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Wednesday, December 5, 2012

Intel\'s Schooling From the \'Big Four\' Cloud Customers

Intel prides itself on having some of the smartest engineers around. When it comes to the world's largest computing systems, however, the chip giant now takes a back seat to a certain kind of powerful new customer.

How giants like Facebook, Google, Microsoft and Amazon work with Intel could mean a lot for much of the rest of the technology industry. Their needs on things like computing power and energy consumption get a lot of attention from Intel, which expects many other companies to eventually build big systems of their own.

Diane Bryant, who runs Intel's data center group, would not identify Intel's Big Four, other than to say they were all American companies. It is most likely she meant Google, which leads in search; Facebook, the dominant social media company; Amazon, which has the biggest cloud rental business; and Microsoft, which uses the cloud for search and media services, as well as corporate computing. Put together, they represent a diverse array of needs, calling for different technology approaches.

“The Big Four operate at a very different beat rate, and they are very tech savvy, so they don't want a lot of input,” said Ms. Bryant. “They all get a dedicated salesperson, the same as the others in our Top 40 customers, but there is a lot more direct innovation from them, and a lot of sharing of ideas.”

Chinese companies like Tencent, Baidu, and Alibaba, she said, were building their own clouds quickly, she said. As costs drop, even more service providers are likely to join.

Ms. Bryant's Big Four have become active centers of innovation, product testing, and future engineering choices for some of Intel's most critical semiconductors. A server chip introduced to the general public last March, she noted, was first installed in three of the Big Four the preceding September because the customers were willing to sacrifice possible production kinks in order to have the latest chip.

“It was a new thing for us,” she said. In exchange, they provide Intel with a lot of early information about how the chip is performing.

The information is particularly useful as Intel strives to make its data center business recover some of the loss suffered in the collapse of the personal computer market. In the first nine months of 2012, Intel's PC client group had revenue of $25.8 billion, a drop of 2.25 percentage points from the first three quarters of the previous year. The data center business pulled in $7.9 billion, an increase of 6.7 percent. Ms. Bryant has told her bosses that she'll double annual revenue, to $20 billion, by 2016.

The intense relationship with Intel is not the only way that the cloud giants seek to influence the computer markets. Facebook builds its own computers, then challenges companies like Hewlett-Packard and Dell to meet or exceed its performance specifications. A chip announcement from Intel next Tuesday will feature executives from both Facebook and H.P.

Not all the cloud providers are so forthright at sharing information, as data on things like power utilization can yield competitive information to competitors. Google is known to have developed its own semiconductors, for example, but declines to patent the product. The methods cited in the patent might give too many clues about what Google is doing next.