Yesterday Intel launched its 3rd Gen Xeon Scalable datacenter processor. While the part was much later than expected as it relies on 10nm tech, Intel still holds a commanding 90% server unit processor share. This is an impressive feat given the ferocious competition from AMD and home-grown alternatives from the likes of AWS.
Intel’s incredibly high market share should indicate that the company is bringing value to the table that often gets overlooked, discounted, and misunderstood. I spent over 15 years working at systems and processor companies, and I’m not surprised at Intel’s pole position at all.
I’d like to lay out the news and provide some analysis around it.
Per Intel’s press release, the company announced:
- 3rd Gen Intel Xeon Scalable processors with integrated AI (”1.5X faster than AMD” and “1.3X faster than NVIDIA”) and cryptographic acceleration, memory encryption, and SGX security technology. Formerly known as “Ice Lake,” the processors are fabbed on a 10nm process and are focused on cloud, HPC, networking (N-SKUs), and edge environments delivering “2.65X more performance” than a 5-year-old Xeon.
- Support for the Intel Optane 200 Series persistent memory and P5800X and D5-P5316 SSD storage, Ethernet 800 adapters, the latest Agilex FPGAs, and optimized software solutions.
- It has already shipped more than 200,000 units for revenue in Q1 2021 with “broad industry adoption across all market segments,” including top CSPs, over 250 design wins across 50 unique ODM and OEMs, over 15 telco equipment manufacturers and comms service providers, and over 20 HPC labs and HPCaaS wins
While I want to jump right into the tech and performance of the new chip itself, I’m not, as I think that’s missing the bigger point of this launch and why many companies still choose Intel.
With that said, I believe for this round, AMD will likely win most non-accelerated workloads, and Intel will win all accelerated workloads using AVX512 and DL-Boost and those workloads leveraging platform adders like Agilex FPGAs and Optane persistent memory. Early reads from AnandTech and ServeTheHome give an early, non-accelerated performance comparison, and you can see for yourself. I will be closely monitoring this space as more thorough application-based workloads are run and reported.
Ways Intel Wins
No slide better told the “why Intel continues to win” story than the one below used in the pre-briefs.
This slide points out wins when Intel competes on a platform, acceleration, solutions, and partnership basis.
Having talked to many CSPs and F500 enterprises, this nails some of the value Intel brings to the table with its datacenter solutions. Native, non-accelerated performance and pricing is important, but if it meant “everything,” wouldn’t AMD have higher than 10% market share at this point? At this same juncture with Opteron, I believe the company had a 26% market share, a marked difference from its current 10% share.
What’s not on this slide that should be, but isn’t that sexy and which Intel likely doesn’t want to highlight are the following variables:
- Salespeople: Intel has 100s if not thousands of salespeople who call directly on end enterprises. This makes a huge difference and some of these relationships are 25 years old.
- Design funding: Intel funds OEM and ODM designs reducing customer R&D costs.
- Marketing funding: Intel spends over a billion dollars a year on marketing and co-marketing with its ecosystems, reducing opex and driving sales. Looks who foots the bill at what seems like every meaningful datacenter conference in Vegas. Customers are addicted to this and can’t get off of it.
- Enterprise conservatism: Enterprise customers have always been conservative, and their motto is “if it’s not broken, why fix it.” IT rarely gets “hero” status for doing anything heroic and is more times than not looked at as the “zero” if something goes wrong. Many IT folks figure that there will be challenges moving to another vendor, and when it comes to things like live migration, they’re more right than wrong.
- OEM and CSP passivity: OEMs and CSPs want to be friends with both AMD and Intel long-term and aren’t publicly going to support or push one vendor over the other. This really leaves it up to Intel and AMD to make the case of preference. Intel spends a lot on marketing and has a gigantic salesforce. AMD doesn’t spend a lot on marketing and has a much smaller salesforce. This isn’t as important as with CSPs, but it matters a lot with enterprise customers.
Intel put its best foot forward with its Gen 3 Xeon launch. The company is the incumbent with 90% server market share and is optimizing for a platform, accelerated workload performance, is bringing more complete solutions to the table, and I believe will have advantages when it comes to design, sales, and marketing resources. This will be balanced against what I believe will be AMD advantages on raw performance in most datacenter workloads.
My channel checks indicate this value prop will be enough to stem the rate of share loss to AMD but not eliminate it. I’m very much looking forward to Sapphire Rapids as it will likely narrow the raw performance gap.
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