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Intel Aims to Compete with Itself to Drive Growth

By Sean Michael Kerner (Send Email)
Posted July 21, 2016

As the world's largest chip vendor, Intel has no shortage of competition, and one of those competitors according to CEO Brian Krzanich is none other than Intel itself.

Intel reported its second quarter fiscal 2016 financial results on July 20, with revenue of $13.5 billion, for Intel CPUsa three percent year-over-year gain. Net income came in at $1.3 billion, with an earnings per share of 27 cents.

Looking forward, Intel provided third quarter guidance for the midpoint revenue range of $14.9 billion.

Looking at specific Intel business units, the Client Computing Group, which builds chips that end up in consumer PCs, had revenue of $7.3 billion for a three percent year-over-year decline.

The Data Center Group had revenue going the other way, reporting $4.0 billion for the second quarter, up five percent year-over-year.

Demand for Performance Drives Growth in the Data Center

"In the data center, we're seeing an ongoing preference for performance up and down the pricing stack," Intel CEO Brian Krzanich said on his company's earnings call. "Average selling prices increased year over year in every microprocessor product segment from Atom and Xeon D SOCs at the low end, up through Xeon and Xeon Phi at the high end."

Krzanich added that progress in the data center extended beyond Intel's CPU product lines. Among the other products is the Xeon Phi accelerator, formerly known as Knights Landing,

"Xeon Phi revenue grew 8x in the first six months of this year versus all of 2015, gaining share in the supercomputing and machine learning segments," Krzanich said.

Another area of data center growth is coming from Intel's Omni-Path high-performance computing fabric. Krzanich noted that in June's Top 500 Supercomputing list, Omni-Path was deployed in half of the new 100-Gig systems.

Looking forward in the data center and the enterprise, Krzanich said that Intel is ramping up production of its Broadwell E server chips in the second half of the year, and he expects strong demand. While cloud continues to expand, Krzanich emphasized that it's an opportunity for Intel as increasing numbers of systems are needed to both power and connect to the cloud.

During the earnings call, Krzanich was specifically asked about competition, to which he responded with an articulate reply.

"As far as competition, there's always going to be competition in this market. I expect it. That's okay," Krzanich said.

Among the primary competitors though is none other then Intel itself. Krzanich said Intel thinks of itself as competition and has a business model to drive continuous improvement of products that enables Intel to replace its own products with better cost-per-performance models over time.

"So we know that even if there was no [outside] competition, the competition is we've got to build a product that's better and drives replacement as well as growth," Krzanich said.

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist

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