3 ms·

This is an interesting twist in the processor wars, here is the #1 cloud company that is turning its profits in providing cloud services in to processor R&D to

This is an interesting twist in the processor wars, here is the #1 cloud company that is turning its profits in providing cloud services in to processor R&D to build new CPUs. This is a much more important announcement than the press is giving it credit for. I have argued in the past the Intel "lost" the smartphone CPU war because Apple decided not to wait for them to come up with some high margin processor compromise and instead to re-invest profits into the development of bespoke processors that gave their products an edge over their rivals. Others like Samsung followed suit with own processors for Android. Doing this both takes away Intel's ability to 'gate' what is and isn't a cellphone processor, and their ability to set the margins they would like. Amazon, Facebook, and Google have been designing and building their own server designs for years. This takes away Intel's ability to gate their choices at the Server manufacturer. As a result more AMD server processors were deployed by these three companies than the rest of the market combined. Now Amazon is taking profits from the AWS service and re-investing them in bespoke CPUs that are tuned to the workloads they can see customers running on their infrastructure. As a result they will not only enhance their cost/power edge over Google, Microsoft, and everyone else, their infrastructure can be better than anything you can buy in order to run your own workload, locking you into their service (a moat if you will for keeping you there). If they succeed, Google and Facebook will follow suit. (I am guessing Google already is well down this path, knowing them but also knowing their secrecy about such things) If you take 50% of the enterprise server market out of Intel's portfolio they are left fighting for enthusiast/gamer share and AMD is eating their lunch there. It is going to be really interesting to watch this play out.

