Thu, Nov 29, 2018 - Page 10 News List

Amazon challenges Intel on price with Graviton processor

Bloomberg

Amazon.com Inc has taken a big step toward reducing reliance on Intel Corp for a critical component of its cloud-computing service.

The largest cloud company late on Monday unveiled its own server processors and said the Graviton chips would support new versions of its main EC2 cloud-computing service.

Until now, Amazon — and other big cloud operators — had almost exclusively used Intel Xeon chips.

Other attempts have failed to loosen Intel’s mighty grip on the server chip market. However, Amazon is using a discounting strategy that has helped it win customers time and time again.

The Graviton-backed cloud service is available at “significantly lower cost” than existing offerings run on Intel processors, Amazon said.

Wells Fargo & Co analyst Aaron Rakers estimated that the new service would be up to 45 percent cheaper than the equivalent offering based on Intel chips.

“This will add another competitive question on Intel’s positioning within AWS [Amazon Web Services Inc] cloud,” he wrote in a research note on Tuesday.

It is the second time this month that Amazon has taken a swing at Intel’s server chip business.

The cloud provider on Nov. 6 said that it was offering services based on computers that use Advanced Micro Devices Inc (AMD) processors.

That marked a breakthrough for AMD’s efforts to compete against Intel.

Amazon still expects Intel to be the major provider of chips for its cloud servers and high-end computing, Amazon Web Services vice president Matt Garman said.

However, it decided to spend the money on creating its own designs, because it saw a use case for rival technology and has the scale to make it worthwhile, he added.

“We absolutely want to differentiate ourselves and meet any and all use cases that our customers come up with,” Garman said in an interview.

Intel processors run more than 98 percent of the world’s servers and owners of massive data centers such as Amazon, Microsoft Corp and Google have become some of its biggest customers.

While these Internet giants have driven down the price of most components by doing a lot of their own engineering, Intel’s Xeon chips have resisted that pressure. The average selling price of these processors has risen over time, something that almost never happens in the electronics industry.

Analysts have speculated for years that these cloud companies would use their large research and development budgets and increasing technical abilities to find alternatives to Intel chips.

They have come up with specific-use chips of their own, but Amazon’s Graviton is the first example of a major player using its own gear to replace a set of cloud workloads normally handled by an Intel Xeon processor.

Amazon is using its 2015 acquisition of start-up Annapurna Labs to design its own chips. The new processor uses technology from Softbank Group Corp unit ARM Holdings PLC, a standard that dominates in mobile phones.

Graviton can run Web services and other applications that are less intensive and perform well when many servers work together on the same task, Amazon said.

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