Qualcomm Server chip: A repeat of Intel mobile chip?

Wen/Sun Yongjie recently, Qualcomm at its annual investor meeting gave the company the next five years of revenue growth targets. Prospects for future growth are slightly bleaker as China faces antitrust investigations and many other emerging markets are more likely to buy cheaper smartphone products. Indeed, Qualcomm's total revenue in fiscal year 2014 grew by just 6.5%, significantly below the average growth rate of 30% in recent years. To this end, analysts expect Qualcomm's revenue growth in the 2015 fiscal year to be around 5%. Perhaps it is the dim prospect of a mobile chip market based on Qualcomm's core business, and at the investor meeting, Qualcomm CEO Steve Morenkopov said Qualcomm is developing low-power chips for the data center market that has been monopolized by Intel. That Qualcomm will enter the future of the server chip market. The remark, which immediately sparked a backlash in the industry, appeared to be a strong competitor to the sector, as Intel announced it would enter the mobile chip market, represented by Qualcomm's smartphone and tablet computers. History seems to have always been strikingly similar and recurring and full of coincidences. Just days before Qualcomm announced its future access to the server chip market, Intel announced the merger of its independent mobile chip division with the PC sector. Although Intel's official explanation for this is that the future of mobile devices and PCs will continue to be integrated (shape and function, etc.) and increasingly blurred boundaries, so sector consolidation is in line with industry development trends, But given the sharp contrast between the huge losses of the Intel Mobile chip division in the past two years and the meagre revenue (not to mention profits) of the 7 billion trillion dollars, we believe that the merger of the two departments, specifically the cancellation of the mobile chip sector, is a helpless move by Intel to gloss over Wall Street in the future as it hides its mobile-chip business. Since the merger, the industry will not be able to accurately understand the Intel mobile chip shipments and revenue and profits, to continue to lose money in the mobile chip market accounted for the market, and can also be at the appropriate time to give up in the mobile chip market contention, before they can be returned. This is probably the true purpose of the two departments that Intel merges. In short, the cause of intel in the mobile chip market is not good, far more than the loss. So the question is, will Qualcomm's access to Intel's dominant server chip market be a repeat of Intel's move to the core segment of the mobile chip market? In fact, as an industry boss, always at a certain time to think of course that you can easily across the boundaries of their own advantage in the industry in the natural extension to another industry or market (although the market space and prospects are broad), it ignores the difference between two industries, including the shape, or even the same industry. For example, traditional PC and server-represented chips and mobile chips, represented by smartphones and tablets, in spite of the large category of chip industry, but different structure, different product shape, different user needs, different industrial ecology and competitive environment, and so many different, in fact, at the beginning of entry is doomedThis factory chamber of Commerce more or less exists to enter the industry understanding of the misunderstanding, and this misunderstanding is sometimes fatal. This deadly embodiment of the bad fill after entry (including money, people, marketing, and so on, to see Intel in the mobile chip market in the past), but few gains (whether market share, revenue or profit). Specifically to Qualcomm's access to the server chip market, only from a technical and ecosystem point of view, the Intel X86 architecture is the foundation, and the foundation of the ecosystem is also around the X86 architecture. So if Qualcomm is going to enter, the impact and establishment of ecosystems is a very difficult and long-term process. This is in the same situation that Intel was in the mobile chip market, and it was not until a few days ago that the mobile chip division merged with the PC department, and it took years and more than 10 billion of dollars to make no real difference. This is also a reminder to Qualcomm, access to the server chip market, especially in the initial hit money is inevitable. But from current Qualcomm and Intel's revenue and profit comparisons, it is clear that Qualcomm is far less capable of smashing money than Intel. The latest quarterly earnings show high Qualcomm revenues of $6.81 billion trillion, with a net profit of $2.24 billion, compared with Intel's revenue of $14.6 billion and a net profit of $3.32 billion (after it has lost 1 billion dollars). The difference between the two is obvious. More crucially, a substantial share of the revenue and profits from its patent licensing in the mobile chip market, and once into the server chip market, these so-called revenue-generating business model will fail. But, as people often say, money is not omnipotent, so there are insiders will say, Qualcomm based on the AMR architecture chip power consumption, cost advantages, the problem is the same, the original Intel vowed to enter the mobile chip market, but also its chip performance as a different from the ARM architecture chip selling point, While the performance of smartphones and tablet chips is indeed on the rise, Intel does not seem to have found a foothold in the mobile-chip market, even in a huge, almost white way, to reverse the embarrassment. What exactly is the problem? As mentioned above, the difference between market and user demand, industrial ecosystem and so on. This determines that the advantages of manufacturers in this area is not necessarily the advantage of the field, the user needs in this area is not necessarily the user needs in that area. Industry knows that in the server chip market, performance and solutions are the most valued by the market and users, and Qualcomm's advantage lies in the low power consumption and high integration of the chip. As for the so-called cost advantage, it needs to be explained that, because the current server (data center) market, most companies are using the Intel X86 architecture chip, if the enterprise to adopt the ARM architecture of the server, not only need to invest in new server components, but also to invest in Port application architecture, This will make the use of ARM architecture chip server cost advantage greatly compromised. Amazon Web Services, which has some of the world's largest data centers,James Hamilton, vice president of Ervices,aws, said at a recent meeting of the Amazon AWS conference that many of the data center operators of their own manufacturing servers needed more efficient components (energy efficiency ratios) rather than just price declines. In fact, some server customers with the ARM architecture have had to pay more. In addition, from the development trend of the server industry, it is not a simple chip competition, but based on the whole platform of chip construction and optimization. For example, Intel's recently proposed software definition infrastructure represents this trend. That is to say, from the innovation and trends of the server chip industry, Intel and Qualcomm are not at all at one level. This is why Amazon has been rumored to use ARM architecture chips to build its own servers and data centers, but Amazon has always adhered to the root cause of the X86 architecture. According to Hamilton, chip makers using arm technology are not keeping pace with Intel, so Amazon is not ready to replace its server's chip suppliers. And since the end of last year, the collapse of the arm server maker Pioneer Calxeda and earlier this year, Nvidia and Samsung have given up the development of the ARM architecture server chip, all show that the ARM architecture chip has missed the best chance to enter the server market. Finally, from the mobile chip market where Qualcomm is currently located, Qualcomm is still in a leading position, but is much more competitive than the server chip market in which Intel is entering. If nothing else, there is at least a chase at MediaTek. and the server chip market before the rival AMD was already defeated by Intel to the arm camp, but until today, also did not see its in the server market has any substantial bright eye performance. The so-called resisting must be in the first, in this sense, Qualcomm's commitment to the server chip market and the fear that the "backyard" could catch fire is much bigger than Intel's foray into the mobile chip market, which also determines that the future will be hard to sustain, even if Qualcomm wants to gamble as much as Intel did in the mobile chip market. In combination with the above analysis, we believe that Qualcomm to enter the server chip market is not appropriate, and from Intel into the mobile chip market in the external environment, industry trends in a variety of comparisons, Qualcomm Cross-border server chips will undoubtedly be Intel's foray into the mobile chip market repeat.