vorpalhex 7y ago
This is entirely Intel's fault for trying to get fat by choking out the market with a gazillion UPCs and a ton of markup. They exhausted their own food supply.
- derefr 7y ago
  Intel's gazillion SKUs are really just a few abstract-ideal "optimal product, highest price" makes of processor, binned down into many different "sub-optimal product, lower price" channels. If you collapse the binnings together, they're really only producing ~four CPUs at a time. At least for commercial availability. There's tons of enterprise SKUs just to serve customers like AWS, of course, but that's not to "squeeze the market"; that's because the customer wants custom IP cores in their chips.
  - dehrmann 7y ago
    With how 10mn is going for Intel, I bet the SKUs really are just the result of binning, not something driven by the sales and marketing side.
- moonbug 7y ago
  they also made bank, like good monopolists ought
StreamBright 7y ago
Intel became too big and too slow. Their R&D efforts are not as efficient as Apple's or in this case Amazon's. This story also proves that in many cases you are better off with a specific design instead of a generic one. If the marketing message is true Amazon has a huge edge.[1] 1. 40% better price performance over comparable current generation instances
- atq2119 7y ago
  Keep in mind that getting 40% better price performance doesn't mean their tech is better. It could just mean they're cutting margins (to drive adoption).
  - StreamBright 7y ago
    Absolutely. From the customer perspective does it matter? If later on it goes back to Intel levels than it means other cloud vendors can compete without a custom CPU. What worries me is what if it is true and not for the too thin margin?
localhost 7y ago
AMD is also eating Intel's lunch in datacenter. Last time I checked (I don't keep track of Intel pricing) AMD had a 5x price/performance advantage over Intel at the launch of EPYC ROME.
- brianwawok 7y ago
  Winning a benchmark isn’t winning. Winning sales is winning. Last I heard most sales still go to intel. But exciting times if this flips, competition is good for all
  - reitzensteinm 7y ago
    Winning a benchmark by a wide margin is pretty close if you have your foot in the door, which of course AMD does not. Their success here is going to be nonlinear depending on how long they stay in the lead.
    - nl 7y ago
      AWS has AMD offerings. That's plenty foot in the door.
  - topicseed 7y ago
    True, but these things take time to move mostly due to time-constrained contracts.
  - privateSFacct 7y ago
    It's very hard to buy prebuilt AMD products into the enterprise still in my experience
    - 3fe9a03ccd14ca5 7y ago
      It’s generally hard to buy AMD CPUs period.
      - 7y ago
monocasa 7y ago
> I have argued in the past the Intel "lost" the smartphone CPU war because Apple decided not to wait for them to come up with some high margin processor compromise and instead to re-invest profits into the development of bespoke processors that gave their products an edge over their rivals. Others like Samsung followed suit with own processors for Android. Kind of a weird way to phrase it given that iPhone 1 through 3GS ran on Samsung SoCs. It wasn't until the iPhone 4 that Apple used their own SoCs. Not sure how Samsung could be following suit in that case. Edit: also, Apple was never going to wait around for Intel. Apple is actually one of the early investors in ARM, back in the early ninties, had used ARM.in the whole iPod line (as well as the ill fated Newton), and iPhones lined up with ARMs in mobile TDPs starting to have full MMUs.
- PHGamer 7y ago
  Samsung has Exynos however, due to Qualcomm and patents you don't ever see their phones equipped with it here in America.
  - monocasa 7y ago
    I mean, now you don't. But earlier cellphones hadn't integrated the baseband yet so it was a moot point either way. Still not seeing how Samsung followed Apple in SoC design when Apple started by using Samsung SoCs.
    - rsynnott 7y ago
      Apple followed Samsung in SoC design, but Samsung (in 2016) followed Apple (2011) in core design. I expect that’s what they’re getting at.
- kbenson 7y ago
  At a certain time, a mobile x86 product had a lot of appeal because of the potential to reuse the software already optimized for x86. The choice then was, wait for Intel to produce good x86 mobile chips to leverage that, or accept that you have to continue using a different architecture. At the point you are deciding to give up on Intel, rolling your own chips starts to look a lot more appealing, since ARM just licenses the IP anyway (and it becomes a differentiator between their product and Samsung's, which is arguably their closest competitor). There were two good paths to take, but one depended in Intel and they never provided it.
techntoke 7y ago
But who cares about a R&D processor that you can only use on a specific cloud hosting provider? All people will care about is if they will have to modify their applications to utilize it, and knowing Amazon that is precisely what they'll try to do. AWS is anti-competitive and it should raise alarms with many in the tech community.
ksec 7y ago
Agree and to add a few more things. These ARM CPU are made with ARM Core Design ( NEOVERSE N1 ) , which means there are no reason why Google or Microsoft, or even Apple and Facebook cant have their own N1. And they will because of the competitive advantage as you mentioned. This solves the Chicken and Egg Problem where ARM CPU from Qualcomm and Ampere or other Vendors could not get into Server Market due to software compatibility. And no one was willing to invest porting and making sure every software runs well on these chip without Hardware. ( One of the reason why Qualcomm exit the Server Market ) Now Amazon is doing both, all the Open Source Web Stack AWS offers will support ARM, assuming Amazon upstream all those work. And once those Software are ARM ready, other smaller Cloud Providers such as Digital Ocean, OVH, Linode etc.. will offer and switch to ARM once there are ARM CPU available. On top of my head, the last estimate HyperScaler represent 50% of Intel's DC and Enterprise Revenue. Intel's yearly revenue from DC is roughly $20B, so we are talking about a potential lost of $10B+ over the next decade. And DC has been the most profitable segment for Intel. Microsoft now also has new incentives to port Windows to work on ARM. ( A lot of Azure Customers runs out Windows VM ) They are also on their way with Windows on Snapdragon. Although I think it will be a few years before it becomes stable enough and mainstream. So 5 years down the road, You now have the servers on AWS running on ARM, all mobile and Tablet are on ARM. Intel are selling less unit to amortise its cost of R&D in each leading node. AMD with better Node fighting for marketshare. If Windows on ARM worked, it is only a matter of time Apple moves its whole Mac line across to ARM as well, may be 2025+. ( Pro Application developers will have incentive to port their work to ARM on both platform ) If Andy Grove were still alive, or his apprentice Pat Gelsinger were still around at Intel, they would be facing the same dilemma half a century ago, -Should Intel invest more in protecting the memory business and fight Japanese manufacturers or should the company flee from memories market and create a new growth market? And this time around, Should Intel invest more in protecting the x86 business and fight ARM or should the company flee from x86 and create new growth market? It was nearly 5 years ago Intel announced Custom Foundry. They had a chance to take on and compete with TSMC. They were far too worried their best tech and IP would info would leak out. They would rather do it all by themselves. 5 years later, I doubt even if they are reopening Custom Foundry there will be any customer wanting to sign up. Sorry if this is a grim outlook of Intel, I am sure they will stick around, just like any great companies once were, IBM, Sun, HP, they will have a long tail of decline until they become mostly irrelevant.

