Intel Corporation (NASDAQ:INTC) talks a big game about its future, promising to make its way into nearly every computing device imaginable. Whether it’s PCs, tablets, smartphones, or other computing devices, Intel wants its processors to power the future of computing. To date, Intel hasn’t been very successful in delivering on its promise, given that the world has embraced mobile computing faster than Intel can keep up with.
For Intel to remain relevant in the world of mobile computing, it needs to deliver a highly efficient yet powerful mobile computing solution that outperforms the sea of ARM Holdings plc (ADR) (NASDAQ:ARMH) designs. Moreover, it should probably get used to the fact that it won’t be able to command the premiums it’s grown accustomed to in the PC world.
To pull off this foray into mobile computing, Intel Corporation (NASDAQ:INTC) is banking on its leading-edge capacity to carry the weight of its ambitions, which bears the lowest unit cost, offers the highest performance, and consumes the lowest power. In other words, after a complete makeover, Intel Atom will hopefully become Intel’s knight in shining armor on nearly all computing fronts.
Threats on threats
Considering how data needs have effectively exploded in recent years thanks to the rise of cloud computing and always-connected devices, you would think that Intel’s data-center group has been consistently booming quarter after quarter. However, last quarter, Intel’s data-center group experienced a 6.9% sequential decline in revenue, indicating that despite growing data needs across the world, the data-center industry appears to be shifting away from the server monolith model.
In an effort to move away from the server monolith, Facebook Inc (NASDAQ:FB) founded The Open Compute Project, which deconstructs the server monolith to be more modular in design. Not only does this approach save on costs, but it also increases the lifecycle of components. The end result speaks for itself, which has allowed Facebook to create a server that’s 38% more efficient and 24% cheaper to build than today’s state-of-the-art monoliths.
Now, if you couple this growing movement with the fact that high-density, low-power server clusters are on the rise at cloud-based companies, it becomes easy to see how Intel Corporation (NASDAQ:INTC)’s data-center business, which is heavily reliant on selling server monoliths, could become disrupted.
High replacement value
Low-power server clusters utilize tens of thousands of low-power processors to execute tasks and work especially well for cloud-based services. To boot, these outfits are constantly looking to keep a lid on energy costs associated with data centers, while still being able to scale performance.