Companies such as HP are taking full advantage of ARM to market servers with reduced size and significant energy saving features.
A quick look at many of our recent articles on declining PC sales from Jan 2013 – Mar 2013 (even just on Microsoft alone) and just about anyone can clearly see that there’s a major dilemma for consumer PC manufacturers. Business (PC) server sales have actually been somewhat problematic for computer makers as well though.
Business servers only accounted for about 2% of all servers sold in 2011, but with the current decline in consumer PC sales, the server sale has now grown in unmatched importance for computer makers. Companies such as Dell and HP have been hit hard by these changing times as companies now use cloud computing options from companies such as Amazon for a number of purposes, or if they do house their own servers nearly all companies today use some form of virtualization software by companies such as VMWare, in order to combine what 4 or 5 or 6 physical servers use to do, now into a single server. Luckily though for server makers, the corporate world is actually the last inescapable area where (PC) servers must be purchased due to the need for the speed and power they possess, and therefore corporations are still very valued customers among companies such as HP and Dell. One of the major problems for such companies though was that over the years they sold faster and faster servers to their customers. So much so that today most companies have more than enough power to handle everything they need to do and are in no way in need of as many servers as they once were. So how you sell servers to people that already have servers with more than enough power than they already need? Well, you can focus on selling them servers with sufficient speed that can save them money.
Back in September of last year in the article, “Why Red Hat, Canonical and Others Have Recently Taken an Interest in ARM” we discussed the evolution of servers and why ARM processors were now in place and ready to supplant the long lived Intel processor era. In the article it was said that, “cloud computers do not need to possess super-computer speed, companies such as Dell and other big names have recently made licensing agreements to distribute ARM-based hardware, something the x86 crowd never would have imagined.” HP is one of those other companies and this coming Monday HP will to introduce their latest ARM server development, Moonshot.
HP says that by using their Project Moonshot infrastructure, a nearly 3,000 server rack can expect to:
* Expend 89% less energy
* Take up 94% less space than current hardware
* And cost about 63% less than current installation costs
With continual savings on energy though it may be an expedient cost saving option for server farms and locations that host hundred (and thousands) of servers, but whether or not this will entice current corporations to fork out the “63% less” installation costs needed to purchase these new servers (when they really don’t need new servers) of course remains to be seen.
Even still, financial analysts aren’t betting on it. A couple of days ago Goldman Sachs gave HP a target price of $16/share. That’s nearly $5 down from it’s current $21/share price. To top off the the bearish outlook on the stock, Goldman Sachs also reduced the stock to a Sell rating.