Technology

Intel Clients Look For Other Options In Data Center Chips

Intel dominates the data center market with a 95% share, but some clients want more options. Morgan Stanley is one such client, and is testing ARM-based chips for its data centers, according to a report from IDG News.

Intel Clients Look For Other Options In Data Center Chips

Intel clients evaluating other options

Speaking at ARM TechCon conference last week, VP of technology business development at Morgan Stanley, Bert Shen, said, “They ran a very relevant columnar database benchmark for us and got a 5x performance improvement per rack compared to an Intel Haswell EP solution.”

Morgan Stanley decided to test ARM-based chips not because of performance, but to reduce its reliance on one dominant vendor, Shen said. It is common for large enterprises to have two vendors for a product line, but until the time it is a commoditized product, firms try to avoid three vendors. “But when there’s one vendor, you basically run like hell,” said Shen.

Morgan Stanley is not the first major Intel customer to try ARM-based chips in its data centers. Earlier this year, PayPal said it is happy and satisfied with ARM’s server chips, adding it is “one of the many hyperscale data center customers” to make use of ARM-based chips in data centers.

Competition from ARM and IBM

ARM hopes that by 2020 it will acquire 25% of the data center market, according to the report. On the other hand, Intel expects its data center business will continue to see growth at a compound annual growth rate of 15%. Intel’s Data Center group booked revenue at $4.1 billion in the last quarter.

Such a decision from Morgan Stanley should alert Intel to a looming vulnerability in Intel’s data center business, which has been driving growth for the company as PC sales decline.

Previously, the principal analyst at Tirias Research, Jim McGregor, told Business Insider that Intel’s price increase in its server chips has left some of its customers upset, and are now considering other available options. “That’s not a position you want to be in. That opens the door for competition,” the analyst said.

In another blow to Intel, IBM recently partnered with chip maker Xilinx to gain a major share of the data center market. From the partnership, IBM hopes to expand the use of IBM Power processors in servers.