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Intel and the Nehalem bump

From credit crunch to cloud crash

Why the lag?

The amazing thing is that server buyers take so long to move to the new technology. Otellini said in the call that "well over half" of the Xeon processors sold in the September quarter were Nehalem 3400 (a reworked Core i7 chip for cheap servers) as well as Xeon 3500 and 5500 varieties. (You would think it would be higher, given the performance and other advantages of the Nehalem architecture).

And when asked if Xeon MP sales were up or down in the quarter, Otellini apologized and said he didn't have the relative sequential growth number in his head. Xeon MPs are the ones for four-socket and larger servers, with the four-core and six-core "Dunnington" 7400s being the latest-greatest chips - and the ones based on the old frontside bus architecture rather than the QuickPath Interconnect used in the Nehalem family.

Otellini said that over the past five years or so, the PC and server businesses have wiggled a bit in terms of driving revenues - not exactly a nod to Advanced Micro Devices, which took some share with the Opterons a few years back in 2006 and 2007 - but that in general, there is not a big shift. But that could change - and in favor of Intel's server chip biz - depending on how the economy shifts buying habits.

"The thing that could change that dramatically is if in coming out of this recession, the Internet data centers start deploying and move toward some of the cloud-based servers," Otellini said. "That could drive pretty healthy demand for rack-mounted servers and blade servers for a while."

Of course, what happens when all the old Xeons are compressed down by a factor of nine to new ones? Or companies boost utilization further by going to shared servers on cloud infrastructure?

A crash is what happens. That is what. But in the meantime, Intel needs to make the money it can selling whatever it can. If there is a virtualization crunch and a cloud crash, that will probably be Sean Maloney's problem, not Otellini's. Maybe Pat Gelsinger, who was the obvious choice to replace Otellini in a few years, left because storage looks like it will just keep on roaring, even with its own virtualization effect? ®

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