[News] Intel warns of slowing data centre growth

[StyM]

http://www.bit-tech.net/news/hardwar...ng-dc-growth/1

Intel has lowered its expectations for the data centre market, and while it still predicts growth it has seen its stock drop nearly five percent as a result.

During the earnings call following its third-quarter financial results, Intel's executives warned that its traditionally lucrative data centre division would see growth slow to 'high single digits.' While any growth is good growth, that's below the company's previous projections - it started the year promising investors around 15 percent growth - and its shareholders have taken notice. Since the announcement, Intel's shares have dropped 4.77 percent in pre-market trading, a suggestion of flagging confidence in a company which still holds a 90-some percent market share of the data centre market.

While shareholders may be getting antsy at slowing growth, Intel's results were far from bad news. 'It was an outstanding quarter, and we set a number of new records across the business,' crowed Intel chief executive Brian Krzanich during the earnings call. 'In addition to strong financials, we delivered exciting new technologies while continuing to align our people and products to our strategy. We're executing well, and these results show Intel's continuing transformation to a company that powers the cloud and billions of smart, connected devices.'

Among the highlights of the company's third-quarter financials are a 21 percent quarter-on-quarter and five percent year-on-year growth in client computing revenue, 13 percent quarter-on-quarter and 10 percent year-on-year growth in the data centre group that has investors so concerned, and 20 percent month-on-month and 19 percent year-on-year growth in the company's recently founded Internet of Things (IoT) division. The result: $15.8 billion in revenue, a nine percent year-on-year rise, with a gross margin of 63.3 percent giving an operating income of $4.5 billion - nine percent higher than the same quarter last year.

[drmrlordx]

. . . huh. Wonder why?

[Levish]

^ business being thrown at AWS & Azure. Usually due to horrendously incompetent management that have trouble providing good long term vision.

Bitter / Not Bitter

[LordEC911]

We just went through ~$200m overhaul of our Data Center... then we went cheap on the integration and bring-up by hiring a contractor to handle all of it when they clearly had no idea what they were getting themselves involved in, both our upper management and their company.

I see it slowing for a bit as more and more small/mid-size centers try outsourcing it... but once you get to a certain size, there are far too many advantages to keeping it in-house and we will see a big jump a few years down the road as that is realized.

[drmrlordx]

Hmm. I would think outsourcing would just move the business to other firms, not cause it to dry up altogether. That is, in the end, someone's got to host the hardware, be it the in-house IT department or the contractor.

[LordEC911]

Hmm. I would think outsourcing would just move the business to other firms, not cause it to dry up altogether. That is, in the end, someone's got to host the hardware, be it the in-house IT department or the contractor.

Why buy something new and awesome and extremely expensive when you can use 4-5 year old technology and keep the margins just as high?

You have to realize that most of the people in charge of the budgets for the data centers are worried about; 1. Can it do what it is supposed to do? 2. Can it do it at acceptable performance levels? 3. Is it relatively reliable?

Very, very few even think of the questions; Is this the best we can do? Is this the easiest way to have it set up in the long run.

Edit- And the article mentions that the growth was slowing Q-Q and Y-Y, from expectations of double digit growth to single digit growth.

[drmrlordx]

So the crux of your argument is that the contractors are going to go about datacenter configuration in a manner that is overall more-efficient than what an in-house IT department would do to meet the same service demand levels?