The ARM server market is a dangerous place to be: Right now there's virtually no money to be made. Some ARM server chip makers have quit or shut down, while others hold on to the hope that the market will some day be viable.
Qualcomm, which was late entering the market for server chips based on the ARM architecture, has been patient. The company doesn't want to prematurely release server chips only to see them fail to catch on, said Derek Aberle, president of Qualcomm, during a speech at the company's investor meeting on Thursday.
Qualcomm entered the ARM server market in October with a 24-core chip, and the late entry now looks like a smart decision considering that other ARM server chip makers have struggled. Qualcomm is targeting the server processor at cloud providers like Facebook, Google and Amazon, which build servers in-house.
ARM servers are attracting interest because they offer a combination of processing capabilities, attractive prices and power efficiency. But Intel rules the server market, and the slow adoption of ARM servers has hurt other chip makers.
ARM server pioneer Calxeda closed after it ran out of cash, and Samsung shut down its server chip effort after seeing the market was not taking off. AMD earlier this year started shipping its Opteron A1100 chip, code-named Seattle, but has scaled down its expectations for the chip, noting that users are still experimenting with it. Other ARM server chip makers include AppliedMicro and Cavium.
There are problems involved with entering a market too early, and Qualcomm didn't want to find out it had a dud product on its hands, said Nathan Brookwood, principal analyst at Insight 64.
Qualcomm has had a chance to observe the mistakes made by other ARM chip makers and avoid them, Brookwood said.
Brookwood likened Qualcomm's gradual approach to the ARM server market to Apple's late entrance into the music player market with the iPod. Apple came out with a product that was more complete than MP3 players at the time.
Similarly, Qualcomm could resolve some of the issues hurting ARM server adoption. Qualcomm can take its time, as it will take ARM servers a few years to get off the ground, Brookwood said.
To succeed in the ARM server market, Qualcomm will have to offer a stable product -- it is not yet clear that it has. The company does have the financial wherewithal to see it through a rough start in the market, but it will also need to offer a clear product roadmap in order to interest users.
Qualcomm's approach to the market is through partnerships, and the company has supplied ARM server chips to the top-tier cloud players, though Aberle didn't provide names. Last week Bloomberg reported that Google would endorse Qualcomm's server chip during the analyst meeting, but Qualcomm executives did not bring up the topic at the event's main keynotes and a company spokeswoman declined to comment.
The chip maker is initially targeting China and the U.S., which are the fastest growing server markets in the world, Aberle said. Qualcomm last month entered a joint venture with Chinese companies to design and sell server chips in China.
One goal is to take on Intel, whose chips rule the server market.
Brookwood likes Qualcomm's approach to establish ARM servers as a true alternative to Intel servers. However there are challenges adapting software to the ARM-based architecture.
The Qualcomm server chips are perhaps not yet ready for prime time, so meanwhile, the cloud providers can help the chip maker by testing applications, Brookwood said.
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