I was already working on a column about AMD purchasing multicore server maker SeaMicro, pointing out what a coup the deal is for AMD, when the story appeared yesterday about an Intel executive claiming the chip giant had been offered SeaMicro and chose to pass on the deal, followed by a SeaMicro board member claiming the Intel exec’s statement was a bald lie. Who is telling the truth here? Who is lying? And does it matter? It is my opinion the answers are that both are telling the truth, nobody is lying, and none of it matters very much. Here’s why…
Remember Bill Clinton saying in a deposition that the truthfulness of a particular statement depended on your definition of the word “is?” I think that’s what is happening here, too. I doubt that SeaMicro sold itself without Intel knowing in advance. At the very least SeaMicro would have tried to get a second bidder to drive higher the final purchase price. Whether Intel formally rejected the chance to buy SeaMicro, they probably did so at least tacitly by, for example, choosing not to counter the AMD offer. Maybe there weren’t papers on the table, either, but I’m sure a question was asked and answered to the satisfaction of both parties, maybe over lunch or in a phone call. And SeaMicro wasn’t insignificant to Intel, which saw the startup as an important enough customer to build a custom 64-bit Atom processor just for SeaMicro.
To better understand the deal let’s look at SeaMicro’s product line, which presently consists of servers using Intel Atom and Xeon processors with up to 256 cores. These are remarkably low power servers ideal in many respects for the data-center-ic (I just invented that word if you were wondering) world of IT in this decade. Intel makes the processors (or has so far) while SeaMicro integrates them into servers using custom chipsets that define the “fabric” of their distributed architecture.
In the simplest sense, then, AMD bought SeaMicro to eventually dump the Intel processors and replace them with AMD processors, which shouldn’t be difficult to do. That’s certainly the way Intel is viewing this deal. But there is much more to it than that.
AMD did not buy SeaMicro to go into the server business or, frankly, to even replace Intel processors, though the latter is likely to happen at some point. AMD bought SeaMicro for the fabric, for those proprietary chipsets that are the true heart of SeaMicro servers — chipsets that will go shortly to 512 cores, then 1024 and beyond.
AMD doesn’t want to sell servers to you and me, they want to sell chips to HP and Dell to put in their SeaMicro-type servers sold to you and me. Expect the SeaMicro server business to disappear before long.
Now why didn’t Intel go for the deal? It’s not like they couldn’t afford the $336 million price. It comes down to several factors, the first of which is NIH — Not Invented Here. SeaMicro has been working for years with Intel and Intel had to have learned plenty from that partnership. If Intel turned down the chance to buy SeaMicro is has to mean there’s a line of similar fabric chips on their way soon from Intel — chips on which I’ll guarantee you Intel has already spent more than $336 million.
But Intel is a proud company — proud and to a certain extent deluded. They see an all-Intel fabric solution as being inherently superior and therefore more valuable even if it isn’t quite ready to hit the market. Intel decided to build rather than buy. But in this instance Intel probably made the wrong choice, as I think they are beginning to see.
It’s this brouhaha about who offered what to whom that raises a red flag for me. Intel would normally not have commented at all on AMD buying SeaMicro. The fact that someone at Intel did comment shows both discord in the ranks (Intel is off its message, which is bad for brand value) and might even be panicked.
There’s a continual debate at Intel about the residual value of the Intel Architecture (IA). Intel management sees that value as significant, some people see it as zero (the cloud and mobile have made processors effectively interchangeable) while I actually see the value of the Intel Architecture as a negative number. That’s because it costs money to maintain IA and I see that expense as no longer directly generating revenue for the company.
So we’ll see in this cloud fabric business the same thing we are seeing from Intel in mobile, where they are spending huge amounts of money to come from behind. It’s the same thing Microsoft is doing with Windows Mobile and it won’t work for either company. That’s why I predicted Intel would buy Qualcomm this year and Microsoft will buy RIM, because it’s too late to strictly build: at least some buying is in order.
And SeaMicro/AMD is going to make that even more imperative for Intel in the cloud space because things are going to get very exciting from here — much more exciting than had Intel bought SeaMicro.
Had Intel bought SeaMicro it would have become a new division or part of an old division at Intel with an old-line Intel manager in charge. Little AMD can’t do that: this is a big purchase to AMD. They’ll make SeaMicro its own division managed by the people who founded the company and have done a great job so far. So if Intel bought SeaMicro things would have immediately slowed down. But with AMD buying and throwing some real money into the SeaMicro business, things will actually get moving faster.
