Intel's server worries - Data center opportunities
All the talk emanating out of Intel over the past couple of weeks is how great they are in servers. Which translates for me to corporate worries about losing market share to the ARM masses and customized silicon for specialized task processing. Let's take a trip through the signs and see where there are opportunities for IT buyers.
Intel's "Supercomputers" TV spot rolled out in January and starts with a sound bite that "over 90 percent of the world's largest supercomputers run on Intel." It is true, not marketing mythology, since stats for the top 500 supercomputers is on an independent site. On the Top 500 site are also stats for the "Green 500" list of the world's most energy-efficient supercomputers. Both Top lists are relevant, as we'll see in a moment.
While using supercomputer data is, to an extent, somewhat biased since it doesn't measure the entire server market, it's a decent snapshot of people willing to pay top dollar for the hottest computing performance. Out of the Top 5 supercomputers logged in November 2016, two of them are Intel-based. Go to the top 10 and there are four machines with Intel at the heart of top 10. For the entire list, it is 92.4 percent of Top 500 systems.
Moving to the Green500 list of the most-energy efficient supercomputer systems, NVIDIA's P100 Tesla GPU holds the top slots. For the top 10 Green500, the numbers change significantly, with Intel multi-core solutions holding seven slots. The only other non-Intel solution, the Sunway TaihuLIght, is China-designed and made with a Sunway SW26010 RISC processor; TaihuLight also holds the distinction of being the fastest supercomputer in the world.
Last week, Intel told investors it expects lower profit margins out of its data center business, with profits dropping over time from "norms" between 45 to 50 percent to the low-to-mid 40 percent range. In 2016, Intel's data center revenues were $17.2 billion.
Moving forward, the company is going "data center first," putting the PC in the background. Intel leading-edge production tech of 10 nanometer (nm) and 7 nm processes will now be first applied to Xeon and other chips going to data center devices. (There's also some rumblings that mobile tech will also get the leading-edge, meaning Intel has essentially embraced Microsoft's philosophy of "cloud first/mobile first!)
Since the cloud powers everything from consumer experiences such as Amazon's Alexa to storing and processing "Big Data" collected by the Internet of Things, Intel expects to make more money as the intertwined worlds of cloud, AI, and IoT continue to grow while PCs and end-user devices are at a "good enough" level for most applications.
Speaking of "other chips," Intel's new-fangled 3D Optane solid state drive (SSD) storage tech is rumored/leaked to be coming out this year for data center applications, with speeds akin to DRAM but with the power savings benefits of SSD. Will Intel sell an integrated server appliance for data centers, rather than simply selling parts and pieces to be OEM-ed together? There are better margins in integrated appliances.
What this all boils down to is faster servers and more performance per dollar. Intel has already signaled it expects data center profits dropping over time, so it isn't unreasonable to expect the company to grow revenues; i.e. volume and lower prices. This should flow through to lower cost servers, but "lower" is relative given some of the costs being tossed around for next generation CPUs and the Optaine tech.
At the same time, Intel and its hardware OEM partners realize data centers have more options for servers, especially when it comes to AI-esque applications on the high-end of performance favoring NVIDIA and other non-tradition (non-Intel) silicon and better performance per watt with the ARM ecosystem trying to move into the marketplace.
A more competitive environment with more viable choices means better negotiation and lower prices. In a multiple-choice environment, Intel and its partners will likely throw in financial sweeteners and additional features to keep and expand the company's chips in the data center world.
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