Qualcomm Fires Two Shots at Intel

Announces the Centriq 2400 Processor and Support for Windows 10 on ARM

It has been an important month for Qualcomm as it continued its diversification and focused its sights firmly on Intel territory. With Intel accounting for almost the entire server market, Qualcomm’s launch of the ARM-based Centriq 2400 chip is a bold move. The ARM architecture has been behind a flurry of efforts to break Intel’s stranglehold but the company from Santa Clara has batted off the competition, with its Data Center business becoming Intel’s growth driver in the process.

But Qualcomm’s entrance to the server market shouldn’t be disregarded as just another foray by ARM. The Centriq 2400 is the first server chip to adopt a leading-edge 10 nm process node and promises highly competitive performance per watt — an all-important measure of efficiency (further details are yet to be disclosed). The timing is also right. Server deployments are swiftly transitioning from on-premise to the cloud while the fortress of proprietary software has been broken wide open by developments in open-source.

This erosion of legacy barriers to entry results in growing appetite for diversity. Although Qualcomm’s entry will not lead to a sudden and dramatic erosion of Intel’s server business, it’s a further indication that the market is changing. Both commercial cloud providers and enterprise suppliers want diversity, meaning that the product mix is set to change from x86 Intel servers to a small but growing presence from ARM players and custom-designed silicon — in many cases based on ARM architecture — from the likes of Amazon, Facebook and Google.

Centriq places Qualcomm far from its mobile heritage. Nonetheless, it’s the company’s scale advantage in mobile that enables it to enter the market on a leading-edge node and, if performance meets expectations, the reason it stands to be successful where others have failed.

Conversely, Qualcomm’s mobile capability underpins Microsoft’s announcement that Windows 10 will be supported on the next generation of Snapdragon chips from 2017 (see Instant Insight: Microsoft Announces Windows 10 Update and New Surface Devices). Unlike the Centriq move, the market has been here before with Windows RT. However, the first attempt to support ARM chipsets fell short owing to a lack of support for legacy Win32 applications designed for x86 systems.

With that failure came some valuable lessons and Microsoft is relying on emulation to address the weaknesses of Windows RT. The success of Windows 10 on Snapdragon depends greatly on the quality of this emulation experience. If Microsoft can deliver and secure manufacturer support, the move stands a good chance of success. The proof will be in the pudding.

This would be a troubling scenario for Intel but a win for Qualcomm. Snapdragon-based systems would be lower-priced, which would conceivably erode Intel’s position in entry-level and mid-tier products resulting in pressure on average selling price and margins.

More concerning still for Intel is Microsoft’s positioning of Snapdragon systems as intrinsically mobile devices with embedded wide-area connectivity. This goes to the heart of Qualcomm’s DNA and it’s why Microsoft has looked to the San Diego company to further the transformation of Windows 10. In an age where connectivity is assumed, the PC industry needs to really embrace mobile data. The irony is that Intel has the necessary cellular modem assets and could have driven this development itself in the same way that it established integrated Wi-Fi with Centrino. Admittedly, it was a challenging business case given costs and limited appetite from operators, but Intel now finds itself deliberating a defensive measure rather than defining the opportunity.

Intel is fully accustomed to new entrants and claims of an end to its PC or server dominance. Moreover, the Centriq 2400 announcement will face headwinds. But Qualcomm’s scale and commitment is a reason for rivals to be respectful of the new competition. In the case for servers and Windows 10 PCs, the broader market has a vested interest in seeing ARM become successful.