Intel said it's "in a great position to compete" in the data center market Monday after CEO Brian Krzanich reportedly told an analyst he expects to lose some ground to archrival AMD later this year.
In a note from Romit Shah of equity research firm Nomura Instinet, Shah said "Mr. Krzanich did not draw a firm line in the sand as it relates to AMD's potential gains in servers; he only indicated it was Intel's job to not let AMD capture 15-20% market share," CNBC reported Monday morning.
While Intel has remained, by far, the market leader for server processors, Krzanich's comments underline AMD's plans to reclaim ground it lost in the past decade or so. CNBC noted that AMD expects to reach a server chip market share in the mid-single digits by the end of 2018.
Shah said Intel's potential losses in the server space could relate to the Santa Clara, Calif.-based company's manufacturing problems with an advanced chip design. An AMD executive told The Information last week that Intel's issues in this area "is a real tailwind for us" as the company, also based in Santa Clara, forges ahead with its own advanced chips for an expected 2019 release.
In a statement to CRN Monday, Intel said the company sees "significant opportunities for growth in the data center — an estimated $70 billion market opportunity by 2021 we have an opportunity to grow our total silicon datacenter market segment share from where we are today."
Intel has indeed been making up significant ground with its Data Center Group, which remained the company's fastest-growing business in the first quarter by increasing 24 percent year-over-year to $5.2 billion. That contributed to Intel's data-centric businesses constituting 49 percent of total sales that quarter, a positive sign for the company as it moves away from being a PC-centric business.
"While we are prepared for a more competitive environment as we move through 2018, we’ve already factored that into our financial forecast and we’re in a great position to compete," the company said.
"We remain very confident in our products, our roadmap and our competitive position," Intel added. "For example, Intel Xeon processor Scalable family represents the biggest advancements in platform capabilities in a decade, and later this year we’ll introduce breakthrough new Intel Optane DC persistent memory and storage technology architected specifically for the data center."
While one solution provider said he doesn't expect enterprises to move away from Intel, two others said AMD is demonstrating real benefits in the server space.
Rick Gouin, CTO at Waltham, Mass.-based Winslow Technology Group, ranked No. 429 on CRN's 2018 Solution Provider 500 list, said while most of his customer base uses Intel, he has a number of mid-range customers that are starting to look at AMD's EPYC server chip for cost savings.
More specifically, he said, it's the number of cores AMD can pack into single chips that creates an attractive value proposition for companies that have to deal with "per socket" or per chip licensing costs from companies like VMware. In other words, the more cores you can pack into a single chip, the better the economics for those software licensing agreements.
"Those types of products are starting to become more interesting to our customers because so many things are licensed by the socket," Gouin said.
What's helping drive that interest is that Dell, for which Winslow Technology Group is a partner, began using AMD chips again for some of its servers for the first time in three generations, according to Gouin.
"From where I sit, Intel is still the 800-pound gorilla in the space," he said. "For so long they haven’t had competition in the server chip space. It's not terrible for there to be multiple players in the space."
According to one executive at a server builder who did not want to be named because he wasn't authorized to speak to the media: "AMD does have compelling features in both their EPYC and Ryzen processors. There are applications where the AMD advantages such as more EPYC PCIe lanes will close new customer deals for AMD."
"However," the executive said in an email, "the ramp on new AMD motherboards has been very slow and AMD lost some first mover advantage with EPYC. Intel XEON Scalable CPUs are now ramping with customers and will be the dominant choice for new servers."
Bob Venero, CEO of Holbrook, N.Y.-based Future Tech, an Intel partner and No. 115 on CRN's 2018 Solution Provider 500 list, said, "You'd be hard-pressed to see enterprises move to AMD." While AMD can compete on cost, he said, there are other aspects that relate to the total cost of ownership for a server, such as uptime, reliability and end-user support, where Intel has been solid.
"You’ve got companies that know that Intel is there, and I think AMD does not have that credibility yet," Venero said.