Why Intel’s Ivy Bridge Xeon processors drive its data business

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Data Center Group drives growth at Intel

In the previous part of this series, we discussed Intel’s (INTC) Q2 2014 earnings and the performance of its largest business, the PC Client Group. Intel’s second most valuable group is the Data Center Group. Intel derives more than 25% of its revenues from this group. More importantly, this group is driving growth at Intel. The Data Center Group’s revenue increased 19% in the second quarter over a year ago. This rise is more than the overall 8% revenue increase for Intel.

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Intel mentioned that within the Data Center Group, the cloud, networking, and enterprise divisions all grew more than 15% in the second quarter. Intel credited the success of this group to its Ivy Bridge–based Xeon E7 processor family. These products saw strong volume and an average selling price increase.

 

Intel’s Data Center business depends on server market performance

Intel’s Data Center business depends heavily on the server market’s performance. According to Gartner, the worldwide server shipments market in Q1 2014 grew 1.4% over a year ago. HP (HPQ) leads this market. Dell (DELL) and IBM (IBM) are the second- and third-ranked player, as the above chart shows. The better growth rate for Intel’s Data Center business shows that Intel likely gained share in the servers chipset market.

Intel plans to launch new products

Intel plans to launch a few new products, like Grantley and Core M, later this year. These products will compete with AMD’s (AMD) Opteron series.

During the conference call to announce Q2 2014 earnings, Intel’s management mentioned, “Later this quarter, we’ll launch our next generation Haswell-based Xeon E5 platform codenamed Grantley. We also expect the first 14-nanometer Broadwell Core M processor-based systems including fanless two-in-ones will be on shelves for the holiday selling season, followed by broader OEM availability in the first half of 2015.”

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