This article will address the misinformation about the recently announced Verizon (NYSE:VZ) server deal with Advanced Micro Devices , which I wrote about in this Seeking Alpha article. Specifically, I will disprove the ExtremeTech article's basic premise, which states that the AMD SM15000 servers involved in Verizon's new cloud offerings are using Intel chips, when in fact they are using AMD's Opterons. Additionally, I will review the importance of AMD's server chip sales to Verizon's new cloud deployments.
Verizon switches to AMD Opteron Processors
In this blog post by Paul Teich, he quotes Verizon's answer about whose processors are being used in their cloud service:
"The answer is both, we are using the Intel Xeon class processors and a bunch of our infrastructure is using the Intel. Recently we switched to AMD Opterons, and as you wonder why, one of the things we are looking for is increasing the memory per host and the Opterons allow us in a single socket configuration to address more memory, and so all of the new deployments we are putting out there are carrying 64GB per host and the 8-core Opteron processors."
The above answer is crystal clear. The new cloud server deal with AMD will be using 8-core Opteron processors.
AMD is providing Verizon with more memory
From AMD's SeaMicro Website concerning the SM15000, there is an option for both AMD's and Intel's processors. While the AMD Opteron option provides "up to 64 GB DRAM and eight "Piledriver" cores per CPU", the Intel option only provides "up to 32 GB DRAM and four cores per CPU".
The above description of AMD's SM15000 using Opteron processor jibes with the comments from Verizon, concerning their goal of "looking to increase the memory per host."
Another article by Anshel Sag verifies the AMD processor win
Interestingly, Mr. Sag believes that the misinformation was spread by Intel.
Mr. Sag believes that the "FUD" from Intel indicates that they must be very worried about the competition from AMD in the server chip space.
I believe that the misinformation was the direct work of AMD shorts, which I discuss in this Seeking Alpha article.
A review of key points from previous Seeking Alpha article: The Significance of Verizon Using AMD Servers for Cloud Services
IDC forecasts Public cloud services forecast to grow five times that of IT industry
As one of the world's largest communication service providers, Verizon has the cash flow and network understanding, to take market share from current cloud service leaders Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN).
SeaMicro's proprietary technology will be key to the next wave in public cloud services growth. AMD will use the proprietary and flexible architecture of SeaMicro to sell their servers and server chips directly to cloud providers, rather than to other server companies.
That Verizon has chosen to bypass traditional server giants International Business Machines (NYSE:IBM), Hewlett-Packard (NYSE:HPQ), Dell (NASDAQ:DELL), etc., and the low-cost servers being used by Amazon and Google, is extremely important, in my opinion.
The Verizon deal could serve as template for similar deals with other huge cloud providers.
The public cloud services providers will compete in the future based upon innovative deployment options, and not just on price.
AMD becoming a "Cloud play" causes misinformation
This Venturebeat article, entitled: The top 10 "arms merchants" of the Cloud, begins with this paragraph:
"A host of companies have been scrambling for a leadership position in one of the hottest areas of the economy: providing the technology needed by businesses to embrace the cloud."
The AMD short's worst nightmare is awakening to the fact that AMD may be positioned to benefit from the cloud, in a very big way.
People are entitled to their own opinions, but not their own facts
Whenever I see people twisting facts, that are easily verifiable, I know the stakes must be very high.
Extremely high stakes can cause people to say and do things, which in retrospect appear embarrassing. Everyone makes mistakes, and I have made my share over the years. But, I have never intentionally misrepresented the facts to others, so I could profit from their naiveté.
Bottom line, the high stakes involved in providing hardware and software to the best growth area in IT, the cloud, has and will probably continue to cause some people to make misrepresentations about AMD's prospects.
Therefore, it is of the utmost importance that sites like Seeking Alpha are available, because they try to publish independent articles, generally based upon verifiable sources and facts.
The truth about the Verizon cloud deal with AMD is much more significant than many investors realize. The conventional wisdom is that the deal will provide AMD with a mere $50 million of additional revenue over the next year.
Yet the fact that all new Verizon cloud deployments will be using AMD server chips was buried by the misinformation campaign.
Wall Street is not factoring in the potential that AMD is working on similar deals with other cloud providers.
Wall Street is not factoring in that AMD's innovative SeaMicro architecture will aid in sales of its own server chips, rather than those of Intel.
Bottom line, I see the Verizon server deal as an important signpost for the future success of AMD's server chip sales.