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Intel Chases Cloud With High-End Server Chip

SAN FRANCISCO ( TheStreet) -- Intel (INTC - Get Report) beefed up its enterprise strategy on Tuesday, attempting to ride the cloud wave with a new high-end server chip.

Launching the new Xeon E5-2600 processors, Diane Bryant, vice president and general manager of Intel's Datacenter and Connected Systems Group heralded an 80% performance gain over the prior generation of Xeon chips.

Bryant, who was Intel's CIO until recently, also highlighted the E5's improved security, bandwidth and power efficiency, touting the chip as ideal for cloud computing.

"The E5 really is the heart of the data center," she explained, during a keynote presentation at the Contemporary Jewish Museum in downtown San Francisco, pointing to the explosion in consumer gadgets. "Cloud computing allows new services to be rapidly deployed to all of these devices - the result is an ever increasing demand on the data center infrastructure."

A host of big-name customers that use Intel's chips, such as HP (HPQ), Dell (DELL), Cisco (CSCO) and Oracle (ORCL), were involved in the glitzy launch event, along with enterprises that rely heavily on Intel technology, such as car giant BMW and Dreamworks Animation.

Mario Müller, BMW's vice president of IT Infrastructure, described the huge growth in machine-to-machine communications, which is fueling demand for chips like the E5 Xeon. "Our vehicles are connected to our internal cloud," he said, explaining that this can be used to provide services such as tracking stolen cars. "Soon, we will have more than 10 million vehicles covered - that's one Terabyte of data volume a day."

Although better known for its PC processors, Intel has been aggressively ramping up its server business. In 2011, for example, revenue from Intel's Data Center Group climbed 17% year-over-year, surpassing $10 billion for the first time. Bryant said that Intel wants to double this figure by 2015.

The no. 1 chip maker, which competes with AMD (AMD) in the PC market, and the popular Qualcomm (QCOM) in smartphones, has certainly been reaping the benefits of an improved IT spending climate.
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