Only the nimblest survive
In part, Intel's hand is being forced by ARM and the smartphones and tablets that those chips power. ARM is riding three trends: first, a general shift away from the PC--Intel's center of power--to slimmer, cheaper, tablets and smartphones. That's a segment of the market Intel hopes to address with its Atom processor, whose "Bay Trail" derivative could power Windows and Atom tablets and convertibles as low as $150 by the holidays.
Intel has already begun mixing and matching chips to various customer segments.
An ARM chip.
"The first thing [that's different about Intel] is that they're using an array of products," said Nathan Brookwood, principal analyst at Insight 64. "If you go back a few years, they designed a chip for the desktop, and then they optimized it a little bit for mobile, and they put a bigger cache on it and called it [a] server [chip]. And there were three basic markets being served by one design. And now, they're taking stuff that was designed for mobile... Atom stuff, that can also can go into servers, with server stuff. And now they're taking another chip that they designed for a laptop, and they're beefing that up... for desktops."
The second trend that benefits ARM is that ARM, unlike Intel, doesn't manufacture its own chips. Instead, it licenses its processors as essentially a kit--intellectual property that can be used as is, or surrounded with a chip designer's own peripheral logic. That's forced Intel's hand, Moorhead said. "So they're going to have to be custom, and more flexible, to keep their 95 percent market share," Moorhead said of Intel.
Finally, while the PC has remained generally unchanged for decades, server manufacturers have shown a willingness to optimize their servers for specific functions, known as "disaggregation". Currently, racks of servers perch one over the other in a server chassis, all with their own CPU, storage, and memory. Eventually, the idea is that servers will have "pools" of computing, storage, and I/O resources, much like the a bunch of flash chips are combined together to make a single flash "drive".
In recent years, Intel has arguably invested more in the server space than it has in the PC, into software, services, networking, storage, and other areas. For right now, the trend is toward custom-designed servers, with specific applications in mind.
"Flexibility is the key, because the architecture is disaggregating, meaning the only way to efficiency in the datacenter is workload by workload, where virtualization is not cutting it," Moorhead said. "In the scale out data center, you have to have a specific server type for a server workload, whether it be Web tier, data mining, Hadoop or otherwise."
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