Richard Cownie (tich.delete@this.pobox.com) on January 29, 2013 7:19 am wrote:
> bakaneko (nyan.delete@this.hyan.wan) on January 29, 2013 6:49 am wrote:
>
> > Selling server chips with extremely low margins
> > sounds dangerous. Qualcomm needs to be able to
> > survive bad times. And the more Qualcomm nibbles
> > at Intels high-margin business (which also
> > exist to protect itself in exactly these bad
> > times), the higher they have to aim for higher
> > margins as they take over Intel's risks. (Which
> > loopsided means that Intel would die faster,
> > because they have to sell for higher prices.)
> >
> > Qualcomm may very well want you to sell servers
> > at lower margins, but in the end they have to do
> > the same as Intel.
>
> Let's do a global replace:
>
> "Selling server chips with extremely low margins
> sounds dangerous. [Intel] needs to be able to survive bad times.
> And the more [Intel] nibbles at DEC/HP/Sun/IBM's high-margin
> business (which also exists to protect itself in exactly these
> bad times), the higher they have to aim for higher margins as they
> take over DEC/HP/Sun/IBM's risks"
>
> That argument didn't work in 1995-2005. It won't work now.
> Intel was able to sell server chips relatively cheap because
> they had massive desktop/laptop volume and could exploit the
> associated massive investment in R&D and manufacturing to
> attack the small, but lucrative, server cpu business.
>
> What's happening now is that the desktop/laptop business is
> not looking so great. The biggest volumes are in cellphones
> and tablets, and those high volumes are driving huge investments
> in both (ARM) core design, and manufacturing. And those people
> are itching to get some higher-margin business - and server
> cpu's look like a tempting target.

The *important* volume was never "number of parts shipped". The important metric was revenue. Volume of money. In the end, money is what amortizes costs of process technology and processor design.

This is why ARM vendors had not been a relevant threat to Intel for many years, despite shipping giant volumes of parts, they did not get such a volume of money from them.

If anything, what will rival Intel is simply the consolidation of other manufacturers and foundries. Smartphones are helping with that, so are niche low power servers and netbooks and tablets, so are GPUs and non-Intel CPUs.

Smartphone has helped ARM and ARM IHVs with reduced-risk stepping stone into server space, perhaps, but it did not create a market that was not already there. Explosion of internet services is significantly creating that. Linux and other open source cross platform code is no less necessary requirement for ARM to enter the market as are high performance ARM CPUs.