The $1.25 billion Intel AMD settlement could improve competition in the server hardware market and solve some lingering problems related to server virtualisation, analysts say.

Today, a virtualisation technology known as live migration lets customers move workloads from one physical server to another, but only if both servers contain processors from the same chip maker, according to Forrester analyst James Staten.

"If you look at the virtualisation instruction sets that have been implemented by AMD and Intel, they are incompatible with each other," Staten says. "If you build a virtualisation pool and do live migration from one system to another, it has to be all Intel, or it has to be all AMD."

The Intel/AMD settlement, which ends various antitrust and patent cross-licence disputes, doesn't explicitly talk about virtualisation, Staten notes.

But a new five-year cross-licence agreement between the companies raises the possibility that Intel and AMD will share information on their instruction sets and enable live migration across servers with different processors, he says.

Gartner analyst Martin Reynolds agrees the Intel AMD settlement could be good news for virtualisation customers. "If they were to integrate virtualisation more deeply into the processors as a single standard that companies use, it's possible virtualisation could become less expensive," Reynolds says.

The virtualisation incompatibility has mainly harmed AMD, because the issue forces customers to standardise on one type of server and Intel has a dominant market share, according to Staten.

In the wake of the settlement, there are several other potential areas for new levels of compatibility between Intel and AMD processors, Staten says, including memory and power management and security.

Broad collaborations between the rivals should not be expected, though. "These are two fighters who just took a lot of bruises over the last two years," Staten says. "They're not about to run to the center of the ring and shake hands."

In lawsuits filed against Intel, AMD claimed that Intel illegally forces customers into exclusive deals with cash payments, discriminatory pricing, marketing subsidies and other practices.

The settlement prohibits Intel from "offering inducements to customers in exchange for their agreement to buy all of their microprocessor needs from Intel," and other anticompetitive practices such as inducing customers to limit or delay sales of AMD products.

"Intel agreed to a set of rules of the road for how they will conduct business going forward," says AMD spokesman Drew Prairie. "It should help create a fair and open competitive environment where products compete on their merits, and where innovation is rewarded by the marketplace. I think that's beneficial for all."

AMD benefits from the settlement more than Intel does, because it eliminates many concerns customers have about purchasing AMD-based servers, according to Staten. Even if customers like AMD technology, they might have chosen Intel-based servers instead because of concerns about AMD's viability.

Moreover, if AMD's allegations were correct, that means Intel's business practices were preventing OEM vendors from embracing AMD processors to the extent they would have liked. The time and money allocated to fighting Intel in court may also have distracted AMD from product development.

"Having those hindrances gone will definitely help AMD because their CPUs are quire competitive at this point," Staten says.

The settlement also makes AMD more attractive to outside investors, Reynolds says.

AMD is taking a different approach than Intel to the server market. While both companies are embracing multi-core processors, Intel is taking a homogenous approach in which every core is the same and AMD is using different types of cores in the same CPU for different workloads, according to Staten. AMD is also trying to go down the multi-core path faster than Intel, with attempts to get 16- and 24-core processors on the market before its rival.

Reynolds said he doesn't expect the settlement to cause any major shifts in how OEM vendors approach Intel and AMD, however. Generally, AMD is about a year behind Intel's technology, but turns a profit by making products that are cheaper and cost less to build, Reynolds said.

"Generally the server vendors use the product that most meets their needs," he says. "They know their customers are smart and will buy the product that delivers the best value."