Cloud Hosting

Reportedly, Microsoft Corporation MSFT in collaboration with Qualcomm QCOM and Cavium. CAVM has developed a Windows-based operating system for its cloud-based servers that will run on ARM-based processors instead of Intels.

Although currently none of the Azure cloud clients use the ARM-based processors in their servers, adoption of the same is expected to pick up going ahead.

Also, Microsofts new server design will be an open source one, available for customizations. It is also free to use and could pave the way for greater adoption.

Why this Move?

The most important reason why Microsoft is making the switch from Intel-based processors to ARM-based processors for its cloud based servers is to cut down on costs and become more flexible.

The company will also gain a competitive edge in the cloud server market dominated by Amazon AMZN and Alphabets Google.

What it Means for Intel?

The server semiconductor market is currently dominated by Intel, which holds over 98% market share. We note that during fourth-quarter 2016, Intels Data Center Group (which includes revenues from server chips)accounted for 28.5% of total revenueof $16.37 billion. Given the declining PC demand worldwide, demand for PC chips is also on a decline.

Server chips were a significant contributor to the companys top line. However, with Microsoft showing preference for ARM-chips, Intels dominance in the server chips market is under threat.

What it Means for Microsoft?

As per an IDC report, worldwide spending on public cloud services is estimated to reach a whopping $203.4 billion in 2020 that is currently growing at a CAGR of 21.5%. Not surprisingly then, competition in the sector is intensifying with the presence of major players such as Amazons AWS, Alphabets Google Cloud Platform.

However, Microsofts decision to switch to ARM-based processors is a strategic one that is expected to help the company remain competitive and relevant.

5 Trades Could Profit "Big-League" from Trump Policies

If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.

Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report QUALCOMM Incorporated (QCOM): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Cavium, Inc. (CAVM): Free Stock Analysis Report To read this article on Zacks.com click here.

See more here:
Microsoft Says Yes to ARM-Based Chips for its Cloud Servers - Yahoo Finance