The guys at Intel -- there were a lot less of them then -- used to be a scrappy bunch of revolutionaries. After they won the revolution they favored a one-party system, but the Feds did not want there to be a monopoly in PC processors. So Intel allowed AMD to have about 10% of the PC processor market, more of less, for years. When AMD started to gain market share because of its innovative designs around 2000, Intel put pressure on PC makers to limit their purchases from AMD (that is according to AMD and the Japanese government; other governments are researching the issue). AMD has filed a lawsuit against Intel in U.S. courts; it will likely be years before a decision is reached, but it puts Intel and the U.S. Justice Department on notice.
Now Intel is generally acknowledged to still have most of the market, but they have lost quite a chunk of it lately. The reason is that Intel's roadplan for processor development was relatively stupid compared to AMD's roadplan. Suddenly in 2005 the bureaucrats at Intel remembered they used to be engineers and came up with a new roadplan.
Only the roadplan isn't all that great for consumers (including business consumers). Intel has a clear advantage in manufacturing capability: they can squeeze more transistors on a single chip than AMD can. They've used that to catch up with AMD this year, roughly, in terms of processing abilities on a dollar-for-dollar basis (both companies make very high end, very low end, and many models of processors in between).
Now Intel wants to claim to be ahead. The last big thing was dual-core processors, basically two processor units on one chip that allow a the chip to do two things at once, or one thing twice as fast. The next big thing is supposed to be quad-core processors, four processors on a chip.
But the product Intel released today does not have four processors on a chip. It has two chips, each with two processors. So it is not much different than a PC or server that has two dual-core processor chips, which both AMD and Intel have had for a long time (in computer years).
It really feels like Intel is burning its candle at both ends, and its long-term plan for us is a burned out candle. The Intel plan is throw more things together and use whatever glue you can find. The AMD people seem to actually be engaging in engineering: knowing what is needed and building it. Their hypertransport system (for getting data back and forth between cores or between the processor and memory) has been around for years. Intel promises to squeeze a memory controller onto a chip sometime in the next few years, once they figure out the concept.
Well, there is nothing like the real world for testing engineering designs. Intel will find some applications that run real nicely on their quad core chips. They will probably price them attractively. People who are in purchasing and own stock in Intel will buy them for their companies.
I don't really care which corporate behemoth wins the processor wars, but I find the slug-out to be vastly entertaining.