Intel has a near-monopoly in the server industry, with
its own ads proclaiming that “98 percent of the cloud runs on Intel.”
That’s why Microsoft’s pledge to use ARM chips in its severs — hinted at
for a while and outlined more fully at the Open Compute Summit this
week — is such a big deal. Microsoft is the second biggest cloud company
in the US after Amazon, and if it moves even a small bit of its
business away from Intel’s products, it threatens the veteran
chipmaker’s most lucrative revenue stream, responsible for $7.5 billion
in operating profit last year.
Speaking to Bloomberg,
Microsoft’s vice president of cloud computing, Jason Zander, said the
company had made a “significant commitment” to ARM servers — porting its
Windows Server operating system onto ARM-powered designs by Qualcomm
and Cavium, which were unveiled at Open Compute. The company won’t say
how widely it plans on deploying ARM’s chips, and notes that these
systems haven’t been integrated into consumer-facing services.
Nevertheless, its intentions are clear.
“We wouldn't
even bring something to a conference if we didn't think this was a
committed project and something that's part of our road map,” Zander
told Bloomberg. “It's not deployed into production yet, but that is the next logical step.”
These ARM design are part of Microsoft’s next generation
of server hardware, intended to cut operational costs. New hardware is
being developed with a number of companies under the name Project
Olympus. Other designs include systems running on AMD’s Naples
processor, and on a variant of Intel’s own Skylake chips. Bloomberg
reports that some of this new hardware will make its way into
Microsoft’s data centers “later this year.” However, it’s not clear if
this refers to the designs using ARM processors.
This is a seismic change in the chip industry, but not an
unexpected one. Microsoft has been slowly pivoting away from Intel’s
products for years, and the switch will affect consumers, too. Last
December, for example, Microsoft announced that a new generation of
Windows 10 machines running on ARM chips
were in the pipeline. The change in underlying hardware could mean
devices that are more energy-efficient, and that offer cellular
connectivity for less.
This move could also hurt Intel, which is suffering as the PC market continues to shrink
year after year. However, the sheer scale of Intel’s business (it’s the
biggest chip maker on the planet) means any change in the industry will
be slow. When talking about ARM-powered Windows 10 machines, Microsoft
admitted that Intel chips would still provide a more powerful
experience, and Intel is confident the same is true when it comes to
servers. A little more diversity in the market won’t mean Intel isn’t
still a force to be reckoned with.
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