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Intel sees opportunity from Asian data center boom

Added on May 24, 2011 by John Ribeiro, IDG News Service

Intel’s sale of chips and related products to data centers is growing by over 20 percent year-on-year in Asia-Pacific, on the back of increased data center capacity creation in China, South Korea, and Australia, a company executive said.

The growth will continue, and may be even faster, for at least the next couple of years, said Jason Fedder, general manager of Intel’s Data Centre Group for Asia Pacific and China.

Fedder cited rollouts of new services and applications by telecommunications providers, and the large number of Internet-enabled mobile devices in use in the region, as key drivers of data center demand.

Expansion by regional Internet companies, particularly in China, and investments in high performance computing for applications such as weather simulation are also fueling demand for data center equipment, Fedder said.

The move by enterprises to cloud computing will come in the second half of next year, a little later than in North America, Fedder said. “So we are at the beginning of a cycle of infrastructure refresh,” he added.

Intel reported in the first quarter that its worldwide data center revenue had grown by 32 percent year-on-year to US$2.5 billion. The company’s data center business is not growing as fast in Asia-Pacific because the surge in demand is largely confined to a few countries, with other markets appearing to be late adopters, Fedder said.

A number of new data centers are coming up in the region as multinational Internet and hosting companies set up data centers to serve local customers, and also to meet governments regulations in some countries that require data to be handled locally, said Jun Fwu Chin, research manager for virtualization and data center at IDC Malaysia.

Amazon Web Services, the cloud-computing arm of Amazon.com, opened its first Asian data center in Singapore last year.

Some telecommunications companies in the region are also setting up data centers to offer cloud computing services to small and medium-size enterprises, Chin said. Mergers and acquisitions, and the consequent integration of IT infrastructure by enterprises, have also resulted in the closure of smaller, less-efficient, data centers in favor of larger data centers, he added.

Intel is positioning itself as a chip supplier not only for computing servers but also for storage and networking in data centers. The company has a dominant position in computing in data centers, with close to 100 percent share of the chips used in servers in data centers, Chin said.

Intel's Fedder said the company is now trying to take advantage of the ubiquity of the x86 instruction set to make the Xeon the common node in the data center, across computing, storage, and networking. Data center operators will then be able to use the features of Intel Intelligent Power Node Manager to do power capping not only on the computing side, but also in storage and networking, he added.

Intel’s products currently account for less than 3 percent of overall data center spend, Fedder said.

Intel plans to introduce more capabilities for data centers in the areas of power management and efficiency, and security, Fedder said. He did not provide details. Intel completed the acquisition of security technology vendor McAfee earlier this year.

The current market in Asian data centers is predominantly for computing capacity, Chin said. However as new video sharing sites and other storage-intensive applications proliferate, the demand for storage in data centers will increase, though computing will still be the larger market, he added. For Intel too, revenue from computing is still expected to be the larger part of the business, Fedder said.