Intel Corporation's Xeon E7 v3 Takes On IBM's POWER 8

On May 5, Intel announced its next-generation Xeon E7 v3 processors, aimed at "mission critical" servers. The chips bring a host of improvements over the prior-generation Xeon E7 v2 processors, including a move to Intel's Haswell CPU core (bringing better performance per clock), more CPU cores (maximum of 18, up from 15 with the E7 v2 family), support for newer DDR4 memory, and more.

These chips are effectively Intel's answer to IBM's latest POWER 8 processors, aimed at those same "mission-critical workloads." Here's how Xeon E7 v3 stacks up, at least according to Intel.

Similar performance, lower total cost of ownershipIntel says its highest-end Xeon E7 v3, an 18 core beast rated at a thermal design power of 165 watts, delivers "up to 60% performance per watt leadership" relative to IBM's POWER 8. Intel also says that it delivers up to 85% total cost of ownership savings.

If we dig into the fine print, Intel says an eight-processor system based on its 18-core Xeon E7-8890 v3 costs approximately $144,626. In contrast, Intel says an eight-processor IBM POWER 8 system (each processor has 10 cores and runs at 4.19GHz) costs $1,592,788.

Intel claims the performance between the two setups is equivalent based on the SPECint_rate_base2006 benchmark. Intel says its advantage over the IBM POWER 8 servers is that systems based on the Xeon E7-8890 v3 are cheaper to buy and consume less power to deliver equivalent performance in SPECint_rate_base2006 -- leading to a lower total cost of ownership.

Intel also says Xeon E7 v3 holds up well in terms of reliabilityIn addition to performance and total cost of ownership, the reliability of chips in this class is a key consideration, which is why companies such as Intel and IBM build extensive reliability features into these chips.

According to Intel, platforms based on its chips do pretty well here (but still not as well as IBM does):

Source: Intel.

From the numbers above, IBM's POWER looks as though it has the lowest unplanned downtime, but Intel's numbers are pretty close. Intel's and IBM's solutions seem to beat the Oracle solution shown here.

Looks pretty solid to this Intel investorThe market-share story that has been going on in the world of four-socket-and-up servers is pretty well captured in the following slide from Intel:

Source: Intel.

If Intel really delivers the total cost of ownership advantages (thanks to lower upfront costs and lower power consumption) that it claims it does, then these next-generation Haswell-based Xeon E7 v3 chips should allow Intel to maintain or even extend its market share and revenue lead over its competition, such as IBM.

Now, from an investment point of view, the launch of this product family shouldn't have a material impact on the thesis; Intel has already given its revenue and profit growth expectations for its data center group this year, and sales of the E7 v3 parts are likely "baked in" to the guidance.

However, Intel has made it clear that it expects to grow its data center business by a roughly 15% compounded annual growth rate through 2018 or so, and delivering best-in-class products year in and year out will be critical to achieving that.

From what I can tell, though, "so far, so good."

The article Intel Corporation's Xeon E7 v3 Takes On IBM's POWER 8 originally appeared on

Ashraf Eassa owns shares of Intel. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, International Business Machines, and Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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