AMD Purchases SeaMicro Based on Its Innovative Chip Consolidation

When it comes to power efficient servers, the other major cost in IT today is the administration of systems both virtual and physical. In fact, the cost of the actual hardware has decreased in the past 10 years but the cost of powering and administering those same systems has increased enormously. The acquisition costs of server hardware accounts for only 10 percent of the servers total cost of ownership (TCO) over three years. Enterprises are increasingly moving toward a virtualized, convergent, and cloud-based infrastructure. Yet at the same time that data center networks are diversifying, they’re also becoming flatter.

Often it comes down to this, how do you handle pressing business needs while ensuring that over-provisioned or under-used servers are at their peak performance? Part of that question may be answered by the recent announcement that chip maker Advanced Micro Devices (News - Alert) (AMD) is buying server startup SeaMicro for $334 million. Sea Micro’s key technological advancement has been its ability to eliminate all but three of the chips on a standard server motherboard. The company has used that technology in servers that consume only a quarter of the power and one sixth of the space of traditional x86 servers.

The fact that SeaMicro has had a somewhat close relationship with AMD (News - Alert) rival Intel means that the next round of chip innovation will heat up once again. This can only have positive repercussions for enterprises and consumers. That’s because AMS hopes to license the new technology to other server vendors. For example, in a related development, SeaMicro recently introduced new servers boasting 64 four-processor Xeon chips along with the startup’s proprietary chips for connecting them together and reducing energy consumption. According to Andrew Feldman, the company’s chief executive, “These use half the energy of comparable arrays of servers, fit in about a third the space, and have 12 times the communications bandwidth between the systems.”

Technological innovations such as these can only have a positive effect on the rest of the chip-making industry, not to mention its impact on the burgeoning mobile industry. As devices, and servers, continue to do more with less, the expectations will have to be filled by increasing numbers of diverse innovations. This recent acquisition may also help AMD make forays into the mobile arena, something it lost out on in the recent battles for position by the leading chipmakers.