ARM's server plans face stiff challenges

Analyst warns that U.K.-based company faces uphill struggle to penetrate the server market as it has to win "extremely conservative" enterprise customers away from Intel and AMD.
Written by Kevin Kwang, Contributor

ARM Holdings will be "seriously challenged" to get a foothold in the highly-competitive server market as it would have to win over the confidence of "extremely conservative" enterprise customers, according to an analyst.

Rajnish Arora, associate vice president for enterprise computing at IDC Asia-Pacific's domain research group, said customers tend not to make changes to their enterprise computing platforms quickly. This mindset, he noted in an e-mail to ZDNet Asia, applies to both hardware and operating systems.

"Enterprise customers also tend to have an extremely long test, evaluation and qualification process to introduce [new hardware] into their IT environment," he added.

However, the analyst thinks that ARM will probably face the "least resistance from Web 2.0 companies" that are concerned about cost and are looking at ways to reduce their expenditure.

"[Web 2.0 companies] have large server farms and do not necessarily mind taking a 'rip-and-replace approach', compared to enterprise customers that are typically much more concerned about resilience and fail-proof features and capabilities of their systems," said Arora.

Furthermore, fellow IDC analyst, Daniel P. Harrington, who is a senior research analyst for enterprise servers at the research firm, told ZDNet Asia that ARM processors are RISC (reduced instruction set computing)-based and most Web 2.0 companies' data centers run Linux stacks, "which can run on RISC".

These companies' data centers are unlike the majority of enterprises that have servers running Windows Server and require an x86-based CPU, he said in an e-mail.

ARM states server intent
The U.K.-based semiconductor intellectual property (IP) supplier, which came into prominence when its mobile chip design was established as a key architecture in the smartphone market, revealed last month in an interview with EE Times that it had plans to provide "multicore server processors".

Citing ARM CEO Warren East, the report said industry players were already conducting "server experiments" with multiple ARM cores on a chip. East also claimed ARM-based servers would enter the market "within 12 months".

According to EE Times, ARM's opportunity to enter the server market arose from the "extreme amounts of energy consumed in server farms", which is resulting in rising costs of powering large data centers.

In another report by ZDNet Asia's sister site ZDNet UK, ARM's executive vice president of marketing, Ian Drew, said that the company was working on low-powered server chips in response to customer demand.

"We've been doing some testing over the past year or so. People talk to us about energy efficiency in a number of different areas, from microcontrollers all the way through to servers," he told ZDNet UK. "We've been talking to a few semiconductor partners and a number of [manufacturers] in the last couple of years on this."

However, Drew adopted a more cautious stance compared with CEO East when asked about ARM's plans to commercialize server chips. Servers, he noted, are a "much more complex problem" as valuable data is stored in them and may take ARM ""multiple years to get to some form of reality".

When approached by ZDNet Asia, ARM declined to comment further.

Competitors unperturbed
ARM's server plans are unlikely to have any impact on the demand for existing servers or lead to the creation of new market segment, noted IDC's Arora.

He added that in the short- to mid-term, Intel and AMD are also "unlikely to respond with price aggression or a marketing blitzkrieg to counter ARM's presence".

Intel did not directly address its competitor's plans to enter the server market. Regional PR manager Ruby Au said in an e-mail: "The ARM announcement highlights that server processors are a highly competitive, customer driven market, and healthy competition benefits everyone."

In response to the high costs and consumption of energy in large data centers, Au noted that Intel has a strong track record on energy efficiency in all server segments and it continues to make tremendous generational gains to provide customers with the equipment they need.

Fellow server heavyweight AMD said that in terms of providing the best performance per wattage, the x86 architecture is "the right way to go".

Benjamin Williams, corporate vice president and general manager of AMD Asia-Pacific, told ZDNet Asia during an interview that the best server is not about "absolute power performance" but one that is able to manage energy consumption efficiently.

"AMD was the first to state [the importance of] power management in the server space, and now the rest of the industry has taken notice and is looking into the energy issue," he said.

Pointing out that most server applications are written for the x86 architecture, Williams said he doubted companies will undergo a "forklift upgrade" to change their hardware and OS at the same time.

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