More on Wells Fargo's Intel (INTC +1.1%) estimate hike: Analyst David Wong thinks the x86 server...

More on Wells Fargo's Intel (INTC +1.1%) estimate hike: Analyst David Wong thinks the x86 server CPU market can grow at a mid-teens annual rate over the next several years, and is an overlooked beneficiary of the smartphone/tablet boom. He notes Intel has suggested "122 tablets generate enough data traffic to occupy 1 server, and 600 smartphones generate a similar amount of traffic." Wong also argues tablets aren't powerful enough to displace notebooks, and has high hopes for Intel's next-gen mobile processors.

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Comments (10)
  • Carrr
    , contributor
    Comments (5) | Send Message
    Finally, someone gets it.
    Against the conventional wisdom of most analysts...
    Intel is still relevant .
    Good work David Wong!!!
    31 Dec 2012, 02:24 PM Reply Like
  • SA Editor Samir Patel
    , contributor
    Comments (163) | Send Message
    This is one of the major reasons I'm bullish on Intel. Tablets/smartphones are all the rage, but the part of the story that gets lost is that the "cloud" isn't water vapor. This is a growth driver not only for server processors, but also for all the other hardware that goes into servers. The move towards mobile computing doesn't mean usage of less computing muscle; it just means some of that muscle is shifted from the end-user device to a centralized server.


    (long INTC, STX, DELL, HPQ)
    31 Dec 2012, 02:26 PM Reply Like
  • SimpleStuff
    , contributor
    Comments (83) | Send Message
    Ditto for me.


    I am also a geek [programmer]. I have been so frustrated that "no one" [think Wall St.] was "getting" the inconsistency of having more and more smartphones and tablets [no matter the brand] while not seeming to realize that you have to have more-and-more processing power to go along with them--at ALL ends of the bandwidth/computing spectrum.


    None of my current PC's will handle the level of Internet traffic and computing I currently do daily. While I will "add" portable processing power to my repertoire, I will also upgrade the bigger machines I depend on most at home. I realize not everyone will do this. However, I watched QVC recently where DELL was featured--people were buying up DELL's latest and greatest PC's like mad. All of the folks interviewed were talking about how they had not changed out their "main" computer in years--but were looking for something "new" in addition to their smartphone and tablet; these folks too realized that they needed "modern" computing power [IMHO].


    At the employer where I program, we are upgrading to faster and faster machines [all with Intel CPU's in them] to handle the B-to-B software we are constantly upgrading. No customer yet has said they have enough power; they want more and more.


    I also am long INTC -- and have been long through all the ups and downs of the past 2 years. Sigh. Sometimes it is tough to be so far ahead of Wall St.


    Thank you David Wong. Thank you too to you other posters. Finally, maybe INTC will get some RESPECT! :) Ignore IDC and Gartner, too, they don't know what to forecast until it turns and hits them in the behind. Oops...also long DELL. :)
    31 Dec 2012, 03:10 PM Reply Like
  • Mrnomad
    , contributor
    Comments (359) | Send Message
    SimpleStuff: As an options trader, I have 3 screens on one pc and two screens on another pc. My tablet is used to watch the news and read epub files. The tablet simply complemented my use of computers but did not replace them. If it replaced anything, it was the tv which I used to watch the news. The tablet has been an asset to me, but not at the expense of my pcs. However, for the multitudes who ONLY use their computer for email, tweets, etc., they are "gone" and are not coming back to a fixed piece of equipment. My kid happily pecks away at the tablet keyboard which pops up on the little screen so even limited WORD is handled by the tablet. For her occasional use of Photoshop, it hardly makes sense to upgrade a fixed computer.


    I am long INTC but play it thru covered calls. If it goes nowhere, which it typically does, I still make $$. If it goes away at 21 or +, Hasta La Vista, thanks for the prem & share price income but INTC is not HPQ. INTC did not sit on its butt and let the world pass it by. Great company, buy on opportunity or the next time the useless analysts & talking heads spout more mistaken judgment.
    31 Dec 2012, 03:46 PM Reply Like
  • Micah
    , contributor
    Comments (497) | Send Message
    How about the Industrial Internet (also referred to as the internet of things) that GE has been marketing lately? They are talking about big data analytics on turbines, engines, and all kinds of mechanical processes that they will be monitoring.


    I heard the one of the GE presidents talking about this on Bloomberg West and he said that current computing power is not strong enough to handle this type of data collection and processing. Think of a huge natural gas or jet engine turbine spinning at 10,000 rpm and each revolution creating 100's to 1000's of data points.


