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    Intel Sees Insatiable Need for Data Center Processors Through 2015

    Written by

    Chris Preimesberger
    Published May 18, 2011
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      SANTA CLARA, Calif. – Intel, which makes processors for basically anything electronic, is looking at the data center with a new perspective: It’s not just focusing on chips for servers anymore; it’s also making them for every other piece of equipment inside those data centers.

      This also includes processors for everything from motion-sensor chips and video surveillance for external security to storage arrays to backup power systems. That also means all the networking hardware, such as routers, switches and all the peripherals that go with them, as well as the power and cooling systems that enable all the IT to work.

      It likely even makes a chip that controls the timer for the restroom lights.

      This clear data center-centric trend is one that has engulfed a number of Tier 1 IT systems providers, including Cisco Systems, IBM, Hewlett-Packard, EMC, Dell, Oracle, Emerson Power/Avocent and others. These companies all come at building the 21st-century data center from their various specialties, and Intel is doing the same from the chip perspective.

      “This transition opens up incredible new opportunities for us in x86 storage, wired networking and software products,” Kirk Skaugen, vice president and general manager of Intel’s Data Center Group, (pictured) told attendees at the company’s annual Investor Meeting May 17 here on its Silicon Valley campus.
      “Looking out at the 2015-2016 horizon, we think we have unprecedented growth in front of us in both revenue and operating margin around products for the data center. This is due to a number of factors: growth in cloud computing and high-performance computing; fast-emerging markets in Asia, Eastern Europe and South America; and the explosion in devices around super-computing.
      “This is a potential multi-billion-dollar revenue source for us.”
      $10B Heading to $20B by 2015?
      Intel’s data-center-related products are now a $10 billion business; this number likely will double by 2015, Skaugen said. Yet Intel represents only about 2 percent of the world’s data center spend (according to a 2008 IDC market report).
      Intel has made major corporate changes to accommodate this potential growth area. Eighteen months ago, customers building new-or refreshing older-data centers would have had to deal with three divisions at Intel: the server group, the storage group and the networking group. Now it’s a one-stop shop.
      “We’ve put all those together so we can address this market kind of holistically,” Skaugen said.
      When Intel entered the server market with the Pentium Pro line in 1990, the average server price was $58,000, and only a “couple hundred thousand units” were being sold per year, Skaugen said. “What we’ve done since then is transform that business into a tens-of-millions-of-units market, where the average server price is under $3,800.”
      As a result, Intel has vastly increased its presence in the storage chip market in the last two years. It ended the 2009 year owning about 17 percent of the x86 market for storage-related processors, but that picture has changed quite a bit in a very short time.
      “Last year, we announced Xeon, not just as a server processor but as the first processor for storage-code-named ‘Jasper Forest.’ As a result, last year we went from 17 percent [of the storage market] to supplying about 70 percent of all the processors for data center NAS [network-attached storage] and SAN [storage-area network] devices,” Skaugen said.
      “Yet the cost of storage has gone down from $28,000 per terabyte to less than $1,700 a terabyte. We kind of revolutionized that.”
      EMC, the world’s largest independent storage hardware maker, has essentially moved 100 percent over to Xeon products, Skaugen said. “NetApp, XIV [IBM], 3PAR [HP] have doubled their buys.”
      Future Looks Bright
      So what does the future look like? To say that the need for processors is virtually insatiable would be to way, way understate the point.
      “This is pretty startling, but even if you assume that 75 percent of the world’s servers in 2015 are actual virtual servers, and installed as virtual instances, we still believe we’ll be able to double the volume of this business in half the time,” Skaugen said.
      In data center networking, Intel hasn’t been much of a presence in the router/switch market. Until now, Skaugen said.
      “In this next wave, kind of the third wave-standard high-volume servers, standard high-volume storage-now we’re looking at standard high-volume networking switching and routing. So now if you open up a [Cisco Systems] Nexus 5000 box, which has traditionally been two Cisco ASICs, there’s now a Xeon inside. If you look at Force10, Juniper, et cetera, they’re going to a control blade of Xeon architecture. We’ll see this transforming over time.
      “So storage and networking is good incremental growth for us.”
      Cloud systems and high-performance computing will represent 50 percent of the world’s server business by 2015-even taking out workstations and the network storage cut, Skaugen said. “That’s another area of huge growth,” he said.

      Chris Preimesberger
      Chris Preimesberger
      https://www.eweek.com/author/cpreimesberger/
      Chris J. Preimesberger is Editor Emeritus of eWEEK. In his 16 years and more than 5,000 articles at eWEEK, he distinguished himself in reporting and analysis of the business use of new-gen IT in a variety of sectors, including cloud computing, data center systems, storage, edge systems, security and others. In February 2017 and September 2018, Chris was named among the 250 most influential business journalists in the world (https://richtopia.com/inspirational-people/top-250-business-journalists/) by Richtopia, a UK research firm that used analytics to compile the ranking. He has won several national and regional awards for his work, including a 2011 Folio Award for a profile (https://www.eweek.com/cloud/marc-benioff-trend-seer-and-business-socialist/) of Salesforce founder/CEO Marc Benioff--the only time he has entered the competition. Previously, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. He has been a stringer for the Associated Press since 1983 and resides in Silicon Valley.
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