Advanced Micro Devices’s annual meeting today was a surprisingly placid affair, considering its share price has nearly halved in value over the past year.

Existing directors were re-elected without a murmur and there was only one question from the floor: a stockholder asking if AMD would consider sponsoring golf tournaments.

Hector Ruiz, chief executive, is under more pressure from analysts, questioning whether AMD can continue in its present form and whether it can return to profitability this year after six consecutive quarters of losses.

The stock is up 13 per cent in the past week on analyst speculation that AMD could be split into two - a manufacturing business and a chip design and development one.

Mr Ruiz said progress was being made towards an “an asset-smart strategy” and he would give an update on this “complex undertaking…in the very near future.”

He said AMD would spend only $900m in capital expenditure in 2008, it was cutting its workforce by 10 per cent and this reduction in expenses would bring down the break-even point by hundreds of millions of dollars, making him confident of a return to profitability in the second half.

AMD would do fewer things better, he said, and get out of non-core businesses that did not have “a clear path to profitability.”

Production problems with its quad-core “Barcelona” family of processors were now behind it, he added, and AMD was on course to begin quad-core production on chips with more economic 45-nanometre circuit widths in the second half - about a year behind Intel.

His most intriguing comment on the battle with Intel was: “We are re-architecting the business so that our financial success is not invariably dependent on continued component performance leadership over a rich and dominant competitor.”

That is as close as AMD is likely to come to admitting defeat, having gone toe-to-toe in recent years with Intel, exchanging processor-advance punches.

Intel now appears to have a decisive lead in the x86 processor market that the two dominate. Mr Ruiz is suggesting his company will focus on expanding in other areas such as graphics chips or targeting specific segments such as processors for small businesses,  in order to grow its own business in the future.

Intel and Cray have been talking this week about building supercomputers with a million cores or brains, but how will all those processors-within-processors work together and communicate with one another and how difficult will it be to write applications that take advantage of all of them?

This is the question that Stanford University hopes to answer with its Pervasive Parallelism Lab, announced on Wednesday.

“Parallel programming is perhaps the largest problem in computer science today,” said Bill Dally, chair of the Computer Science Department.

“[It] is the major obstacle to the continued scaling of computing performance that has fuelled the computing industry, and several related industries, for the last 40 years.”

The problem has arisen because multi-core processors were too expensive until recently for all but high-performance computers, meaning few programmers have developed the expertise to take advantage of their new, affordable abundance.

Stanford says computer scientists fear the progress of computing could stall and that’s clearly a worry for the major microprocessor suppliers - Intel, AMD, IBM, Nvidia, HP and Sun are all supporting the new lab, which will pool the efforts of the university’s leading computer scientists.

It is also not the first initiative of its kind. Intel and Microsoft announced last month  they were investing $20m in research at the University of California at Berkeley and the University of Illinois at Urbana-Champaign  in the same area.

Stanford’s lab has a budget of $6m over three years. The aim is to develop a complete parallel computing system, covering everything from fundamental hardware to new user-friendly programming languages. This could lead to the system doing all the work for developers to optimise their code for parallel processing.

Intel is taking the high road and its rival Advanced Micro Devices the low one in search of market share in different business segments, according to announcements on Monday.

Intel unveiled a partnership with the Cray supercomputing company. In an industry first, their engineers will work together on creating a new supercomputer for release around 2012.

They aim to reduce dramatically processing times for intensive applications such as medical imaging, cell modelling in genome research and hurricane forecasting. The high-performance computing market was worth $11.5bn last year, according to the IDC research firm.

Kirk Skaugen (pictured left), head of Intel’s Server Platforms group, and Peter Ungaro (right), Cray chief executive, told me that synergies between the two companies’ research teams would help them solve problems where components interconnected.  This was key to keeping processors fed with data and operating at maximum performance.

They would also work on how to take advantage of what is expected to be a grouping of as many as 1m processing cores in a single supercomputing system.

The two companies say they will work with academic institutions and government bodies to test their products.

Meanwhile, AMD introduced its AMD Business Class, aimed at small and medium-sized businesses. This is a new platform of chips designed to help PC makers target this segment with products. Both dual, triple and quad-core processors are featured combined with AMD and non-AMD graphics and chipsets.

Acer, Dell, Fujitsu Siemens and Lenovo all announced their support for the initiative.

Intel designed its Classmate PC to help schoolchildren in its emerging markets, but its second-generation model, unveiled in Shanghai today, represents a shift in strategy.

Classmate 2 recognises the success of Asus’s eee machine in attracting the broader consumer market in both emerging and developed worlds to small, cheap laptops.

It may have happened faster than Intel and One Laptop Per Child anticipated. Both focused on developing-world education markets, but now are adjusting to making their designs more widely available.

Intel says they define a new category called “netbooks” of smaller wireless internet-enabled laptops with low power requirements and a low price tag.

