Intel Throws a Curveball at ARM Holdings

Intel (Nasdaq: INTC  ) is at war with smaller chip architect ARM Holdings (Nasdaq: ARMH  ) . ARM absolutely dominates mobile computing with a crushing market share in smartphones and tablet computers, but Intel's mastery of desktops, laptops, and server systems is really only challenged by Advanced Micro Devices (NYSE: AMD  ) -- and even so, AMD is a minor threat at best.

Neither Intel nor ARM is satisfied with this state of affairs. Intel has improved its Atom line of mobile chips to the point where they make sense in smartphones, hoping to steal a march on ARM in that arena. On the other hand, rumor has it that ARM's mobile chips would make terrific building blocks for server systems, and that Intel and AMD should watch their backs for incoming knives in that market.

But this week, this rivalry gained another wrinkle: Hewlett-Packard (NYSE: HPQ  ) just announced a new line of servers powered by Intel'smobile chips. The move had been foreshadowed, but now it's set in stone.

You'll find Atom processors inside the Gemini product line, which is HP's brand-new "extreme low-energy server" lineup. The machines will be available by the end of the year, and extends the Project Moonshot initiative. HP has already announced ARM-based servers under the Moonshot umbrella, though that server line under the Redstone moniker also left the door open for "Atom-based processors as well as others" down the road.

I don't expect ARM to complete the set of possible combinations by developing a server-oriented chip and cramming it into smartphones. But at this point, nothing will surprise me anymore. Add Intel, ARM, and AMD to your Foolish Watchlist to keep a closer eye on the processor wars. Big-iron servers and nimble mobile-computing platforms go hand in hand to turn the IT industry on its head, and whoever gains a strong foothold in both of these revolutions will delight their investors for years to come. Read more about it in our special free report: "The Next Trillion Dollar Revolution."