Intel Seeks to Boost Corporate Sales With New Xeon Chip

Intel Corp. (INTC), the world’s largest chipmaker, said a new line of server chips will reinvigorate sales and reverse a slowdown that threatens growth at its most profitable unit.

Intel will start selling today a new Xeon 7-series processor, the first new version in three years, said Shannon Poulin, general manager of marketing at Intel’s data center business unit.

While Google Inc., Amazon.com Inc. and Facebook Inc. are buying chips to build their own data centers and offer services over the Web, other companies haven’t been spending as much on server computers. Server chip sales fell short Intel’s projections in 2013, gaining 7 percent even as sales to cloud data-center operators surged 35 percent.

“We need to get the enterprise growing again,” Poulin said in a telephone interview. “We’ve seen some folks waiting for it.”

The new top-of-the line Xeons will help convince companies to replace their old servers because it will allow them to better use the growing amount of data being generated by Internet-based devices and services, Poulin said. An improved feature of the new processor is the ability to access more memory, requiring less frequent writing and reading of information stored on relatively slower hard disk drives.

That means data analysis can be done more rapidly, according to Poulin. For example, retailers may be able to access video and sales data in real-time, letting them know who is in their stores so that they can update promotions and discounts instantly for shoppers.

While Xeon has 97 percent of the market for servers based on personal-computer chips, according to Mercury Research, the new processor line will allow Intel to take better aim at other designs, such as International Business Machines Corp. (IBM)’s Power chips, Poulin said. While Power and other RISC-based designs make up less than 20 percent of total server shipments, they account for more than 40 percent of the revenue, giving Intel room to grow by boosting market share, he said.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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