Intel Launches High-End Server Chip for the Cloud

(Reuters) - Intel Corp took the wraps off its newest Xeon server chip on Tuesday, seeking to capitalize on an explosion of Internet traffic sparked by Web-based cloud computing, social networking and growing smartphone and tablet computer use.

The company's Xeon E5-2600 family of processors delivers up to 80 percent better performance than previous platforms while consuming less energy, Diane Bryant, in charge of Intel's data center business, told reporters.

It is designed to support the servers and workstations that handle what Intel estimates will be 33 percent annual growth of data traffic through 2015.

Intel has already shipped its new platform to a host of server manufacturers. It said several - including Hewlett-Packard Co, Dell Inc, IBM, Oracle Corp and Cisco Systems Inc - are expected to announce Xeon-based server platforms on Tuesday.

Smaller rival Advanced Micro Devices is also stepping up investments in enterprise processors. Last week, the perennial runner-up to Intel announced that it would buy micro-server player SeaMicro for $334 million, getting into an emergent, power-efficient server technology.

AMD has lost ground to Intel in the server market in past years but hopes SeaMicro can help its expansion into low-power solutions in massive data centers. But Intel executives said their own Xeon E5 platform can improve energy efficiency by more than 50 percent in some cases versus the previous generation.

We did look at SeaMicro's fabric technology. There are probably very few people they didn't come to and shop their solution to, Bryant said. We were not impressed. We declined and very soon after our competitor acquired them.

LAGGING, SCRAMBLING

Shares in Intel held steady at about $26.50 in afternoon trade, while AMD's stock was down about 3 percent at $6.86.

While Intel lags Qualcomm and Samsung Electronics in selling processors for smartphones and tablets, Intel executives have pointed to their server business as key to capitalizing on fast growth in the mobile market.

The popularity of smartphones and other mobile gadgets has increased the need for massive computer centers that store data and feed email, videos and other information to those devices.

UBS expects spending on data centers to surge 49 percent this year, driven by the likes of Apple, Facebook and Google.

At Tuesday's event, Intel trotted out a variety of clients to demonstrate how its new platform might be employed.

German automaker BMW said it was using Xeon-based servers to keep its luxury cars linked to the Internet.

Soon we will have more than 10 million vehicles connected and that will lead us to 1 terabyte of data volume per day, said Mario Muller, BMW vice president of IT infrastructure.