Processors with 64-bit capabilities, followed quickly by dual-core performance, are the two trends that will dominate x86-based computing this year, according to Advanced Micro Devices Inc. and Intel.

The battle for x86 market leadership has been heating up since 2003, when AMD released Opteron, which can run 32-bit and 64-bit instructions. Intel responded last year with 64-bit extensions for Xeon. More recently, the two have jockeyed for position in the emerging dual-core market.

AMD this week unveils two new Opteron chips that were manufactured using a process that lets AMD squeeze more transistors onto a piece of silicon. That will let AMD increase on-chip memory, improve power management, and offer dual-processor core designs beginning in the next two quarters.

"The most logical way to get to the next level of performance is by having two cores directly connected, which will also enhance multithreaded and multitasked environments," says Pat La, director of server and workstation marketing for AMD.

The new 852 and 252 Opteron chips also include PowerNow, a power-optimization technology that AMD says can reduce power consumption by as much as 75%.

Last week, Intel said it began production on its first dual-core processors. In the second quarter, the chipmaker will begin delivering in volume dual-core Pentium 4 and Pentium Extreme Edition for the desktop market. Intel expects the first dual-core server products in the second half of the year. The company has more than 10 multicore projects under way, says Robert Cooke, VP of Intel's desktop platforms group.

AMD plans to have dual-core server chips by midyear and PC chips in the second half of 2005. AMD's La says nearly 1,000 applications run on the AMD64 instruction set.

"Clearly, server workloads as a class will benefit more from dual core than desktops' workloads," says Nathan Brookwood, an analyst with Insight64. But Intel likely is pushing forward on desktops because it has been able to get that product line ready for dual core more quickly than for servers, he adds.

Intel expects to have shipped a total of 2 million 64-bit-enabled Xeons by the end of February, and by end of the first quarter, 80% of all Xeons shipped will have 64-bit capability. Says Phil Brace, general manager of Intel's digital enterprise group marketing: "2005 will be the year of 64-bit server computing."