Everyone knows Intel makes chips – but what is the company’s cloud strategy?
Intel is not building its own public cloud to compete against stalwarts like Amazon Web Services or Microsoft Azure in the infrastructure as a service market, nor is it sitting idly on the side lines.
What Intel is doing is working behind the scenes with public cloud vendors, supplying them with customised processors to power ultra-efficient and powerful virtual machines. But the company has grand plans for its next move, and it involves targeting not just the big service providers but regular enterprise companies.
Cloud for all
Recently, Intel launched the Cloud for All initiative, which does pretty much what it says on the tin. While the public cloud has taken off in recent years, Intel now wants regular businesses to have their own clouds too.
The reason is simple: private clouds that customers run in their own data centres require chips; Intel is the biggest provider of processors in the market. So, more private clouds equates to more chips that Intel can sell.
Intel does not quite put the proposition in those terms. Instead, it says that many businesses like the benefits that cloud brings, but some would prefer a cloud on their own premises. Diane Bryant, Intel’s senior vice president and general manager of the company’s data centre group, says there are impediments to enterprises more fully adopting cloud. Private clouds today are too complicated to install and manage and the market is too fragmented, she says. “Our goal is to eliminate these impediments and enable the deployment of tens of thousands of new clouds, both private and public,” Bryant said during the launch of Cloud for All.
How will Intel help make the cloud more enterprise ready? It is involved in a variety of industry projects, from OpenStack for building open source IaaS clouds, to Cloud Foundry for building open source application development platforms, to supporting the development of standards for application containers. During the launch of the Cloud for All programme, Intel announced it would help fund a team at Rackspace to invest in working to mature OpenStack. What is a chip maker doing being one of the leading sponsors of open source cloud and application development initiatives? Intel is seeding the market: It hopes that investments in these projects will eventually lead to more mature product offerings, leading more enterprises to buy private clouds and the Intel chips inside them.
One for the money, two for the show
A closer look at Intel’s financials provides more context as to why this is such a big push for the venerable chip manufacturer. During its most recent quarter Intel made $2.7 billion (€2.5 billion) in profit, but there are some signs of weakness. Overall revenue was down 5% to $13.2 billion (€12.2 billion).
During the past two decades, Intel has made a significant portion of its revenue by providing chips for PCs, but with the rise of mobile devices PC chip sales are slowing. In the last quarter PC chip sales were down 5%, with revenue down 14%.
There is a bright spot in Intel’s financials though, and it is the cloud. Fast-growing data centre chip sales are countering the slowdown in the PC chip demand. Data centre chip sales have been fuelled by Intel supplying custom-made silicon to the biggest IaaS public cloud providers. The company counts AWS, Microsoft and Google, all of which are rapidly building new data centres for their clouds, as proud customers. Intel’s data centre chip sales rose 10% in the last quarter to $3.9 billion (€3.6 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 virtualisation a decade ago, he notes.
Intel does not seem to be facing much pressure from competitors either. IDC estimates that leading challenger ARM has less than a 1% 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 these international providers 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.
Brandon Butler, IDG News Service
Subscribers 0
Fans 0
Followers 0
Followers