Cloud Hosting

AMD's heavily threaded Bulldozer, APUs, GCN are good fits for Seamicro's compact cloud computing servers

Advanced Micro Devices, Inc. (AMD) has struggled mightily in the server market in recent years, seeing its market share fall from nearly 15 percent in 2007 to less than half that -- roughly 6.5 percent in 2011.

I. AMD Server Division -- In Need of a Turnaround

AMD can try to write off part of its struggles to rival Intel Corp. (INTC) usinganti-competitive techniquesto squelch its performance during its strong years in the middle of the last decade, a big part of the troubles have come due to AMD'strailing die shrink timing, which has not improved since itspun off its fabs. While AMD finallydropped a new architecture (Bulldozer) in Sept. 2011, it disappointed in clock speeds and power performance -- something that may be attributable to die shrinks. Difficulty getting to 32 nm may have left AMD with too little time to thoroughly test and refine the new cores.

Approximately 21.89 percent of AMD's market share is tied up in its server sales, so clearly this is a major issue for the company and its shareholders. AMD desperately needed a new tactic. Whileallowing competitive interplaybetween Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330) and GlobalFoundries in die shrinks may be a potential long term solution, AMD needed something more immediate.

That's why the news of its acquisition of SeaMicro for $334M USD (a mix of $281M USD cash and stock) is a bit surprising, but a bit unsurprising. The small 80-person Silicon Valley server maker is known as a premium maker ofhighly dense and power-efficient servers. It sells heavily to large-scale cloud computing businesses.

The move is also a boon toSanta Clara, California manufacturer NBS. Unlike Apple, Inc. (AAPL), Hewlett-Packard Comp. (HPQ), Dell, Inc. (DELL) and others, SeaMicro doesn't have its servers assembled by Chinese laborers working under sweatshop like conditions. It's made in America, by blue collar workers earning a respectable living.

While it only spends a tenth of the research and development budget (~$50M USD per year) as Dell or HP, SeaMicro's product is viewed as very competitive from a technology basis. But SeaMicro can work intimately with its American manufacturing partner, building prototypes, trialing optimizations, and working out bugs before production hits.

SeaMicro currently exclusivelysells Intel-based servers-- a mixture of Xeon (Sandy Bridge) basedtightly-packed 10 RU designsand mixed 10 RU designsincorporating Intel Atom chips for lighter workloads. The Atom servers use the dual-core 64-bit Atom N570 chip (8.5W TDP). SeaMicro's unique 10 RU form factorsqueezes one to two tower racks into a single compact box-like form factor.

SeaMicro claims four-fold power reduction and six-fold space reduction by eliminating the typical busy server chipset to just three chips, via proprietary interconnect technology.

Read the original:

AMD Acquires Cloud Server Maker SeaMicro for $334M USD