Watch out, Intel (Nasdaq: INTC), because ARM Holdings (Nasdaq: ARMH) is stepping out of the mobile arena and into the realm of enterprise servers.
Yesterday, Hewlett-Packard (NYSE: HPQ) announced a new line of servers using ARM-based chips -- even though HP is currently the largest vendor of Intel-based servers, with Dell (Nasdaq: DELL) as another mainstream provider. There has long been talk of enterprise-grade servers adopting ARM architecture, but nothing has materialized -- until now. Enterprise server customers value three things: speed, price, and power efficiency. ARM-based chips deliver in spades on the latter two.
HP will be utilizing chips from a small chip shop based in Austin, Texas, called Calxeda. The company was founded in 2008 and includes ARM Holdings as one of its initial investors. The quad-core ARM-based chips are dubbed "EnergyCore" processors and consume as little as 1.5 watts of energy, the lowest power consumption seen in servers.
In comparison, Intel's rival Atom processor uses 8.5 watts; jumping up to a powerful Xeon server processor kicks consumption up to 45 watts. EnergyCore processors aren't built with raw horsepower, but they can run the vast majority of cloud tasks that heavyweights like Google (Nasdaq: GOOG) and Amazon.com (Nasdaq: AMZN) throw at it. The chips also run cooler because of reduced power consumption, allowing manufacturers to pack more of them into each system.
This is one of the few things HP has done lately that is actually strategically sound, unlike other recent events. This project is the first major stab at bringing ARM to the enterprise server market, and the first batch is meant primarily for testing purposes. Most server applications can't run as-is on ARM architecture, so some adjustments would be needed if the testing wows some prospective adopters.
HP is claiming potential energy savings of up to 89% while occupying 94% less space, which could reduce overall costs by upwards of 63%. Those are some tall orders to fill, but even getting in that ballpark would catch the eye of any IT department.
Speed is no longer the determining factor. Few users nowadays actually need the raw power that Intel's chips are renowned for. Rather, what counts is having sufficient speed to accomplish the majority of tasks but being able to do so efficiently and cheaply. This is why ARM has become the de facto standard in mobile devices and why it is also a credible threat to Intel and AMD (NYSE: AMD), even on their home turf.
Add ARM Holdings and Hewlett-Packard to your watchlist to keep tabs on how ARM-based servers work out. Get access to this free report on another revolutionary trend in the mobile sector and how to profit from it.
