
Intel preferentially offers two customers Skylake Xeon CPUs - walterbell
https://semiaccurate.com/2016/11/17/intel-preferentially-offers-two-customers-skylake-xeon-cpus/
======
msimpson
The whole of the article rests on a single claim that,

"Several trusted sources say that later today, likely at Supercomputing 16,
the company will announce they have pulled in Purley aka Skylake-EP Xeons, to
this year and will sell them to two key customers."

Customers which the article goes on to name as Google and Facebook. Although,
I cannot find any corroborating evidence to support this claim. Supercomuting
16 is now over, and I see no other articles detailing how "Intel is playing
favorites with Skylake Xeons in a way that will shatter the industry status
quo." SemiAccurate is literally the only site I can find professing this
scenario.

I'm not saying it's necessarily untrue, but I'd like a lot more information on
why it's just Google and Facebook.

\- Was there a silent bidding war on early access?

\- Did Intel simply choose two major customers based on previous sales?

\- Were Google and Facebook specifically targeted to exploit FPGA for AI
development?

The list goes on ...

~~~
RandomOpinion
Looking at the article date (Nov 17) and the dates for Supercomputing '16
(ended Nov 18), if Intel had actually announced preferential release to
specific customers, it would have been confirmed already. Combing through
Google News, there doesn't appear to be any article covering Intel's
announcements at SC16 that mentions such a preferential release. So, it's
probably just a false rumor.

~~~
ChuckMcM
Apparently not: [https://newsroom.intel.com/press-kits/intel-at-
sc16/](https://newsroom.intel.com/press-kits/intel-at-sc16/)

Although I would be really surprised if this was something they actually
announced, it doesn't really help Intel to announce something like that and as
the article points out it can anger other customers.

That said I have worked in Intel's System Validation group which was
responsible for determining when a new chip was ready for general
availability. I have directly witnessed Intel's preferential customer
treatment where Intel allocated all of their processor production on a new
processor to their largest customer(s). In my case they were selling Nehalem
chips to Dell long (6 - 9 months) before others like NetApp could get them to
start building filers with them. I have also worked in the platforms group at
Google so I have an idea of the scale of their hardware effort and how many
chips such a deal with Google might entail.

As a result, I think the actual story is this -

Intel got back first silicon that was acceptably functional on the new parts.
This kicked off a discussion between their top customers and the potential
early availability of parts. Those customers did a calculation on what
advantage they might get by getting hardware early. Then Intel went down their
customer list from most strategic to least strategic and offered them access.
Either Google or Facebook was on the top of that list (likely Google) and they
bought some, but not all of the production capacity, and then Intel offered
the remainder to the second customer on the list who agreed to take the rest.
Everyone else has to wait until the part is released to general production in
all of its target fabs.

Further, it won't cause Intel any grief because all their customers know that
the ones with the most volume get the most "love" from Intel. And the
situation might be different the next time around.

~~~
akiselev
I don't understand what the big deal is. Almost every integrated circuit
manufacturer does this because supporting a few big customers is far cheaper
than many smaller ones especially when you're operating on the cutting edge, a
chronic condition for Intel. Google and Facebook will only call support when
there is a discernable pattern of failures of processors or in previously
verified code and that's the most optimal way for Intel to deal with early
problems instead of handling thousands of support calls for intermittent
failures in tiny sample sizes. The difference here is that microprocessors are
a key piece of IT infrastructure and there are now a few providers that can
soak up production of new products for months. For better or worse, economies
of scale have always been a natural competitive advantage and Intel's dominant
position in the server CPU market doesn't change that calculus, nor obligate
them to make their products widely available when they first roll off the fab.

~~~
hga
The big deal is the claim that companies that were promised access RSN to
these chips will now have to wait ... 6 months, was it?

It's the breaking the promise more than anything else that problematic, if the
sources, presumably from these screwed companies, are accurate.

~~~
akiselev
Ah, I wasn't aware that Intel promised them early access. Did Intel break a
contractual obligation or an implied agreement with previous partners? I'm
unclear as to what promise means in this case.

------
slv77
Intel has been under intense pricing pressure as the server market has
consolidated into a few large cloud providers. Some of the largest providers
have used their weight to really turn the screws on Intel. Providing exclusive
access to top-end child has effectively turned Intel from being viewed as a
commodity vendor to a partner.

In the past some of these players have threatened to turn to ARM processors to
extract more pricing concessions from Intel. It will be interesting to see if
that was a bluff or if Intel's technology advantage does really give them a
TCO advantage even with their margins factored in.

It's also interesting that Google and Facebook are leaders in machine learning
and I wonder if there isn't some additional collaboration in the works for
custom silicon in the works. Google has their own custom silicon for machine
learning and maybe could be encouraged to help Intel enter the market if they
knew they would have exclusive access to the newest generation of chips.

Given the market caps of Google, Facebook, Apple et-al it makes me wonder why
nobody has bought out Intel.