I don’t imagine SeaMicro will dump Intel processors. That would be stupid. But they’ll immediately add Opteron support. And since AMD gets the best Opteron pricing in the world, Opteron-based SeaMicro products will have a cost advantage.
But wait, there’s more! Since Intel has little presence yet in cloud fabric components and AMD has to know they are coming, they’ll do even more to be disruptive. Here’s where I’ll take a risk and predict that AMD will become an ARM licensee to extend SeaMicro’s fabric chipsets in that direction, supported, of course, by an ARM version of Windows and extensive Linux support.
ARM is the mobile AntiChrist to Intel.
And that’s why we’re seeing signs of panic in Santa Clara.
Would it be ‘data-center-ic’ or ‘data-centric’? Forgive me my poor knowledge of English
[..] Would it be ‘data-center-ic’ or ‘data-centric’? Forgive me my poor knowledge of English [..]
‘data-centric’ can be restated as ‘central to data’, or a concept where data is at the center of everything.
‘data-center-ic’ is a pun on ‘data-centric’ – it’s a contraction of ‘data-center-centric’, implying ‘central to the data center’. It you were really saying something is ‘central to the data center’ you’d say ‘data-center-centric’, which sounds silly (too many “center” sounds), which is why no one says that. And that’s why the pun ‘data-center-ic’ is funny.
Also, remember he’s talking about their “low power” nature. He must be referring to the chips, hence the “IC” at the end. So it could mean “data center integrated circuits”. 🙂
And yes, I’m #1 again!
For your grammatical information, it’s not the position but the meaning of the word/comment that counts, much like being first in line with a trivial question is resoundingly less memorable than asking the first meaningful question. I hope that makes sense to you.
I am sure Intel is wary of ARM but their hubris is such that they feel they can apply the NIH principle to that other design company as well. ARMs advantage is not their core design, but the latitude allowed to their diverse licensees.
Excellent article. This is not the first time Intel has suffered from NIH.
Intel has in the past had secret projects to protect their blind side, such as the 64-bit core running AMD’s instruction set. I strongly believe that Intel has another non-x86 cpu designed and ready to go to market, if and when they decide they will lose the mobile to ARM with the X86.
Running Linux, Android, iOS, anything other than Windows will eliminate any market advantage for Intel and AMD with the x86. If Intel had a simple ARM-like core, they would easily out manufacture everyone making ARM chips today.
With the x86, even if Intel can compete equally on price and power, what mobile manufacturer in their right mind would lock in with a shark like Intel instead of shopping to all the ARM vendors?
I’m not an industry follower, but I’d have thought that if Intel had a true ARM competitor “ready to go” they would have launched by now. I don’t know how Intel defines “losing” but the lack of Intel solutions in any of Apple, Samsung, or Motorola’s mobile products would have me wearing Depends if I was in their C-suite.
There again perhaps Microsoft is being coy/cute when they talk about Windows 8 on ARM and instead have a back room deal for Windows on Intel Arm-like, for old times sake? But times have changed and even Microsoft has shown it likes to dabble with mistresses.
There’s a strong triangle developing in the mobile area between Motorola and Intel, and Motorola and Google. Motorola being the nexis (no pun) here, with both god parents having deep pockets. The products coming out of Motorola, say about a year from now, should be pretty interesting, as they will represent a different architecture from ARM devices, but probably still running Android, but, as Android is a Google product, perhaps cutting edge Android.
There’s a very weak vertex in that triangle… There again, despite Google’s protestations that it will be “business as usual” at Motorola (which would mean continuation of awful performance), the triangle is now reduced to a line. Perhaps Google is trying to drive the Android OEMs towards a different standard architecture through Intel/Motorola but its an odd way of achieving such an aim through the use of a competitor. This is the inherent conundrum of the Moto/GOOG deal. The point of Android was to leave the hardware innovation to the multitude of OEMs with experience in hardware. Methinks that Google is now trying to create a new WinTel duopoly which deprecates the OEMs to building case variations on a standard design. Ironically, Microsoft seems to be doing the opposite with Windows Phone in forming what appears to be a monogamous relationship with Nokia (it tried some three-ways but the partners were two-timing).
Wouldn’t it make more sense for MS to buy NOKIA? At least Nokia is already a close partner (see Ovi Map and Bing map) and building Windows Phones (good one I may add). While RIM is still in denial that it is dying.
