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Amazon.com Inc. has taken a big step forward in reducing the reliance on Intel Corp. for an essential component of its cloud service.
The largest cloud computing company unveiled its own server processors on Monday and said the Graviton chips will support new versions of its leading EC2 cloud service. Until now, Amazon – and other major cloud operators – used almost exclusively Intel Xeon chips.
Other attempts so far have failed to release Intel's powerful power in the server chip market. But Amazon uses a refresh strategy that has helped her win customers over and over again. The company said the Graviton-supported cloud service is available at a "significantly lower cost" than existing offerings running on Intel processors.
Aaron Rakers, an analyst at Wells Fargo, estimated that the new service would cost up to 45% cheaper than the equivalent offering based on Intel chips. "This will add another competitive question on Intel's positioning within AWS Cloud," he wrote in a research note on Tuesday.
This is the second time this month that Amazon is testing Intel's chipset business. On November 6th, the cloud provider announced that it offers computer-based services using Advanced Micro Devices Inc. processors. This is a breakthrough for AMD's efforts to compete with Intel.
Amazon is still expecting Intel to be the leading chip vendor for its cloud servers and high-end computing, said Matt Garman, vice president of Amazon Web Services. But she decided to spend money to create her own designs because she saw a case of using competing technology and had the scale needed to make it profitable.
"We absolutely want to differentiate ourselves and meet all the use cases mentioned by our customers," Garman said during an interview.
Intel processors manage more than 98% of the world's servers and the owners of gigantic data centers such as Amazon, Microsoft Corp and Google have become some of its biggest customers. While these Internet giants brought down the price of most components using their own engineering, Intel's Xeon chips withstood this pressure. The average selling price of these processors has increased over time, which has hardly ever happened in the electronics industry.
Analysts have speculated for years that these cloud companies would use their large R & D budgets and growing technical capabilities to find alternatives to Intel chips. Amazon's Graviton is the first example of a major player that uses its own hardware to replace a set of cloud workloads that are normally managed by an Intel Xeon processor.
Amazon uses its acquisition of the Annapurna Labs startup in 2015 to design its own chips. The new processor uses the ARM Holdings unit technology from SoftBank Group Corp., a dominant standard in mobile phones. Graviton can run Web services and other less intensive and powerful applications when many servers work together on the same task, Amazon said. – Bloomberg
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