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Intel’s Dominance May Falter Further as Microsoft Eyes ARM for the Cloud

Microsoft is testing the low-power chips to run its Azure cloud servers in a bid to save money.

Intel's dominance could be further eroded as Microsoft looks to alternative chip makers for its cloud hardware.

Bloomberg reports that Microsoft has been testing servers built using ARM-designed processors to run its Azure cloud system. While they’re not yet being used to provide services for customers, they are being tested for uses such as machine learning, big data analysis, and storage. Microsoft hopes that the move could save it money, as the chips use less power and are built by multiple manufacturers, keeping pricing competitive. 

Currently, Intel controls almost the entire server chip market. It's unclear how widely the ARM chips will be deployed at Microsoft, but Jason Zander, vice president of Microsoft's Azure cloud division, tells Bloomberg that Microsoft is making “a significant commitment” to using the new silicon. Bloomberg also reports that the hardware will be incorporated into a new cloud server design developed by Microsoft that will ultimately be open-sourced for other companies to use.

Traditionally ARM has dominated the market in mobile processors, with hardware best known for its energy efficiency. But the U.K.-based chip designer has also encroached upon the Intel stronghold of supercomputing. ARM developed new chip architectures designed specifically for supercomputing applications and Fujitsu announced that it would use the firm’s hardware to make a new supercomputer called Project K.

Since ARM was purchased by the Japanese telecom and Internet company SoftBank last year for $32 billion, aggressive investment has only looked to worsen the situation for Intel. ARM plans to double its British workforce, from 1,600 to 3,200 staff, by 2021, and just last month said that it expected to deliver around a trillion chips for Internet of things devices in the next 20 years. Meanwhile, other chip makers—from established players like Nvidia to newcomers like Nervana—are challenging Intel with their machine-learning-focused chipsets.

For its part, Intel is  busy trying to innovate, working hard to develop its quantum technologies and optical computing hardware. But the Microsoft news suggests that some of its bread and butter income could soon be taken from beneath its nose.

(Read more: Bloomberg, Reuters, “Intel Outside as Other Companies Prosper from AI Chips,” “ARM Wrestles Its Way Into Supercomputing,” “$32 Billion Buyout of ARM Is a Giant Bet on the Internet of Things”)

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