AMD made a potentially game-changing move by acquiring SeaMicro
AMD’s $334 million purchase of microserver vendor SeaMicro threatens to disrupt the status quo in the server market. Look for AMD to be aggressive with microservers as it tries to upset Intel’s near-monopolistic apple cart.
Late last week, Advanced Micro Devices (AMD) announced its intent to purchase leading microserver start-up SeaMicro for $334 million, about $280 million of which will be cash. This acquisition is the first big move for AMD’s new CEO, Rory Read, and it’s a good one as it makes AMD a bona fide provider of data center and cloud computing servers. I like the move because it provides a strong platform to help AMD compete as the server market transitions into its next generation.
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If you’re not familiar with SeaMicro, the company offers “microservers,” which are small, dense systems that use 64-bit, dual-core, Intel Atom or Xeon processors. Four sockets/servers with 4 Gig of RAM are placed on three-inch-by-two-inch boards. SeaMicro then takes 32 of these boards and stitches them together to make up the system. The SM10K is a 10 U box with a total of 512 cores and a terabyte of RAM. The stitching together is the SeaMicro “special sauce” as the company has created an ASIC and proprietary interconnect fabric to tie those components together. The result is an incredibly high-performing server ideal for workloads like Web and cloud applications that use less than a quarter of the power and footprint of legacy servers.
While the technology itself is very cool, what made SeaMicro so appealing to AMD, and should have made it more appealing to Intel, was the ability of SeaMicro’s server to work with any processor. AMD can simply remove the Intel chips and replace them with its own 16 core Opteron processors. This has the potential to be huge for AMD as it enters the massive multi-core server market.
AMD has made it perfectly clear that it has no intention of competing with its partners for the server business, such as Dell and HP, but instead will use the SeaMicro technology as a way of furthering its relationship with mainstream server vendors. AMD has a strong desire to grow its share from mid-single digits to double digits and SeaMicro could help it accomplish that. I’ve always felt that significant share gain can only happen when there is a technology transition underway and the market leader either refuses to change or has taken its eye off the ball. By letting AMD scoop up SeaMicro, and from other conversations I’ve had with industry insiders, I think it’s fair to say that Intel is still mired in legacy computing and either refuses to see the growth of microservers. Or, those at Intel just have their hands over their ears and are yelling “I CAN’T HEAR YOU.”
The acquisition of SeaMicro might motivate Intel to buy Calxeda, the other microserver vendor of equivalent class. However, SeaMicro’s ability to move between different processors makes it a much more flexible and potentially powerful server than what Calxeda could deliver.
So kudos to AMD for recognizing the benefits of paying up for SeaMicro. And for Intel, it’s time to start taking the microserver market seriously.
