If you’re in the business of managing and setting up servers in big data centers, you’re probably looking ahead to the second half of this year. Before the year is out, the first servers running on microprocessors based on the ARM chip architecture will come to market.
This development may amount to a big challenge to chip giant Intel, because it will be the first time in a few years that the companies who build and buy servers will have real choice in the kind of processor inside.
If you bought a server in 2013, chances are it had an Intel chip in it. Market research firm IDC estimated that of the 2.3 million servers sold in the second quarter of last year, 2.2 million of them were based on x86 chips, and most of those were Intel’s.
That gives Intel a lot of market leverage when it comes to setting prices on those chips. And, as Patrick Moorhead, head of Austin-based Moor Insights and Strategy, explained in a recent interview, there’s a growing desire among companies who build and buy servers for a new alternative to Intel.
Until recently, that alternative was Opteron, an x86 server chip from Intel’s longtime rival, Advanced Micro Devices (AMD), which at one time competed well, but in recent years has failed to keep up with Intel.
“There is a vacuum in the marketplace left by the downward trajectory of Opteron, and it happened much faster than anyone was prepared for,” Moorhead said. “The companies that make servers feel that they had it good when they had a choice, and they’re eager to have one again.”
A quick refresher: The main reason that ARM chips dominate the mobile phone business is that they’re designed to consume power efficiently in order to preserve battery life.
Companies buy licenses for the basic designs from ARM in order to build their own chips. Those licenses constitute a who’s who of the the smartphone world: Apple’s A7 chip used in the iPhone and iPad is based on ARM designs; same goes for Qualcomm’s Snapdragon chips. Nvidia’s graphics chips and its processors aimed at notebooks and tablets are also based on ARM designs.
So far, Intel has failed to get any meaningful traction in smartphones with its own line of low-power mobile chips, known as Atom, though it keeps trying.
That same power-sipping capability is what makes ARM chips attractive for servers. As data centers operated by companies like Google, Facebook, Amazon and many others pack thousands of machines into ever more dense spaces, the cost of power to keep them running has quickly risen to the top of the list of things those companies worry about. Add to that Intel’s ability to charge relatively high prices for Xeon chips, and the potential appeal only grows.
The one thing that ARM chips have lacked until recently is a 64-bit core design. Without that, the chips can’t work with the amount of memory typically required in a server. Intel and AMD chips have had 64-bit chips for about a decade. ARM didn’t release its first 64-bit design until 2011, and the first one to wind up in a smartphone was Apple’s A7, in the latest iPhones and iPads.
Both Hewlett-Packard and Dell have plans on the table to sell servers based on ARM chips. HP has Project Moonshot, the tiny, customizable line of servers it debuted last year. HP will probably be first out of the gate with an ARM-based server this year, Moorhead said, adding that Dell, which demonstrated its first ARM-based servers in the fall will likely follow soon after HP.
Last month, Google was reported to be interested in designing its own line of ARM chips for the custom servers it builds for its data centers. It wouldn’t be a small undertaking. Depending on what type of license Google might get from ARM, Moorhead estimates that it could easily cost Google $1 billion or more to design its own custom chip.
“They’d be creating everything from scratch, and then they’d have to take out licenses on parts of the chip design they don’t have rights to,” he said. “It would get really expensive rather quickly.” It’s also possible, Moorhead said, that Google has started the rumor in order to put pressure on Intel for more favorable pricing. “It may just amount to a negotiating tactic. … I just don’t see Google taking on that much risk.”
Meanwhile, several companies are in various stages of building ARM chips they would sell to hardware manufacturers. Calxeda, an Austin-based startup that had raised more than $90 million in venture capital funding, had been working on ARM server chips and had worked closely on server designs with as many as seven server companies, including HP. It ceased operations last month after failing to raise more money from investors.
AppliedMicro, a chipmaker based in Sunnyvale, Calif., has designed a server chip called X-Gene, aimed at servers. Moorhead said that this is the one most likely to land in commercially available servers during the second half of this year. Other server chips from Broadcom and Cavium will likely follow in 2015.
Then there are some dark horses in the picture. Nvidia, which was among the first to bring ARM chips to Windows-based notebooks, has a secretive development project known as Project Denver, which is oddly enough based in Portland, Ore. Moorhead thinks a server chip could emerge from that effort, but not initially. “Nvidia hasn’t come right out and said it will build a server chip. But it hasn’t said it won’t either,” he said. “It has certainly hired a lot of people who have a history of designing server chips at companies like Intel, AMD and HP.”
Other companies said to be exploring ARM-based server chips are Samsung, Qualcomm and AMD. While Samsung and Qualcomm are both powerhouses in the design of chips for phones, neither has ever built a general-purpose microprocessor. AMD, which has a long history of building x86 chips for PCs and servers, has that expertise.
“If AMD were to take out the relevant ARM licenses, it could potentially be a very potent force,” Moorhead said. “AMD knows how to build processors, and it has the respect of HP and Dell and all the other vendors.”
And if ARM chips eventually become a serious competitive threat, Intel is already ready to respond. Its low-power Atom chips, first created for phones, tablets and small notebooks, have already been adapted for servers. Atom sells for less and was built with low power consumption in mind.
Additionally, Intel has created new versions of its Xeon server chips, due later this year, that include networking features. Moorhead compares the strategy to one Intel followed in the mid-1990s with chips for personal computers.
“They had Celeron on the low end and Pentium on the high end,” Moorhead said. “They’re basically going to try and repeat the strategy with servers.”
Beyond that, Intel could easily consider building specialized versions of its server chips to suit the particular needs of its biggest customers, like Google or Facebook, he said. “If they think the risk is credible, and the opportunity makes sense, Intel will give its customers whatever they want.”
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