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Intel's big plan to seed the private cloud market

Brandon Butler | Aug. 5, 2015
Everyone knows Intel makes chips but what's the company cloud strategy?

During the past two decades, Intel has made a significant portion of its revenue by providing chips for personal computers; but with the rise of mobile devices PC chip sales are slowing. In the last quarter they were down 5 percent, with revenue down 14 percent.

There is a bright spot in Intel's financials though, and it's the cloud. Fast-growing data center chip sales are countering the slowdown in the PC chip demand. Data center chip sales have been fueled by Intel supplying custom-made silicon chips to the biggest IaaS public cloud providers. The company counts AWS, Microsoft and Google all of which are rapidly building new data centers for their clouds - as proud customers. Intel's data center chip sales rose 10 percent in the last quarter to $3.9 billion.

Intel wants to mirror some of the growth from the public cloud in the private cloud market now.

Dark clouds ahead?

Matt Eastwood, senior vice president of research firm IDC's enterprise infrastructure group, says the private cloud market including OpenStack and container initiatives are likely to mature on their own, but having Intel's support will only accelerate the process. Intel was instrumental in getting infrastructure and software ready for the shift to virtualization a decade ago, he notes.

Intel doesn't seem to be facing much pressure from competitors either. IDC estimates that leading challenger ARM has less than a 1 percent stake in the server-class processor market, with the vast balance of the market share going to Intel.

But Eastwood says the rise of international cloud providers like China's Alibaba and its Aliyun public cloud is a potential threat to Intel. Will international providers like that partner with the leading chip manufacturer, or instead rely on less-expensive, generic "home-grown" silicon from China? It's too early to tell, Eastwood says. In the meantime, Intel is hoping to capture as much growth as it can in the public, and now private cloud markets. 


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