By Don Clark
Intel makes a lot of money from selling chips, but few markets are as lucrative as processors for server systems. The company on Tuesday announced its latest move to turn a potential threat to that franchise into an opportunity.
The issue is the rise of what the industry calls “micro servers,” powered by inexpensive, power-sipping processors that were originally targeted at cellphones rather than machines running in computer rooms. Such machines are a response to the fact that electricity bills, and space, are more pressing issues in many data centers than performance.
Many companies are talking about the hardware trend–particularly ARM Holdings and companies that use its chip designs, which are the norm in many mobile devices.
Intel, as widely expected, unveiled a new product targeted specifically at micro servers that is based on the Atom chip line–which was first sold in portable PCs called netbooks line and is now also targeted at smartphones. It draws just six watts of power, compared to 17 watts for the most power-efficient model of its Xeon server chip line. The company said 20 products already are being designed using the new “system on a chip,” the Atom S1200.
The company asserts that Intel will have a series of advantages over ARM entrants. Not least of which is the fact that its products are based on the x86 design that is the foundation of most existing server software. In addition, the Atom chip has support for other features server users like, including a 64-bit capability that allows chips to exploit more memory.
But Intel, of course, is quick to make the case that micro servers using Atoms are good for some chores but not others, so its more widely used Xeon chips will remain just as popular as they have ever been.
“Whatever the workload is, it will run best on Intel architecture,” said Diane Bryant, the Intel vice president who runs its server chip business, at a briefing in San Francisco.
There are financial implications for which servers customers choose, of course. The new Atom product line starts at $54 each; there are Xeon models that range from several hundred dollars to more than $4,000.
But Ms. Bryant made the case that typical micro server deployments can be a very good business for Intel, too. A refrigerator-sized server rack packed with 560 of the new Atom processors would yield about $35,800 in revenue to Intel, the company says. A similar rack would fit about a fifth as many Xeon chips, while amount to $32,900 in revenue to Intel.
Which chores are best for the Atom? Imagine, Ms. Bryant suggested, a small business that uses a company to host its website, but doesn’t get much traffic. An Atom-powered micro server would work fine for that. But another company that gets a lot of transactions through their website might need the Xeon, she said.
One person with a different perspective on the issue is Andrew Feldman, who helped pioneer the micro server market as CEO of SeaMicro, which was purchased by Intel rival AMD. His operation still sells systems using both Intel Atom and Xeon chips, and plans to add models with AMD server chips as well as ARM processors.
Feldman scoffs at recent Intel suggestions that the company was an active early proponent of micro servers. “It’s simply untrue,” he said. “We encountered rather significant pushback when we set out to build Atom-based servers.”
He added: “To their credit, they learned. They realized how important this market is.”
Feldman is betting, however, that ARM-based servers also will play an important role in the micro server market. One reason is that, in his view, Intel is limiting the potential reach of Atom-based servers by restricting the amount of memory they can address, which ARM will not do.
Another is that he expects ARM will remain lower in power consumption than Intel, despite the latter’s improvements in that area–just as the lower-performance ARM parts have far outsold Intel for smartphones and tablets. “We know what direction that went,” he said.
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