Intel has a lot riding on the new server chip it's introducing this week. After two years of losing market share to Advanced Micro Devices and several weak earnings reports, the world's largest maker of microprocessors is betting that its Woodcrest processor platform for servers will close the gap in performance and energy efficiency between its product line and AMD's products and move the company back into a clear leadership position.

The new chip is highly anticipated, but there aren't many surprises expected when the product line is unveiled in New York by Pat Gelsinger, senior VP and general manager of Intel Digital Enterprise Group, and in San Francisco by VP Tom Kilroy. Intel has been laying the groundwork and providing computer makers and users with regular reports on the chip's specs for the past year. What's unclear is whether Woodcrest has what it takes to make "Intel Inside" a must-have once again.

Woodcrest is based on Intel's new Core processor architecture, which also will serve as the underlying technology for Intel's new desktop and mobile platforms. Core will make its first appearance this week in servers, where Intel needs help most quickly. It will show up a month later in a desktop PC platform called Conroe and a month after that in a mobile platform called Merom.

Intel earlier this year said Woodcrest will provide an 80% performance boost and a 35% power reduction over its existing Xeon chips. More important, Intel says the chip will offer up to a 35% performance and 140% performance-per-watt improvement over AMD's Opteron processors. As energy costs rise, that efficiency measure is rising in importance.

Those numbers had better be true if Intel's new generation of processors is going to slow AMD's momentum. AMD controls about 22% of the x86 processor market, up from 16% a year ago, and its goal of achieving a 30% market share within two years seems plausible. AMD has been even more successful in the much smaller four-way server market, where it now owns 48% of the U.S. market and 36% worldwide, according to Gartner. Woodcrest won't address that four-way market. For that, Intel customers will have to wait another quarter or so for Tulsa, which will boost on-chip memory from 4 Mbytes in Woodcrest to 16 Mbytes.

Flavor Of The Day

Despite a rough couple of years, Intel isn't a struggling company by any means. While AMD has gained ground in a market that Intel once dominated, Nathan Brookwood, an analyst with Insight 64, points out that overall growth of the x86 market has let Intel increase sales and remain the world's largest semiconductor manufacturer. And Woodcrest will make Intel much more competitive with AMD. But it's unlikely to make computer makers return to the good old days when they exclusively offered machines based on Intel chips.

Intel already has missed the boat with some customers. CLP Power Hong Kong, a provider of electricity power generation, distribution, and retail services to 2.2 million customers in Hong Kong, switched from Intel to AMD largely because AMD was first to market with a 64-bit x86 implementation and again first to market with dual-core server processors.

"I think Intel got very complacent," says Andre Blumberg, technology and architecture manager for CLP. "Woodcrest looks quite good on paper, and we'll see how that platform performs. But we are not going to do anything based on the flavor of the day."

That may be Intel's biggest challenge. Many customers who never would have considered a computer with anything but an Intel chip inside are using PCs and servers built with AMD processors, and they're happy with the performance, power consumption, and price. Woodcrest will help Intel win some of them back. But Intel will never again be considered the only choice for chips.