MSFT Stock: Microsoft Takes Aim at Intel’s Server Dominance

The server market has just gotten a bit more competitive.

Microsoft MSFT stock - cloud server

Ever since we can remember, Intel (NASDAQ:INTC) seems like the only brand that comes to mind when it comes to server chips or PC processors. That may soon change, however.

As announced by Microsoft Corporation (NASDAQ:MSFT), its Azure cloud system may soon be running on servers built with ARM-designed processors. Apparently, they have developed a Windows OS version specifically designed to work with ARM processors.

Although the processors are not yet available to customers and Microsoft itself isn’t even actually running the processors yet, the chips are currently being tested for a variety of applications including big data analysis, machine learning, search and storage. If everything works out as hoped, Microsoft’s ‘gamble’ on these more power-efficient and less costly chips might pay off handsomely for them.

ARM is better known for their mobile processors. But since the company was purchased last year by Japanese Telecom and Internet firm SoftBank, it started working aggressively on more than just mobile phone chips. Among its new ventures are chips for supercomputing applications, IoT (Internet of Things) devices, and of course, the kind that can potentially challenge Intel’s domain — server chips.

While it is not yet entirely clear how extensively Microsoft intends to adopt ARM chips, vice president of Microsoft’s Azure cloud division Jason Zander says that they are making a ‘significant commitment’ to use ARM’s new silicon server chips. “We wouldn’t even bring something to a conference if we didn’t think this was a committed project and something that’s part of our road map,” he explained to Bloomberg.

Zander was obviously referring to the 2017 Open Compute Project U.S. Summit in Santa Clara, California. After being so used to all of their data centers running on Intel x86 processors, Microsoft ‘surprised’ everyone on opening day by demonstrating a Windows Server running on ARM processors.  The demonstration basically confirmed that Windows OS is no longer exclusive to Intel x86 chips. Now, Windows OS customers have a new option for running a Windows Server — ARM chips.

Microsoft worked with Qualcomm (NASDAQ:QCOM) and Cavium Inc (NASDAQ:CAVM), both of whom design motherboards that use ARM chips. Qualcomm has its Centriq 2400 processor (with 48 cores) while Cavium has its ThunderX2 ARMv8-A (with up to 54 cores). Both designs are based on Microsoft’s Project Olympus which was introduced last year as the company’s open source data center server design.

While Intel has clearly established a stronghold on the server front, and this isn’t really the first time that they are being challenged, it’s the first time that they may actually be threatened as chip makers have somehow caught on and are now showing signs of being seriously competitive.

Knowing Intel, they aren’t about to take the situation sitting down. Which means we may be seeing more improved processor chips in the near future as challengers and the reigning industry leader strive to outdo each other. And that will be good for us customers. After all, the effect of competition brings product quality as well as lower prices.

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