Taking Advantage of a Colossal Market
The technology industry talks a lot about scale. Whether it’s the importance of the network effect, economies of scale in component sourcing, the number of customers or the size of the addressable market, scale is often cited as a prerequisite for success. The same applied at Qualcomm’s recent launch of its Centriq 2400 server chip. Scale in the mobile arena is the asset that Qualcomm hopes will help it differentiate in a market becoming increasingly segmented by workloads that must balance price, performance and power consumption.
Mobile scale is unique. There’s no other consumer gadget as successful or as ubiquitous as the mobile phone. Shipments this year will reach 1.97 billion, 1.51 billion of them smartphones. This has created huge opportunities for the industry itself and those riding on its success. The combination of mobile scale and platforms, open APIs, accessible cloud computing and centralized marketplaces has transformed industries and created new ones. Square, Uber, Airbnb and an endless list of other companies exist because of the combination of mobile platforms, micro-services and cloud computing. These attributes give start-ups instant scale.
It also means that the design and supply of hardware components have benefited from the rise of the smartphone. For example, ARM has seen its designs in more than 100 billion chips over the past 25 years, with half of them produced in the past four years. The next 100 billion are expected to take another four years. The mobile phone has generated tremendous growth and scale that are now being extended to other sectors.
Among those sectors, the Internet of things has obvious needs for low-power computing and connectivity. Some devices can borrow almost directly from the innards of a smartphone. For example, a drone shares many of the same components and specifications as a phone. The area is a natural fit and an obvious extension for those coming from the mobile market. “Distributed computing” and “edge compute” have become the buzz phrases of 2017, but the smartphone was an early incarnation of the concepts. What is fascinating is how smartphone scale is now affecting the cloud and data centre.
Qualcomm’s Centriq 2400 server chip is a good example. On paper, the company faces a daunting task as a newcomer to a server market dominated by Intel and where low power has traditionally counted for little. But times are changing in the data centre, opening the door for Qualcomm and ARM to provide some competition for x86 silicon.
The move from on-premises equipment to a cloud environment means scalability and portability have become essential. With Qualcomm focusing on the balance of price, performance and power consumption, it is seeking to redefine expectations of performance and running costs. CloudFlare, which is working with Qualcomm on its server products, stated that tests point to a 50 percent reduction in its power bill using Centriq 2400.
Mobile scale is central to Qualcomm’s server differentiation. Centriq is the first server chip to use a 10 nm process node. With smartphones pushing the limits of process technologies and accelerating the shift to smaller geometries, Qualcomm argues that it’s mobile scale that gives it a unique advantage against Intel. It is this which enables Qualcomm to compete on cost and power efficiency.
Qualcomm won’t displace Intel in the data centre any time soon, but in a market becoming more and more segmented by workloads, Qualcomm could build a healthy position without the need to top the market share table. Mobile scale continues to affect markets well beyond the smartphone industry. While several companies are disrupting from the cloud and out toward the network edge, Qualcomm is using mobile scale to do it in reverse.
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