Microsoft News Tracker

Clint Boulton at internetnews.com:

Intel is no longer the sole star of Microsoft Virtual Server 2005 show.

Microsoft Corp. today trotted out the second beta of Windows Server Virtual Server 2005 service pack 1 (SP1), a version that supports virtualization features on AMD and Intel processors.

Beta one of the product supported Intel virtualization from the get-go; R2 SP1 debuts support for AMD, a clear indication that customers don’t want to virtualize solely on Intel-based machines.

You can download the beta here and there’s a list of other features. Beta 2 arrived a little early, but the final release is still scheduled for 1Q 2007.

Michael Kanellos and Tom Krazit at CNET have the story which is aptly titled Strike Three for Intel:

AMD’s surge can be seen most strongly in the U.S. retail market, which accounts for about 9 percent of global PC shipments. In the first seven weeks of 2006, AMD’s share in desktops in that area climbed to 81.5 percent, while Intel’s has slid to 18.5 percent, Baker said. That’s almost a complete reversal of their typical relative positions.

In notebooks, Intel’s share has declined to 63 percent, even though (NPD Techworld analyst Steve) Baker and others generally agree that Intel enjoys a technological advantage in laptops.

Just to be clear, this is only sales in US retail stores which excludes direct PC vendors like market leader Dell, which is exclusively an Intel shop, but it’s still a stunner. Hit the article for some analysis, but a key factor seems to be pricing and AMD relationship building. AMD is gaining share in servers as well.

It likely makes little difference to Microsoft whether Intel or AMD is leading, although it undoubtedly gives them more leverage in their dealings with Intel. There’s one area though where all three are getting hit and that’s 64-bit:

It looks like the world isn’t clamoring for 64-bit desktops just yet.

Nearly two and a half years have passed since 64-bit processors started going into PCs. But the software to take full advantage of these chips remains scarce, and customers aren’t buying much of what’s out there.
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The dearth can be seen in a lot of ways. Microsoft released a 64-bit version of Windows for desktops last May, but has sold few copies, according to analysts.
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Instead, most PC makers and software developers will wait until Vista, the next version of Windows

“There is just not enough driver support for 64-bit Windows,” said Rahul Sood, president of VoodooPC. “We don’t offer it. We are waiting for Vista.”

The slow emergence of a 64-bit ecosystem also means that those consumers who bought 64-bit systems in the past few years to “future proof” themselves against a software conversion really didn’t. By the time Vista comes out, those early 64-bit computers will be 3 years old, closing in on the typical four-year replacement cycle.

There’s more analysis in the article, but lack of driver support is always the kiss of death. If the drivers were there, you could make a case for running 32-bit apps on the 64-bit operating system in compatibility mode. Instead, most folks are running the 64-bit processor in 32-bit legacy mode.

This week both Gartner and IDC announced their server sales rankings for 2005 and there was a variety of news. Stephen Shankland at CNET:

Windows narrowly bumped Unix in 2005 to claim the top spot in server sales for the first time, according to a new report from IDC.

Computer makers sold $17.7 billion worth of Windows servers worldwide in 2005 compared with $17.5 billion in Unix servers, IDC analyst Matthew Eastwood said of the firm’s latest Server Tracker market share report. “It’s the first time Unix was not top overall since before the Tracker started in 1996.”

And in another first, fast-growing Linux took third place, bumping machines with IBM’s mainframe operating system, z/OS. Linux server sales grew from $4.3 billion in 2004 to $5.3 billion in 2005, while mainframes dropped from $5.7 billion to $4.8 billion over the same period, Eastwood said.

On the hardware side, Shelley Solheim at InfoWorld:

Worldwide server revenue rose in 2005 driven largely by increased sales of x86-based servers, according to figures released by market research firms Gartner and IDC Research this week.

Worldwide server revenue in 2005 grew 4.5 percent to $51.7 billion, while server shipments grew 12.7 percent to 7.6 million units from the previous year, according to Gartner. IDC estimates revenue grew 4.4 percent to $51.3 billion, while shipments grew 11.6 percent to 7 million servers.

For the 4th quarter, Gartner had somewhat slower growth year to year while IDC estimated a slight decline.

Although the two research firms’ numbers vary, the overall message was the same: lower-end servers based on x86 microprocessors from Intel and Advanced Micro Devices continue to outpace sales of midrange and higher-end enterprise servers.

Revenue for the x86 server market grew 11 percent year-over-year to $25.7 billion, while shipments were up 14.3 percent to 7 million units, according to Gartner. Revenue for RISC-Itanium Unix servers remained about flat year-over-year, increasing 0.5 percent to $15.4 billion, while shipments were down 5.3 percent to 460,000 units, said Gartner.
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IBM continued to lead the server market with 32.1 percent revenue share followed by Hewlett-Packard, at 28.2 percent, Dell, with 10.5 percent and Sun Microsystems Inc. with 9.6 percent share, according to Gartner. IDC reported similar figures, with IBM accounting for 32.9 percent of the market, HP with 27.7 percent, Dell with 10.3 percent and Sun with 9.5 percent.

Jeffrey Burt also has more at eWeek.

None of the above are really surprising - they reflect longstanding trends in server software and hardware commoditization. Windows would have reached first place some time ago if not for Linux which takes server OS commoditization one step further.

Microsoft has confirmed the battery draining bug that affects laptops with the Intel Core Duo chipset and processor. Tom Krazit has the details at CNET:

Microsoft has confirmed the existence of a flaw in its USB 2.0 drivers for Windows XP Service Pack 2 that can cause a notebook to consume power at a faster-than-expected rate when using a peripheral device.
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Microsoft published a Knowledge Base article on the subject in July 2005, but made that information available only to PC vendors and partners, a company representative said in a statement. The software maker is not releasing the article to the public, but a copy was posted on Slashdot that industry sources have confirmed was the original article.
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In the private Knowledge Base article, Microsoft outlined a fix that involved modifying the registry key for USB 2.0. However, since then the company has realized that this is an impractical fix for most users, and is working on a new fix that could involve a BIOS update patch, a company representative said in a statement.

Intel is also working on a fix. It’s not known how widespread the problem is - other Intel and AMD processors may also be impacted.

Ashlee Vance at The Register:

Investors celebrated Wednesday afternoon after AMD issued glowing fourth quarter results. Record sales of server and notebook processors pushed AMD’s revenue higher, and shareholders remained bullish on AMD after seeing the sales figures. AMD’s stock surged more than ten per cent in the after-hours markets.
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Excluding the results of the memory unit AMD has spun out as Spansion, AMD posted fourth quarter sales of $1.35bn - a 78 per cent year-over-year increase. In addition, its net income hit $268m as compared to $59m in 2004.

The AMD results are in stark contrast to those from much larger chipmaker Intel, which yesterday missed its own fourth quarter earnings forecast. While Intel pointed to weak demand for PC chips as one reason for this miss, AMD celebrated its server, notebook and PC products.

We mentioned Intel’s disappointing earnings on Wednesday.