Oracle reveals major stake in startup challenging Intel data center processors

Oracle already owns much of the data center software and hardware markets and now it is eyeing processors -- Intel's most lucrative business.

Oracle revealed it has invested $40 million in Ampere Computing, a Silicon Valley startup developing data center processors and whose CEO is Renee James a former Intel president and a current Oracle board member.

The investment represents less than 20% of the company, additional investors include the Carlyle Group and Arm — a subsidiary of Japan-based Softbank.

Ampere's chips are based on the ARM microprocessor architecture which successfully competes with Intel in mobile and smartphone applications but not yet in data center applications —  where Intel makes most of its profits. 

Ampere is offering a 19 inch chassis evaluation board with processors based on 64-bit ArmV8 cores with custom network and storage offload engines and integrated Ethernet. It claims to match or exceed private and public cloud performance for lower operating costs.

Oracle has been testing the technology in-house but has not said anything about their performance.

ARM's biggest challenge in the data center is that it lacks the software development tools and engineering talent that is available for Intel architecture microprocessors which makes the development of data center business applications more expensive. This can offset computing efficiency gains. 

Oracle already has a huge presence in nearly every major data center as a vendor with a large catalog of products and services. It has managed to acquire most of the largest enterprise software companies and also Sun Microsystems, a large hardware company. It owns Sun's Sparc microprocessor architecture which is designed for data centers. But ARM has larger library of chip capabilities that can be custom built for higher computing efficiencies.

Renee James has more than 28 years experience at Intel and ran its software groups which will be useful for Ampere's business strategy.