In the server market, proprietary RISC architectures such as IBM's (NYSE: IBM) POWER and Oracle's (NYSE: ORCL) SPARC have seen significant market share erosion as the world has moved from high-end, proprietary systems to commodity X86 systems. While the chips from IBM and Oracle are certainly formidable for their specific niches, Intel's breadth and depth of offerings for a wide variety of datacenter workloads has been – quite frankly – unmatched. Unfortunately for IBM, Intel's (NASDAQ: INTC) next big server chip – Ivy Bridge-EX – is likely to move further into IBM's POWER territory.

IBM's POWER – a magnificent engineering feat
While not all investors are CPU nerds, it doesn't take much to convince most that IBM's POWER chips – and in particular, IBM's upcoming POWER 8 – are pretty beastly feats of engineering goodness:

(Source: IBM)

In terms of raw performance per core and per chip, thanks to some pretty beefy designs as well as a rather liberal thermal envelope, IBM's POWER 8 – when it shows up in systems likely later this year – is set to be a performance beast. This makes sense, particularly given how strong the current generation POWER 7+ chips are in a number of industry-standard benchmarks such as SPEC and given the rather substantial improvements that IBM has put into POWER 8.

Unfortunately, the hardware story looks bad for IBM
In IBM's earnings report, the company had some pretty ugly numbers to report across the board in hardware. Total systems revenue declined by 25%, with System z taking a 37% hit, POWER systems declining 31% and System x (Intel-based) dropping 16% (all year-over-year). This isn't a pretty picture by any means, although the relative rates of decline tend to suggest that POWER is losing the architecture battle against Intel's X86 (as the declines here were substantially narrower than the POWER based systems).

Further, another big hint that POWER may not be doing so well is that IBM has been very keen to license its POWER 8 micro-architecture to anybody willing to take the IP. On top of that, in addition to licensing out POWER, the company has actually taken ARM (NASDAQ: ARMH) processor licenses itself for some of its lower-end network routers, switches, and base-stations rather than try to develop more apropos POWER instruction set based IP for its custom chip clients.

Intel's Ivy Bridge-EX likely to further erode high end POWER sales
As Intel has gained more share of the server market, it has moved further up the value chain with specialized chips based on its high-end PC cores (so there's a lot of design leverage here vis-à-vis the cores, although the rest of the chip is custom). Interestingly enough, Intel's last X86 chip launch intended to go directly against IBM's POWER – known as Westmere-EX – was launched back in 2011. This year, the company finally goes ahead and refreshes this part with Ivy Bridge-EX.

(Source: Intel)

This will be a 15-core chip (a 50% increase from Westmere-EX's 10-core configuration), sport a much improved cache structure, faster memory support, improved cores, and will be built on the company's 22-nanometer process (which allows for more performance and more densely packed logic elements). All in all, it should be a significant step up from the old parts which, in themselves, were good enough on a performance per dollar and performance per watt basis to take share against the formidable POWER 7 chips. Intel is likely to gain further share with its big-iron focused X86 parts at IBM's expense.

Foolish bottom line
Intel's share gain story across the datacenter is pretty clear at this point and, barring some epic screw-up on Intel's part, the momentum on Intel's part should continue as the company continues to push on its manufacturing lead as well as its increasing architecture prowess across the compute continuum. Does this mean that IBM is done for? Of course not – the company 's bread and butter is software and services. But POWER's weakening position as well as IBM's sale of its System x to Lenovo means that IBM's days as a big iron hardware powerhouse are likely to slowly wind to a close. 

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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel, International Business Machines, and Oracle.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.