Intel (NASDAQ: INTC) seems to come out with a new chip every month. Recently, it has released more powerful products for PCs and new chips for netbooks. Now it is moving back to the server market where it has a global market share of about 80%.
The Nehalem chips have more computing power than Intel's current server products, but the new semiconductors will, no doubt, be expensive.
According to The Wall Street Journal, several tech firms, including Cisco (NASDAQ: CSCO), have already announced that they will put the chip in their latest products. As the paper points out, tight corporate IT budgets may get in the way of robust sales, but that may not be the toughest problem Intel faces in marketing the chip.
As chip performance advances, the question is starting to come up about how much chip is too much chip. The best products Intel has introduced over the last two years already have extraordinary computing power. Does it make sense for most companies to want even more? In many cases the answer may be that chips that are a year old can handle 99% of the needs of many firms. Upgrading is not only costly, it is unnecessary.
Investors banking on Intel's new product as a way to raise revenue at the company may be disappointed.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
3-26-2009 @ 11:53AM
Kurt said...
Maybe. Pegging investment hopes on one segment of Intel's product line would be unwise. However, Intel has many irons in the technological fire and one needs to look at the product mix and it's long term potential as a whole before investing.
That said, the Nehalem chips are not just a simple update. These represent the most significant design changes to the server processors for Intel in several years. If anything, tighter corporate budgets will drive the adoption of these new processors. Simply put, $200 to $300 more for a processor that effectively can almost double the work a current server does at lower power points is a no brainer for IT engineers.
3-26-2009 @ 12:13PM
Daniel Lohin said...
Whoever wrote this clearly doesn't understand the way the IT market is heading. The IT market is now all about consolidation to save both energy and space which in turn saves money. The new Nehalam chips are beats at Virtualization. The idea behind virtualization is to have as few computers doing as much as possible. While the chips may be more expensive then older chips, if you can host 10 VMs off of them where as before you could only host 5, then you save power and space. You also save money because you don't need to buy as many computers. Now I could see an argument that you will sell less chips due to this fact. Even that seems like a weak argument though...