Intel To Ride ‘Cloud’ Wave Despite Server Slump, Says Barclays
August 25, 2011
Barclays Capital’s Ben Reitzes today writes that server sales based on Intel’s (INTC) “x86″ chip architecture will be “more subdued” this latter half of the year as a consequence weakening demand in the financial services and public sectors, but that the fallout won’t be bad for Intel because it can still ride the wave of “cloud computing.”…
Reitzes now models x86 server unit growth of 3%, year over year, for the full year 2011, down from a prior 7% estimate. His estimate for 2012 goes to 1% growth from a prior 2% estimate. Growth will again be 1% in 2013 before falling 3% and 4% in 2014 and 2015, respectively.
However, Intel will still get a boost in server chip sales, given that the move to “virtualization” of data centers and home-brew server farms, part of the cloud computing model, will generate discrete chip sales separate from actual finished server sales:
We believe the server market is likely to see continued unit growth pressure despite some support from emerging markets due to pressures from virtualization and its by-product, Cloud Computing. In addition, while cloud providers will be large consumers of server technology, the move toward self-made servers (Google (GOOG) in particular) counts as a component purchase – not a server purchase – so it is not counted for in this data set and will also mute our y/y growth rates. The important ramification of this trend is that x86 server vendors are negatively impacted, while Intel still gets the component revenue.