    I think smartphones and tablets are just a drop in the bucket for what is coming. Long INTC and STX.
    31 Dec 2012, 03:49 PM Reply Like
  • Mrnomad
    , contributor
    Comments (359) | Send Message
    Micah: Long GE too via call options. INTC & GE are great companies.
    31 Dec 2012, 04:35 PM Reply Like
  • regrunebaum
    , contributor
    Comments (28) | Send Message
    Mostly operate as a lifelong spectator but dip my toe in every now and then and Intel is one of my favorites. My comment some weeks ago was "this company is being over analyzed", a paraphrase of Plato's comment a few centuries ago, so I especially appreciate what SimpleStuff writes. THANK YOU SS.
    31 Dec 2012, 05:56 PM Reply Like
  • KIA Investment Research
    , contributor
    Comments (13114) | Send Message
    I too am long INTC and like what's being said, but I'm having a hard time believing these numbers:


    "He notes Intel has suggested "122 tablets generate enough data traffic to occupy 1 server,"


    That just doesn't seem right to me.. short of all tablets streaming video, I would expect the number of tablets supported by a server to be several times this number.


    I am no expert here, but I do run an online game where I easily support 230 concurrently connected high-end PC gammers.
    My server is what's called a budget class server:
    10Mbps Port, Core 2 Duo 2.4GHz (800MHz FSB), 4GB RAM
    160GB SATA2, Windows 2008 R2 Standard Edition EN


    How in the world does 122 tablets 'occupy' a server?
    (We assume here that 'occupy' implies some significant usage, otherwise why even bring it up.)
    1 Jan 2013, 04:29 PM Reply Like
  • SimpleStuff
    , contributor
    Comments (83) | Send Message
    Very useful comments; I hope I can do justice to them with a couple more things to think about.


    re: "multitudes" who now do email on tablets -- humbly, this "target market" were never true users of heavy computing power. That may be the mistaken assumption in quotes on "pc decline". The growth I see will come from a power user base. Also, there will be a growing power user base, I believe, because the applications demanded today require more and more computing power to satisfy these users. As today's young people begin entering the workforce [a larger cohort than the boomers, by the way] many many more of them will have computers as part of their work and daily life than any generation coming before them....


    Businesses/employees use more computing power every day, and I believe David Wong is seeing "back-end" operations for smartphone and tablet apps growing to support more and more consumers carrying them--more banking, more healthcare, more entertainment processing, etc., will require them.


    The example from Micah on GE is a perfect case in point. More usage of computing power is being invented every hour. I see it and work in it every day.


    re: Mr. Tomasello's question on how many "users" per server... I am not sure what Mr. Wong's assumptions were. I am more of a software than a hardware person. But I think of it slightly differently. I am not sure, but I believe that games utilize the client to process a portion of the game action. That is usually why gamers need "high end" pc's...with extra heavy graphics processing and plenty of storage and memory capability...because a great portion of the game is processed locally and not remotely on the server. So, the server could handle more clients because the clients themselves do a good part of the processing which relieves the server load a good deal.


    Contrary to this gaming model, the smartphones and tablets do not really do much of their own processing. They "render" simple graphics...but I believe that a great deal or most of the processing is done exclusively on the server. While the "thin client" [which is what tablets and smartphones are] easily makes a request to the server, the server probably has a great deal more work to do just for that one request. That request may involve the server going to a back-end database, and to another repository such as an email server, and back again, with some data-crunching or other fairly heavy processing having to be done amongst all of these -- before it eventually returns to the client with a response to the client's request. Most clients like these are doing a great deal of media [maps, videos, pics, etc.] and servers are likely encrypting and decrypting all of the data simultaneously. With heavier and heavier activity [say, bank account processing], the stress on the servers grows. So you need to reduce the number of clients allowed access simultaneously, or you need to increase the numbers of the servers available for simultaneous access.


    The problem is usually communication bottlenecks at some point along the chain, and not necessarily the server itself. Sure, most heavy-duty server systems are set up to handle thousands of clients. However, at my work, we have seen our network speeds and pc response times decline dramatically as our "cloud" operations have ramped up. So, something is sapping the ability of our servers to continue as they did in the past, with greater and greater demands handled in cloud-type environments.


    Given this, I would give Mr. Wong's assumptions the benefit of the doubt--possibly being conservative as the industry struggles with determing the new infrastructures and computing power that are going to be needed to cope with the new environments.
    2 Jan 2013, 01:46 AM Reply Like
  • KIA Investment Research
    , contributor
    Comments (13114) | Send Message


    What a nicely put together response.
    I agree with much of what you said, but still doubt the tablet-to-server ratio.


    For instance, mapping software would be something you would assume would be compute intensive, however Nokia's Maps allow for offline navigation.. this implies all the work is being done locally on the client.


    WRT my game server; you are right that a lot of work is done on the client, mostly graphics .. but the server is very busy processing some very complex algorithms (like path-finding .. that is how NPCs move about the screen.)


    I see tablets being primarily used for web surfing and email with a second order task of occasional banking. These are just not expensive tasks.


    If I'm correct here, then I suggest that this typical tablet use could not be nearly as server-expensive as Mr. Wong suggests.


    PS. One way to think about it would something like this:
    How many servers does Microsoft employ to power it's website?
    How many computing devices do these servers serve daily?


    I'm guessing it's 1000s of devices per server per day and not the sub 200 suggested by Mr. Wong.
    2 Jan 2013, 08:31 PM Reply Like
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