As expected, Intel® announced the Haswell E5 processor family for Servers and Workstations at IDF on September 9. Coincidentally the event was just up the valley from Apple’s event announcing the (ARM-based) iPhone 6, 6Plus, and Apple Watch. Between the two media-saturation blitzes, one could barely find coverage of misbehaving NFL stars or Russian would-be Czars in the day’s news headlines. While few would connect these two events in any way, to me there is a common thread, best summarized by my interpretation of their messaging: “It’s a floor wax! It’s a desert topping! Its everything you ever wanted, and more!” If you’ll allow me, …
Sometimes, more isn’t necessarily better. Sometimes it’s just “more”. Looking at these announcements, both products offer a dazzling array of features and blazing performance, and each exemplifies why the underlying architectures (X86 and ARM®) dominate their respective landscapes. But both also leave plenty of room for competitors who can serve those customers who might want a little LESS, not MORE. (Less usually costs less than More.) Don’t get me wrong, I think these are both great products, and I will probably buy at least one of them. (You can guess which one.) But Apple represents a diminishing slice of the smartphone market because many customers want more value, not more flashy features they can’t figure out how to use and don’t want to pay a premium to get. What Apple successfully sells is a more polished user experience and top-notch customer service, at a premium price. And while Intel commands some 95% of the server processor market by unit volume, many customers and analyst are quite excited by the prospect of having an alternative architecture such as ARM V8 to choose from.
In fact, recent research by TBRI (Technology Business Research,. Inc., at www.tbri.com ) found that data centers will seriously consider an ARM alternative for their servers as they come to market, in spite of, or perhaps because of, Intel’s drive to cram more performance on the die. Specifically, TBRI found that 58% of survey respondents reported that they are likely to purchase ARM-based servers,with 7% being extremely likely and 51% being somewhat likely to do so. It is safe to assume that these customers are probably not considering ARM because they want more performance. They want more value.
Speaking of value, investors seem to value Intel’s strategy of ever-increasing prices. In the most recent quarter ASPs for the Data Center Group was up 3% over Q1 2014 and 11% over Q2 2014. Haswell is yet another step in this direction as prices went up yet again. The largest price increase is typically at the high end, and this time around Intel really jacked them up. (Perhaps they felt emboldened by the declining relevance of IBM POWER, which historically has given Xeon a run for its money when it comes to top-end performance.) The the top shelf Xepn part saw a whopping 57% increase:
- Most expensive E5-2600v2 was $2612
- Most expensive E5-2600v3 is $4115
Looking at the mid to low end of the stack, it looks like -3-9% increase across the board. This may not sound like much until the effect of compound gouging kicks in, year after year.
- 2620v2: $406 => 2620v3: $417, a 3% increase
- 2630v2:$612 => 2630v3: $667, a 9% increase
- 2640v2: $885 => 2640v3: $939. a 6% increase
- 2660v2: $1389 => 2660v3: $1445 , a 4% increase
So long as Intel continues to climb up the price ladder, alternatives like ARM and AMD Opterson will be able to provide compelling alternatives to Xeon.
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