vorpalhex 7y ago

This is entirely Intel's fault for trying to get fat by choking out the market with a gazillion UPCs and a ton of markup. They exhausted their own food supply.

derefr 7y ago
Intel's gazillion SKUs are really just a few abstract-ideal "optimal product, highest price" makes of processor, binned down into many different "sub-optimal product, lower price" channels. If you collapse the binnings together, they're really only producing ~four CPUs at a time. At least for commercial availability. There's tons of enterprise SKUs just to serve customers like AWS, of course, but that's not to "squeeze the market"; that's because the customer wants custom IP cores in their chips.
- dehrmann 7y ago
  With how 10mn is going for Intel, I bet the SKUs really are just the result of binning, not something driven by the sales and marketing side.
moonbug 7y ago
they also made bank, like good monopolists ought

StreamBright 7y ago

Intel became too big and too slow. Their R&D efforts are not as efficient as Apple's or in this case Amazon's. This story also proves that in many cases you are better off with a specific design instead of a generic one. If the marketing message is true Amazon has a huge edge.[1] 1. 40% better price performance over comparable current generation instances

atq2119 7y ago
Keep in mind that getting 40% better price performance doesn't mean their tech is better. It could just mean they're cutting margins (to drive adoption).
- StreamBright 7y ago
  Absolutely. From the customer perspective does it matter? If later on it goes back to Intel levels than it means other cloud vendors can compete without a custom CPU. What worries me is what if it is true and not for the too thin margin?

localhost 7y ago

AMD is also eating Intel's lunch in datacenter. Last time I checked (I don't keep track of Intel pricing) AMD had a 5x price/performance advantage over Intel at the launch of EPYC ROME.

brianwawok 7y ago
Winning a benchmark isn’t winning. Winning sales is winning. Last I heard most sales still go to intel. But exciting times if this flips, competition is good for all
- reitzensteinm 7y ago
  Winning a benchmark by a wide margin is pretty close if you have your foot in the door, which of course AMD does not. Their success here is going to be nonlinear depending on how long they stay in the lead.
  - nl 7y ago
    AWS has AMD offerings. That's plenty foot in the door.
- topicseed 7y ago
  True, but these things take time to move mostly due to time-constrained contracts.
- privateSFacct 7y ago
  It's very hard to buy prebuilt AMD products into the enterprise still in my experience
  - 3fe9a03ccd14ca5 7y ago
    It’s generally hard to buy AMD CPUs period.
    - 7y ago

monocasa 7y ago

> I have argued in the past the Intel "lost" the smartphone CPU war because Apple decided not to wait for them to come up with some high margin processor compromise and instead to re-invest profits into the development of bespoke processors that gave their products an edge over their rivals. Others like Samsung followed suit with own processors for Android. Kind of a weird way to phrase it given that iPhone 1 through 3GS ran on Samsung SoCs. It wasn't until the iPhone 4 that Apple used their own SoCs. Not sure how Samsung could be following suit in that case. Edit: also, Apple was never going to wait around for Intel. Apple is actually one of the early investors in ARM, back in the early ninties, had used ARM.in the whole iPod line (as well as the ill fated Newton), and iPhones lined up with ARMs in mobile TDPs starting to have full MMUs.

