A year after launching its “awesomely spectacular” four-core Xeon 5500 server processor, Intel is coming out with its six-core successor, the 5600.

Its debut today represents the beginning of a new battle with Advanced Micro Devices over “volume servers” – a key market segment where the bulk of server chips are sold for systems that run applications and processes in data centres and company IT departments.

Intel and AMD will also be clashing over higher-end servers – Intel plans to introduce eight-core Nehalem-EX processors by the end of the month to compete with AMD’s eight- and 12-core “Magny-Cours” processors.

Both companies can smell the blood of IT managers looking to upgrade their servers to new ones that can pay for themselves in energy, warranty and software savings in a matter of months.

As well as two extra cores or brains, the 5600s improve on their predecessors by using smaller, more efficient 32-nanometre circuitry (codenamed Westmere), rather than 45nm.

Boyd Davis (pictured), head of marketing at Intel’s Server Platforms Group, told me 15 old single-core servers could be replaced with just one Xeon 5600-based server to give the same performance and it would pay for itself in as little as five months.

“About a third of the installed base is still those old single core servers,” he said.

“If an organisation has 50 of those old single core servers and it replaces them with three Xeon 5600-based servers, it can save $10,000 a month, so it really is a very strong economic value proposition to get rid of the old infrastructure.”

New applications driving purchases include web services, which operate in the “cloud” on remote servers, and virtualisation, where computing tasks are handled by pools of servers configured dynamically as virtual machines.

The 5600 series also promises better security and faster processing with the handling of advanced encryption on the chip.

The Gartner research firm predicted last month that worldwide server shipments would grow in the middle to high single digits this year after a 17 per cent fall in 2009.IDC reported a 19 per cent decline to 6.6m units, but said volume servers experienced the sharpest rebound in the improving fourth quarter, with 10 per cent revenue growth.

IDC said there had a been a once-in-a-decade market inflection in the fourth quarter.

“Customers are actively re-evaluating their IT needs and refreshing their infrastructures,” it said.

Hence, increased competion between Intel and AMD, with the latter addressing volume servers with two different platforms compared to Intel’s single approach.

“AMD has the right strategy to capitalise on the rebounding server market by offering targeted platforms for the high end and low end of the volume market,” says Pat Patla, general manager of AMD’s Server and Embedded Division.

“We are able to offer extreme performance scalability in one platform, while delivering cost efficiency and unrivalled power efficiency in the other.”

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