Why HP's Moonshot Can't Kill Intel

Intel (NASDAQ: INTC  ) investors have worried about mobile chips making inroads into the server market. Now they're coming -- and it's not the end of the world after all.

Mobile processors have a lot in common with modern server chips. In both cases, power efficiency often matters more than raw performance. For smartphones, that means longer battery life on the supercomputer in your pocket. For servers, it's all about the data center's power and cooling bills. Thousands of less powerful but highly efficient chips can get more done than hundreds of monolithic powerhouses.

So when Hewlett-Packard (NYSE: HPQ  ) unveiled its long-awaited Moonshot server systems yesterday, Intel stockholders were on pins and needles. The Moonshot project has been rumored to use ARM  (NASDAQ: ARMH  ) chips made by privately held Calxeda. Will this be the first foot in the data center door for ARM and its legion of chip-building allies? Is this the end of Intel's hegemony in the server space, a fading Advanced Micro Devices (NYSE: AMD  ) notwithstanding?

Sliding another server into the 45+system Moonshot chassis.

Not exactly. Sure, HP will offer Calxeda-based systems later on. AMD will also make an appearance, using its highly integrated combinations of central processing cores and number-crunching graphics units. But you know who's first in line?

That would be Intel.

"The first HP ProLiant Moonshot Server is available today with the Intel Atom Processor S1260," says HP's website (emphasis mine). By the way, its site is already powered by Moonshot servers, handling an average of 3 million hits per day using no more power than 12 60-watt lightbulbs. No mean feat, I'd say.

HP claims that replacing traditional servers with equally powerful Moonshot systems can save you up to 89% in energy costs, take 80% less floor space, and cost 77% less. These numbers are "based on HP internal analysis," with no further discussion of the assumptions used. Your mileage may vary. Still, delivering results in that ballpark is an impressive feat that shows how efficient these mobile products can be when bunched together by the hundreds.

So the mobile revolution in the data center is under way. Intel is not only along for the ride, but is riding shotgun next to the first big-name driver.

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.


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