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To: Mary Cluney who wrote (139109)	7/12/2001 3:27:36 PM
From: pgerassi	Read Replies (1) \| Respond to of 186894

Dear Mary: It is you that is dense! Most servers come with less than the full processor complement as well. Many 4 way servers come with one or two CPUs. You always think that servers will have max CPUs and little disk. I have stated that it is the other way around. Most systems come with lots of disk, peripherals, and other things. $60B in servers means about $1B in CPU chips. At the typical Intel ASP of $150 or so, that is 6 million CPU chips or enough to power 4 million servers. Now if Compaq, IBM, and HP sell 100K RISC chips for $1k each (their cost), that still leaves 4.6 million CPU chips for Intel. Still enough to cover all of their servers. Of course that does not mean that OEMs do not pocket $4 to $8B for the CPU modules. If you refer to the Himalaya Guide, you see that a CPU module is contained in its own metal box, and it contains up to 2 CPUs, memory slots, logic, PCB, regualtors, HSF, and server switching interconnect. That unit is what costs $10K or more. But, there are many costly components in there besides the CPU chip itself. We are supposed to be arguing the CPU chip revenue portion of the server revenue number. That is the money paid to the component supplier, not what the customer pays the OEM. These two are highly independent and the OEM receives the large majority of it before and after the component suppliers are paid. For proof merely look at what Compaq charges for 4 256MB ECC SDRAM DIMMs, $11,000. Go to Pricewatch, and you see that the cost charged to a DIY is $220 from a reputable supplier like Micron. Now I think that may contain other hardware, but it is not worth $10,780 more or 50 times the component price. Given the same markup, a $23,000 CPU module has a CPU worth $460. But even standard modules are charged 4x the DIY cost by Compaq, DELL, and IBM. Given the above, better than 90% of the servers are simple 1 or 2 CPU filled servers. Most of these are indistinguishable from normal high end PCs in either standard PC case types or (1, 2, or 4)U rack mount cases. Perhaps the server revenue figures overlap the commercial PC revenue figures. A commercial PC could be in both categories. Most web servers are commercial PCs where a small CPU like a Celeron, with a large amount of memory, normal amopunt of disk and one or more NICs. At this level, CPU chips are a larger figure, but they are already counted as revenues for Intel (or AMD) based PCs. So a good deal of server CPU chips are already in PC revenue. I will grant that much more information from the IDC is necessary to argue this further, because the OEMs do charge like I was arguing and not like you were. They also add in far more peripherals than Tony thinks into a server purchase. Perhaps it is the mistaken impression that high end servers are configured and charged like everyday PCs, and that is clearly not the case. Pete