PHGamer 7y ago
Samsung has Exynos however, due to Qualcomm and patents you don't ever see their phones equipped with it here in America.
- monocasa 7y ago
  I mean, now you don't. But earlier cellphones hadn't integrated the baseband yet so it was a moot point either way. Still not seeing how Samsung followed Apple in SoC design when Apple started by using Samsung SoCs.
  - rsynnott 7y ago
    Apple followed Samsung in SoC design, but Samsung (in 2016) followed Apple (2011) in core design. I expect that’s what they’re getting at.
kbenson 7y ago
At a certain time, a mobile x86 product had a lot of appeal because of the potential to reuse the software already optimized for x86. The choice then was, wait for Intel to produce good x86 mobile chips to leverage that, or accept that you have to continue using a different architecture. At the point you are deciding to give up on Intel, rolling your own chips starts to look a lot more appealing, since ARM just licenses the IP anyway (and it becomes a differentiator between their product and Samsung's, which is arguably their closest competitor). There were two good paths to take, but one depended in Intel and they never provided it.

techntoke 7y ago

But who cares about a R&D processor that you can only use on a specific cloud hosting provider? All people will care about is if they will have to modify their applications to utilize it, and knowing Amazon that is precisely what they'll try to do. AWS is anti-competitive and it should raise alarms with many in the tech community.

ksec 7y ago

Agree and to add a few more things. These ARM CPU are made with ARM Core Design ( NEOVERSE N1 ) , which means there are no reason why Google or Microsoft, or even Apple and Facebook cant have their own N1. And they will because of the competitive advantage as you mentioned. This solves the Chicken and Egg Problem where ARM CPU from Qualcomm and Ampere or other Vendors could not get into Server Market due to software compatibility. And no one was willing to invest porting and making sure every software runs well on these chip without Hardware. ( One of the reason why Qualcomm exit the Server Market ) Now Amazon is doing both, all the Open Source Web Stack AWS offers will support ARM, assuming Amazon upstream all those work. And once those Software are ARM ready, other smaller Cloud Providers such as Digital Ocean, OVH, Linode etc.. will offer and switch to ARM once there are ARM CPU available. On top of my head, the last estimate HyperScaler represent 50% of Intel's DC and Enterprise Revenue. Intel's yearly revenue from DC is roughly $20B, so we are talking about a potential lost of $10B+ over the next decade. And DC has been the most profitable segment for Intel. Microsoft now also has new incentives to port Windows to work on ARM. ( A lot of Azure Customers runs out Windows VM ) They are also on their way with Windows on Snapdragon. Although I think it will be a few years before it becomes stable enough and mainstream. So 5 years down the road, You now have the servers on AWS running on ARM, all mobile and Tablet are on ARM. Intel are selling less unit to amortise its cost of R&D in each leading node. AMD with better Node fighting for marketshare. If Windows on ARM worked, it is only a matter of time Apple moves its whole Mac line across to ARM as well, may be 2025+. ( Pro Application developers will have incentive to port their work to ARM on both platform ) If Andy Grove were still alive, or his apprentice Pat Gelsinger were still around at Intel, they would be facing the same dilemma half a century ago, -Should Intel invest more in protecting the memory business and fight Japanese manufacturers or should the company flee from memories market and create a new growth market? And this time around, Should Intel invest more in protecting the x86 business and fight ARM or should the company flee from x86 and create new growth market? It was nearly 5 years ago Intel announced Custom Foundry. They had a chance to take on and compete with TSMC. They were far too worried their best tech and IP would info would leak out. They would rather do it all by themselves. 5 years later, I doubt even if they are reopening Custom Foundry there will be any customer wanting to sign up. Sorry if this is a grim outlook of Intel, I am sure they will stick around, just like any great companies once were, IBM, Sun, HP, they will have a long tail of decline until they become mostly irrelevant.