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ARM-based server demand in '13 unlikely: analyst

TAIPEI--Computer servers using chips licensed by British chip designer ARM Holdings PLC might not break into the mainstream market this year, despite interest from Google Inc. and Facebook Inc., according to a local analyst.

Charles Chou, a senior manager at the Market Intelligence & Consulting Institute (MIC), expects ARM servers to account for less than 5 percent of the 8.8 million-unit worldwide server market in 2013, compared with nearly zero last year.

"ARM (architecture) is actually an option for low-computing power servers with lower costs," he told CNA. "We think that, at this point in time, such a product is unlikely to break into the mainstream market."

ARM design, which is known for its low power consumption, might be suitable for small and medium-sized server vendors that have fewer requirements related to server performance, including those in Taiwan, the analyst said.

Another potential business model for ARM servers is the demand from Google Inc. and Facebook Inc., which tend to skip branded server vendors and place orders for data centers directly with contract manufacturers, Chou said.

However, Google or Facebook might not be willing or have enough resources currently to support ARM servers, because the business model of ordering non-branded servers is just beginning and its effects are still to be proved, he added.

MIC has projected that the worldwide server market will grow 3.9 percent in 2014 to 9 million units, while the number of servers shipped by Taiwanese vendors will rise 6.6 percent to 5.4 million units.

Tech tracking firm International Data Corp. (IDC) said worldwide server market revenue has slipped 7.7 percent from a year ago to US$10.9 billion during the first quarter of 2013, which was the fifth time in the last six quarters that the server market experienced an annual decline in revenue.

"Customer demand for new servers is being impacted by ongoing server consolidation, technology transitions, and challenging macroeconomic conditions across the globe," said Matt Eastwood, group vice president and general manager of enterprise platforms at IDC.

"It is clear that challenging market conditions are increasing the competitive dynamics for the server market share globally, particularly since computers represent a critical element in the larger IT transformation that continue to reshape broader enterprise IT market opportunities," he wrote in a May 29 report.

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