Last Thursday ARM put up an almost 10 percent single-day gain, which turned on the controversial possibility that a large-scale disruption of the server market was looking more possible. In the drive to produce servers based on lower-power chips that reduce operating costs and conserve energy, the $13 billion Cambridge, England–based microprocessor design company is seen as the great hope. Companies like Google and Amazon face the fact that their data centers are massive power hogs that impact both the environment and their bottom lines, and they’re searching for ways to reduce their energy use. So as Wall Street’s excitement over ARM’s announcements settles, what will the implications be for data centers and low-power servers, as well as big players like HP and Microsoft?
There were two key pieces of news last Thursday:
- The Wall Street Journal reported that HP, which has a 30 percent market share in servers, would collaborate with ARM-funded startup Calxeda to produce servers based on ARM chips.
- ARM will produce 64-bit chips. The ARMv8 architecture includes a 64-bit instruction set, opening up new possibilities for webscale data centers that want the option of running the latest software and application tasks. Microsoft, in particular, had complained that the absence of 64-bit processing was one of the reasons it had refused to support ARM architecture in its server software lineup.
One of the indicators of disruption is that the key players in a market are starting to hedge their bets against the market’s looking different in the future. HP is concerned that not all of its future customers will want Intel/AMD-based servers. And Microsoft, which has already opted to support ARM in its next desktop OS, must consider the risks of staying so closely aligned with Intel, a move that devastated its position in the mobile and tablet market.
What was striking about ARM’s press release was the quote from Microsoft’s General Manager, KD Hallman, describing ARM as “an important partner.” Microsoft must hedge against the possibility that the same energy concerns that drove processor design in mobile are becoming apparent in data centers. Many in the semiconductor industry have told me they believe future Windows Server support for ARM is inevitable, and adding 64-bit processing support dampens one Microsoft objection to supporting ARM.
The future of software design must include 64-bit architecture, largely because analyzing big databases and running data-heavy applications like digital video is easier on 64 bits versus 32 bits. Major cloud-computing companies like Amazon’s have to offer their clients 64-bit processing, and Amazon’s distinguished James Hamilton, who focuses on Amazon Web Services’ data center efficiency and scaling, has been open about the fact that he sees ARM designs as “appropriate for server side computing.”
Calxeda’s ARM-based server prototypes offer a 10-to-1 space advantage over traditional servers as well as an excess of a power envelope smaller by 10 times versus standard x86 servers. HP clearly believes there’s a market for ARM-powered servers, and volume production is slated for the second half of 2012. No doubt major cloud-computing players like Google and Amazon will run trials of these servers (if they haven’t already).
Intel owns just under 95 percent of the PC server market, a staggering degree of dominance that led one software executive to joke with me that Intel has had to ensure AMD’s survival just to avoid antitrust allegations. But unlike AMD, which has always struggled to differentiate itself from Intel, ARM has big power-saving advantages to entice companies to consider it as a cost-savings option.
The world is changing, and energy conservation is the new black. Intel’s dominant position is not in jeopardy, but Intel does have a competitor in ARM with the precise value proposition that data center customers want. Given the messages coming from major players like Amazon, ARM will most certainly get its shot to impress, and the help it gets from Microsoft and HP will only aid ARM’s cause.