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Nehalem is proving Intel's own 'cash machine'

By Andy Patrizio on October 7, 2009 3:30 PM

This was a switch. Usually when a vendor offers customer case studies, it's the customer with the big story to tell. So I was quite willing to hear IT managers discuss how Intel's Nehalem had saved them money. Remember when Intel launched Nehalem and Pat Gelsinger called it a "cash machine?" Well, as it turned out, Intel had the best story to tell.

Intel said that more than 40 percent of the servers currently deployed and chugging away in datacenters around the country are powered by single-core chips that are four or more years old. That's a lot of old, inefficient 32-bit servers that run at single-digit utilization rates.

Intel had a similar situation of its own. It had 147 datacenters, many of them running single-core processors. In the last few years, even before the economy went into the drink, CEO Paul Otellini and Andy Bryant, who is pretty much a de facto chief operating officer although his title is chief administrative officer*, have been on an efficiency hunt trying to cut costs wherever possible. So those servers had to go.

Diane Bryant, the company's CIO, said that in the past year, Intel has been able to cut its datacenters from 147 to 70, consolidate single-core servers to Nehalem-based by a factor of 10 to one, and in the end, save Intel $250 million over the course of eight years. Just this year alone, thanks to reduced power and cooling and maintenance costs, Intel will save $19 million.

Well, convenient story, they have chips to sell, you may say. We've seen the quarterly server sales figures and they are hideous. Intel reports third quarter earnings on the 13th so I will be taking a peek at the 10-Q to see if they back up those claims. But really, while it may be self-serving, I seriously doubt Bryant would risk her reputation by engaging in exaggeration.

Implications

Dumping single core means a big architectural shift. Single-core processors are 32-bit machines, which means they have a 4GB memory limit. Now anyone who has run a server knows 4GB is useless. Just boot Windows Server 2003 and poof, 2GB are taken right off the top, leaving you barely any room for Web serving or any app/database server.

Moving to 64-bit CPUs and operating systems means eight, 16 or 32GB or more of memory, room for a whole lot more capacity. So it's easy to do a 10-to-1 consolidation or virtualize those systems.

Pity Intel's customers didn't have equally compelling stories to tell. One was in high performance computing and his whole story was more speed, more speed (which Nehalem does give). The other was a trader who griped that a 17 millisecond delay on the Internet could foul up trades, and his whole deal was more speed, more speed.

The one interesting customer was a program development manager with Energy Trust of Oregon. That firm goes into companies and helps them optimize their energy consumption, get the most out of the power they consume as well as look to alternative power sources.

As it turns out, Energy Trust is a rarity in what it does; energy companies, it seems, are not in the business of going to customer sites to help them become more efficient. But after all, that's par for the course for green-minded Oregon.

(* Intel reserves the official COO position for the CEO-in-waiting. When it chose Paul Otellini to replace Craig Barrett in 2002, he was bumped up to president and COO three years prior to getting the big chair. Otellini's successor, most likely Sean Maloney now, will get the president and COO job title two or three years before Otellini heads into the sunset. Andy Bryant moved into the job of chief administrative officer from the CFO position in 2007 mostly to let Assistant CFO Stacy Smith become top bean counter, a job he had been groomed for. Bryant's primary duty is helping Otellini run the ship of Intel Corp., which a COO would do.)

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