Or if MS does want RIM, would it be more plausible buy through Nokia?
While on that topic, do you see the future of mobile be more vertically integrated eco-systems, like Apple, Google + Moto, MS + Nokia–all build its own OS+hardware+content & services? Maybe include Amazon and Facebook as well.
RIM is not valuable as a maker of handsets. It’s valuable for its worldwide client base and brand recognition.
RIM is hell-bent on destroying itself from within. The subscriber base and even BBM is becoming less valuable by the day. It hoisted itself on the PlayBook petard instead of realizing it was at its most vulnerable in the transition to QNX phones. By diverting attention and resources to a non-core device, Lazarides thought he was channeling Steve Jobs but was in fact connecting to a Dell call center in Mumbai.
RIM is in the uncomfortable position of hawking uncompetitive and soon to be obsolete BBOS7.1 devices and PlayBooks at a price scantily above cost, while desperately waiting for their engineers to get BBOS10 ready. Their next couple quarterly results will be brutal – even after their $485 million dollar write-down last quarter.
This is the FIRST TIME I’ve seen a Cringely commenter use it’s and its the right way round. Yay for Peter! Is this the beginning of the fightback??
Perhaps you haven’t read many comments. Most of the time it’s done correctly. Except for your comment where quotes should have been placed around the two words.
RIM may have some declining value in its WW network and name recognition. However, that is eroding as every day passes with nothing new and compelling forthcoming. They can just look over at Yahoo and see how that works. M$ also shrivels as the days pass; what happened to “innovation”? more like beg, borrow and steal. Intel is however, growing ever stronger in spite of their CPU chipline temporarily falling behind in mobile. And how is Intel going to come up with $116B to buy QCOM??
Meaning, BBM app on Win8 = $$$
Intel is becoming passe’.
They pinned their destiny on PC’s and Microsoft. PC’s are becoming passe’.
They thought their future was better when Apple switched to their processors in its PC’s. To Apple PC’s, even their own are passe’.
Apple bought a chip maker and is making its own chips for its mobile devices. Apple is now selling a tremendous number of non-Intel mobile devices.
Then there are the other makers of mobile equipment. Not many of them use Intel chips either.
A lot more chips are going into everyone’s mobile devices than Intel is making for PC’s.
AMD is at least looking for news markets and products to grow into. Intel seems firmly stuck in the past.
Apple does not make there own processors. They only make an extension and slap their name on it. Apple will switch processors again if they think it makes their product better. They have a huge success with the Air, which relies heavily on Intel. Already Medfield is competitive with the iPhone 4S and Nexus. Intel will start gaining on ARM in the coming years. iOS, Android and Windows Phone can switch quite easily to x86.
Windows Server 8 doesn’t run on ARM and it won’t as long as there are no 64 bit ARM processors.
Where it gets interesting is in GPU’s. They are used more and more for general computation. Intel isn’t big in GPU’s, so there they might have a disadvantage.
Huh wha? There are 64 bit ARM implementations…
https://www.eetimes.com/electronics-news/4230160/ARM-unveils-64-bit-architecture
https://www.anandtech.com/show/5027/appliedmicro-announces-xgene-arm-based-socs-for-cloud-computing
And some of them are really quite good. On the other hand we have a ways to go before phones will need something more than 32 bit processors.
Of course, Intel could have bought them to block AMD from having the technology. That would have been a smart move. They could have canned/shelved the SeaMicro technology and AMD would have been back to square one.
Windows Phone is gaining traction, and will accelerate once Windows 8 is birthed. (Windows Mobile is the last generation architecture, get with the program, Bob!).
Microsoft doesn’t have to buy RIM, as they have nothing that would be of interest, other than BES, the server-based add-on to Exchange. However, Exchange can already do what BES does, and without having to allow foreign governments a peek inside. They could loan cash to Nokia for them to buy RIM, but again, what would Nokia get out of it? They don’t need their hardware design expertise. If they acquired the software it would wither and die just like every other software product at Nokia. No, I think RIM’s last, best hope is Google, merging it into Motorola Mobility. Intel buying Qualcomm? I don’t think the guys in San Diego are ready to cash out just yet. There could be some serious antitrust concerns as well. I could see a TI/Qualcomm tie-up.
