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Intel's data center group: Cloud, custom, networking to fuel growth

Intel's data center unit remains strong due to custom chips for cloud deployments, build-outs and networking functions virtualization.

Intel's data center group, powered by Xeon processors, is surging as 35 percent of the unit's revenue comes from cloud deployments and that infrastructure for the likes of Amazon Web Services and Microsoft Azure is increasingly custom.

Those takeaways were front and center as Diane Bryant, head of Intel's data center group (DCG), highlighted the outlook. Intel's hammerlock on the server market means that it can do well even as workloads move to the cloud. Will enterprises buy a lot of servers in the future (probably not), but those Xeons are likely to be in the systems bought by cloud vendors.

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It's worth noting that DCG enterprise deployments now account for less than half the unit's revenue.

By offering customer Grantley Xeon processors---there are 35 flavors---Intel is able to maintain pricing. Custom processor customers include AWS, Azure, HP Moonshot and Oracle. These customers will pay a premium for performance and lower costs over time.

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In addition, Bryant highlighted networking potential. Intel launched network functions virtualization (NFV) and software defined networking (SDN) pilots and deployments in 2014 with the likes of AT&T, Telefonica, China Mobile and Alibaba.

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The router of the future is basically a server. There's a good reason Cisco is so bullish on its UCS efforts.

Other odds and ends that will keep Intel's DCG unit humming along:

  • High-performance computing is doing well as demand is strong for Intel's Xeon Phi co-processors. Knights Landing, the next generation of Xeon Phi, will ship late 2015.
  • Usage for HPC revolves around government and research, commercial and big data.
  • Intel is going to benefit due to another Microsoft end of life event. Microsoft will take Windows Server 2003 to end of life and that will spur server upgrades.