Intel has high hopes that its Atom processor, launched this week and set to be included in Classmate in the third quarter, could gain significant market share in new categories of “internet in your pocket” devices.

The Classmate 2 has a more sophisticated and rugged design, along with better battery life.  Intel sets the specifications and design for the machine and its Taiwanese manufacturing partner ECS helps system suppliers with configurations.

Intel listed 17 suppliers of Classmate 2 in 14 countries, including the USA, Greece, Vietnam and Australia.

Tom Rampone, head of its Channel Platforms group told me some models should be priced below $300, but a price tag of around $350 would be more typical.

The original Classmate was not noted for its performance, suggesting its successor will have to up its game considerably to be a match for the speedy eee, which sells for $300 and higher.

ECS expects to double Classmate shipments this year, but only to 200,000 units from 100,000 in 2007.

The maths for guessing the future of computer processing power is no longer “Think of a number and then double it.”

It should be getting easier in this multi-core world. We’ve gone from single brains to two brains and now quad-core microprocessors, so eight should be next, right?

Actually, the answer is three.

Advanced Micro Devices came out with the industry’s first triple-core chip today and it signals that cores are being viewed more flexibly than pure performance drivers. Instead, they are providing different price points and functionality for users.

“We’ve really started a debate in the industry with this,” Pat Moorhead, vice president of AMD’s advanced platform marketing, told me.

“Just like there’s a spot for $20,000, $30,000 and $40,000 cars, there’s room for two, three or four cores in the market. I see our competitor [Intel] now agrees – it’s announced a six-core server processor.”

Mr Moorhead says there are plenty of PC makers ready to support triple-core. It’s an in-between solution – for basic capabilities go for dual-core, for top performance, it’s quad-core, for something perhaps 30 per cent better than dual-core, triple-core will fill an important niche, he says.

The big shift is that Moore’s Law – the doubling of transistors on chips around every 18 months – is being de-emphasised by the two major processor makers in favour of “visual computing” – combining microprocessors with graphics processors to provide 3D interfaces and high-definition video.

“It’s going to become all about video, you get this incredible high-definition playback at 1080p with triple-core combined with our graphics,” says the marketing man, hammering home the message.

News that Apple is in talks with record labels about a possible ‘all-you-can-eat’ model for iTunes is making the rounds on the blogs this morning following last night’s story in the FT.

Over at TechCrunch, Erick Schonfeld asks whether music companies would be willing to go along with a subscription model. We think the answer is clearly yes.

Consider this: Steve Jobs himself pointed out last year that the average iPod contains just 20 iTunes songs. Our own back-of-the envelope analysis shows that the number at this point (4bn iTunes songs sold, divided by 140m iPods and 4m or so iPhones) could be closer to 28 songs per Apple device. Either way, given Apple’s 70-30 revenue split with record labels, that means the music companies are making a paltry $14-$20 per iPod, even though many iPods can hold thousands of songs. Meanwhile, Apple banks hundreds of dollars per iPod sold.

Compare that $14-$20 with what record labels could make on an all-you-can eat deal, and it’s easy to see why music companies would be interested.  Music labels are thought to be pushing for a $100 up-front payment over the two-year life of an iPod, with the markup to be split between the music companies and Apple. The lowball $20 per iPod figure being floated by Apple suggests that Steve Jobs is determined to drive a hard bargain, if he agrees to such an arrangement at all. But even if the record labels were only able to get Apple to come up to $40 per device, they would be almost doubling what they have been getting under the current a-la-carte model.

 Update: Peter Kafka at Silicon Alley Insider has a good analysis of the economics of an iTunes subscription service here.

After the acclamation, for Apple opening up its iPhone to outside applications, comes the anxiety.

Developers were expressing concern today at what they saw as a poorly-worded email from Apple that could be read as suggesting many were being left out of the iPhone developer programme for the foreseeable future.

Meanwhile, at the Emerging Communications Conference at the Computer History Museum on Thursday, I listened as Christopher Allen of iphonewebdev.com reeled off a long list of restrictions by Apple on what it will let developers create for the iPhone.

They included no applications that have executable code, which he said ruled out Java and Flash applications. The guidelines also required an application to terminate for an incoming phone call, making it an unsatisfactory experience for users of something like an instant-messaging client. He speculated on whether developers could include non-Apple media codecs such as DivX and he said it was unclear whether there would be access to the iPhone’s Bluetooth wireless capabilities.

On the positive side, there was Kleiner Perkins’ $100m fund for developers, a 70-30 revenue split between developers and Apple, the iPod touch providing an additional market and Apple’s habit of releasing quarterly upgrades to its firmware, compared to the mobile industry’s attitude of expecting users just to buy a new phone for fresh capabilities.

In nine months, the iPhone has grabbed 28 per cent of the US smartphone market and it is the vehicle for 71 per cent of all US mobile internet usage, he said.

Plenty of reasons then for high anxiety as well as anticipation about getting inside and exploiting this ground-breaking device.