If Intel suffers from NIH, then RIM suffers from something far worse. It has TNA syndrome (The Next Apple). NIH is sufferable if you are large enough. TNA is delusional but explains RIMs current circumstance. I am fairly sure the company cannot understand why it is not on a tear right now. Meanwhile it’s shareholders are beyond tears.
Are SeaMicro’s fabrics better, or just bigger? Now that the mobile core wars are on, this would be a sensible time for AMD to license some late-model ARM technology and get a jump on the inevitable 16-core mobile SoC, no?
As to the residual value of IA, I’d be quite happy to be rid of what is, at this point, little more than a compression/encryption algorithm for RISC instructions.
Apparently Microsoft would as well — Windows 8/ARM systems are to be so locked down against booting anything else that Redmond must be thinking about massive subsidies to vendors.
SeaMicro would have been lost in some dark corner of Intel’s huge business. AMD can’t compete with Intel on MIPS/chip, but now it maybe can, on MIPS/$ and/or MIPS/watt, which is what counts from here on out.
Good article. For an attached/embedded/packaged mobile system developer, this is earth shaking insight.
I agree. It’s such an exciting time in the SoC embedded world. We have seen scale out storage boom (isilon), now scale out cpu’s are coming (HP moonshot). Goodbye VMware and their legacy hypervisor for legacy x86 scale up apps.
Anina: You want me to just STAND there?
Cringley: Yeah.
Anina: Next to you?
Cringley: Yeah.
Anina: Why?
Cringley: So people will figure we do it and finally stop thinking I’m gay.
Anina: But you’re NOT gay, Mark!
Cringley: Yeah. But that god dam pink shirt on that god dam HDTV gig…
Well written story. I personally believe that Intel’s biggest fear is being broken up my the the Anti-Trust as a monopoly, and may factor into why such an acquisition was made. I can recall the 1999 250 Million Dollar law suit settlement with DEC over Alpha Processor intellectual property that was stolen and integrated into the Merced now called iTtanium CPU that Intel was developing that was it’s first 64 bit processor.
Robert X: As someone fighting burnout on a long-term project of my own, I sympathize with your desire to wind down this column next Fall. But man, I do hope you change your mind. This is the most enjoyable tech destination in my browser! Even when occasionally half the commenters say you’re full of it, you nevertheless spark a great discussion thread among some of the least brain-dead posters on the planet. Get a B-12 shot or something and please stay online!
[…] may be dumb but they aren’t stupid, here. Cringely argues that Intel is going to miss on mobile and cloud […]
Bob you made a similar observation years ago about Bill Gates, that when he criticizes a company, talks down their product quality, etc., it means he feels threatened. He did that with Google in general, and indirectly with Apple specifically on the iPad.
Good read. I guess it isn’t first time Intel does this?
The safer story would have been AMD divesting itself of its remaining share in Global Foundries! I guess it is old news.
The Seamicro story is arguably an older story, I think this started when AMD turned their pyramid upside-down (many years ago now). To explain: the broad base of the pyramid was their consumer desktop, middle was consumer laptop, and tippy top was commercial server, and at that time they serviced their customers in that order as well. But the highest profit was always the opposite, so AMD started an initiative to make commercial server the most important, consumer mobile next, and consumer desktop last.
At some point since that time it seems consumer desktop began trending downwards in volume (who knows how drastically that is happening) but I guess the new triad is commercial server, followed by consumer mobile be it laptop or tablet. My impression is that AMD doesn’t have much in the way of tablet wins, apart from the MSI windpad. Furthermore, my impression is that AMD isn’t doing so hot in any consumer space be it desktop or mobile; nor enterprise for that matter.
But their video card business has done better than nVidia for awhile!
You may have to reconsider your headline in light of Intel’s recent announcement that they are going to get into pay TV business:
http://online.wsj.com/article/SB10001424052702304450004577277732222512596.html
Are they NUTS!
As usual Bob has some really valuable insights on this.
I think Intel has some new ;ow power Atom multicore 64bit VT offerings in the wings. A couple of years ago I went to an Intel vendor conference and was given “silly” answers on why Intel didn’t offer these for netbooks at the time.
x86 still has some time to run but it might be a restricting factor for Intel.
Android on Atom can deliver.
In my whole technical life spanning 32 years I have not seen a company with bigger NIH and hubris than Intel. And yes, they will pay for it dearly.
I agree. Intel will HAVE TO buy Qualcomm.
I agree. Microsoft has to buy Nokia and/or RIM or both depending on circumstances.
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