~~~
dom0
2011-x chips contain custom and undisclosed additions for these biggest
customers ("Big seven") already. These are in all 2011-x SKUs made from the
same chip, but are said to be disabled through fusing, just like other feature
fuses.

~~~
userbinator
I hope someone leaks more info about that, or reverse-engineers something,
because I find the whole secretive attitude around processors and other
hardware information incredibly offputting as it is; but it's not just Intel
who are doing it.

Maybe when used hardware with these customisations starts showing up on eBay
or similar...

------
t0mas88
Amazon uses custom product numbered Xeons. So I wouldn't be surprised if they
get the same advantage + their own optimizations in short term. Intel wouldn't
risk to annoy AWS, they are a far bigger customer than Google.

~~~
bhouston
AWS is bigger in general access Cloud, but could Google be bigger in terms of
raw CPU numbers to power all of its internal services?

------
bhouston
So basically if I want Skylake Xeons I need to move from AWS to Google Cloud?
Interesting that Intel did this. I guess throwing AWS under the bus is worth
it?

------
BuffaloBagel
What happens to Google/Facebook's retired hardware? Is it all just scrapped?

~~~
more_original
No, they sell it. This seems to be the main reason why E5 Xeons became really
cheap some time ago.

[http://www.techspot.com/review/1155-affordable-dual-xeon-
pc/](http://www.techspot.com/review/1155-affordable-dual-xeon-pc/)

~~~
ndesaulniers
All the mobos for these cpus aren't ATX, so I'm curious to see what gamers put
them in.

~~~
detaro
Many tower cases easily fit E-ATX, which should have options available.

------
matheweis
Well good. Once upon a time we had PowerPC and x86; and one particularly smart
company was able to switch architecture without too much trouble to their
customers.

Sure would be nice to have some competition to get things moving forward
again.

------
deepjoy
"New generation server parts significantly reduce operating costs and without
a huge price rise, they will also drop TCO more than a little"

Looking at some outside evaluations of their capex, it does not seem to
represent a significant drop since CPU cost is only a tiny part of operating a
datacenter.

[http://continuance.co/revisiting-capex/](http://continuance.co/revisiting-
capex/)

~~~
revelation
Hence _T_otal _C_ost of _O_wnership. Running a data center is all about
getting direct power consumption (servers) and indirect power consumption
(cooling) down.

~~~
emn13
I've heard the assumption that energy costs outweigh cpu costs for TCO, but
after some rough guesstimation I'm not so sure.

1MWh of electricity is enough to power a cpu running 114W on average for a
year. A 24 core (48 thread) xeon has a 165w tdp, meaning that even such a
beast is likely to use less on average (most applications don't have 100% cpu
load 100% of the time, and virtualizing up to that load causes serious issues
when several clients happen to simulatneously peak). In essence, this should
run pretty much any single CPU, and even if you're doing something weird to
actually get that 100% load, we're not far off.

1MWh of electricity is around 40$ at wholesale prices
([https://www.eia.gov/electricity/monthly/update/wholesale_mar...](https://www.eia.gov/electricity/monthly/update/wholesale_markets.cfm)).
Even if google pays 100, then it looks to me as if straightforward server cpu
energy usage is unlikely to be a huge issue.

Of course, there are power supply losses and cooling overheads, but even if
that raises the power consumption by a factor 5 (doubtful), then a several-
thousand dollar server cpu is still going to outweigh energy costs for many
years.

Furthermore, energy costs are trending downwards _and_ cpu's are still getting
more efficient; it's a somewhat risky investment thus to buy a more expensive
(but more efficient) chip if that investment needs years to pay off.

So, it looks to me as though plain old cpu costs certainly are far from
irrelevant; they may indeed exceed energy costs over the chips lifetime if the
energy is acquired at close to wholesale prices and cooling is efficient (say
3x overhead?).

------
stolk
Meh. If it is lower TOC that you are after, then move your data centre to
multi core ARM.

E.g. a 48 core 64 bit ARM processor:
[http://www.cavium.com/ThunderX_ARM_Processors.html](http://www.cavium.com/ThunderX_ARM_Processors.html)

So, Amazon, Alibaba, you know what to do now.

------
johansch
I don't really understand the commotion. Intel have been striking global and
local deals like this with much smaller outfits than Google and Facebook for
at least a decade.

It's an intricate play with variables like marketing opportunities (globally
and locally), silicon availability (when, in which numbers), performance per
dollar, etc etc. You could even get into this game by buying "just" like 5-10k
CPUs in a quarter, if you're in the right region and have the proper local
branding quality.

The concept of "launch customers" globally/per market doesn't seem very new
either. That window of exclusivity is usually so short that it matters more
from a marketing point-of-view (for both seller and buyer) than anything else.

~~~
hga
The problem is the claim that Intel reneged on commitments to sell these chips
to other companies RSN instead of in 6 months, and it's not a capacity issue.

------
CyberDildonics
Sounds like they should auction off the initial runs before there is enough
supply to meet demand.

~~~
johansch
They employ way too many sales and marketing people that would fight against
such a straight-forward solution. You would think that the lack of having any
actual competitor after AMD more or less folded would make their positions
redundant, but Intel moves slowly.