Life begins at 40 goes the saying and Intel yesterday outlined a new life for itself as it celebrates its 40^th birthday on July 16^th this year.

From mid-year, the company expects to be making major strides with its Silverthorne microprocessor, now branded Atom.

At its analyst day on Wednesday, Paul Otellini, chief executive, outlined how the low-power processor was at the centre of its plans to find new growth and exploit what it views as a $40bn market opportunity by 2011.

It sees four versions of the chip addressing different segments of a new market – for internet-enabled consumer electronics, mobile internet devices (Mids), low-cost PCs it dubs netbooks and the embedded market for smarter machines like ATMs and petrol pumps.

It seems any early fruits of its strategy will come from netbooks, judging by the raging success of Asus’s eee PC.

Sean Maloney, head of sales and marketing, said manufacturers were readying 25 different netbooks using its chips for release mid-year. He described them as suiting the can’t-afford-a-notebook consumer or families looking for a second laptop, as well as appealing to users in emerging markets.

Intel has tried and failed to expand in markets beyond PCs and notebooks before. But netbooks are closer to its core business and Stacy Smith, the new chief financial officer, said the company had not spent huge amounts developing Atom – it reused existing microchip production assets and development had been “really quite inexpensive,” he said.

Mr Otellini said Intel would celebrate its 40^th not with a big party or special T-shirt but with its employees giving 1m hours in public service. If all goes well, they will hopefully find time to raise a glass to Atom as well.

Microsoft and Intel have been in such a lockstep for so long in their promotion of the Windows operating system powered by x86 microprocessors that they have earned the moniker Wintel.

But when does such co-operation reach inappropriate levels?

One among a series of internal Microsoft emails, unsealed by a federal judge in a case alleging PCs labelled “Vista Capable” could not fully run its latest operating system, suggests a line may have been crossed.

In the email, dated February 26 last year, John Kalkman, a general manager handling relations with PC makers, answered why PCs using Intel’s 915 graphics chipset were allowed in 2006 to have “Vista capable” logos, when they could not run advanced features such as Vista’s 3D “Aero” interface:

“In the end, we lowered the requirement [for Vista capability] to help Intel make their quarterly earnings so they could continue to sell motherboards with the 915 graphics embedded,” he wrote.

Another Microsoft employee, Mike Ybarra, says in a 2006 email that the decision to lower the graphics requirements for the “Vista capable” logo was a mistake:

“We are caving to Intel…we are really burning HP…we are allowing Intel to drive our consumer experience,” he wrote.

Intel did have a tough year in 2006, prior to Vista going on sale at the beginning of 2007, but a company spokesman has strongly denied that Mr Kalkman could have had any knowledge of its internal financial forecasts related to chipsets and motherboards.

In another email, first reported by the Seattle Post-Intelligencer, Steven Sinofsky, the head of Windows, writes:

“Intel has the biggest challenge. Their “945″ chipset which is the baseline Vista set “barely” works right now and is very broadly used. The “915″ chipset which is not Aero capable is in a huge number of laptops and was tagged as “Vista Capable” but not Vista Premium. I don’t know if this was a good call.”

Microsoft’s response to the content of the emails is that they “reflect part of an active discussion about how best to implement the Windows Vista Capable program.” The programme was introduced in April 2006 to maintain the sales momentum of Windows XP PCs while escalating the “buzz” for the forthcoming Vista.

The class-action lawsuit alleges consumers were misled by the programme into thinking they were buying PCs that could be upgraded to the new operating system and run all of Vista’s key features. The emails reveal that retailers themselves had qualms about Microsoft lowering the technical requirements for its logo.

Microsoft could perhaps have avoided any legal action if it had taken Wal-Mart’s advice, contained in this internal memo from a Microsoft employee:

“[Wal-Mart is] extremely disappointed in the fact that the standards were lowered and feel like customer confusion will ensue. They would like to see Microsoft reconsider the program and allow for the use of 2 different logos; one that is strictly a Windows Vista Home Basic Capable [the barebones version of Vista], and the other Windows Vista Capable.”

Around 10 per cent of Xbox 360s have been suffering from that irretrievable breakdown known as the “Red Ring of Death”, according to the warranty company SquareTrade, although the figure could be much higher.

The problem forced Microsoft to take a charge of more than $1bn for the cost of repairs in its last financial year, but the company refused to reveal what percentage of its consoles were suffering from the failure.

In a blog note, SquareTrade reports a 16.4 per cent failure rate for 360s based on 171 claims made on a sample group of 1040 Xbox warranties that it sold between April and July last year.

There were 102 Red Ring of Death hardware failures among these, with overheating thought to be the main cause.

SquareTrade notes its report only tracks its test group for six to 10 months and “once this same test group is tracked for 24 or 36 months, the fail rate is certain to go up.”

However, Microsoft extended its own warranty to three years for red-ring failures at the time of its writedown last year, so SquareTrade may not be seeing many of the breakdowns that are continuing to occur.