The details on the new BeagleBone board are here, but basically TI is offering a 1 GHz ARM processor plus the connectivity and power components on a single board for $45. That’s a lot of compute power for a little price. While the Raspberry Pi costs $35 it doesn’t have as many ports built in, and Adrian Valenzuel, marketing director of TI’s Sitara ARM processor product line, said it also isn’t as open.

When pressed, he said that people who build with the Pi can’t buy the hardware that comprises the Pi board on the open market, unlike with the TI board. He’s right. The chip on the Pi is built by Broadcom, but it’s not something that anyone can simply order and play with. On the flip side, Atmel, the company that makes the processors on the Arduino boards, sells those components and has released software supporting the Arduino community.

And while some people might be content to play with $35 Pis, there are plenty of people thinking about pro-quality projects that might want to get even more granular than the board, and try their hand at tweaking the components around the processor. That’s TI’s sales pitch as it moves down market to the class of makers who love the power of the Pi over the ubiquitous (in Maker circles, anyway) Arduino.

TI’s hope is that by getting people playing with its board it can sell components and attract a user base that wants to play with its hardware. It may never be a huge business, but it’s one that chip makers are paying attention to. Earlier this year AMD introduced its GizmoSphere board, a $200 board and developer community for makers.

While none of the companies involved are willing to share any sense of how these products may help them financially, it’s clear that chip firms are eying the maker community as a market worth paying attention to, especially as the internet of things heats up.

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The goal of Project Moonshot, as initially stated in November 2011 and reiterated seven months later, is to offer super energy-efficient and compact servers capable of running the world’s biggest webscale (and biggest enterprise) workloads at a fraction of the cost of current hardware. HP said it shipped a number of early versions for customer proofs-of-concept last year but today’s news represents broad availability of what HP execs called a “software-defined server designed for the data center.”

The new server puts 4,500 Proliant servers into one HP 1500 enclosure. Compared to traditional Proliant (DL-380) servers, this iteration uses 89 percent less energy, 80 percent less space and is 97 percent less complex than the former state of the art at 77 percent less cost.

It’s understandable, given HP’s huge server installed base in enterprises, why it lays out that particular comparison, but customers might be more interested in how Moonshot boxes compare with webscale servers from what used to be no-name rivals like Quanta, Inventec, and Wistron. Increasingly, those are the servers that are being forklifted into massive data centers.  The notion of BYO servers is also spreading. In January, Rackspace, the big hosting and cloud provider, for example, said it would start building its own servers.

That trend puts traditional server vendors like HP, Dell and IBM in a tough spot. It’s good to see HP willing to cannibalize its existing products — if it doesn’t someone else will eat its lunch anyway. But,the macro issue is whether most of those big web-scale workloads have already moved onto new “no-name” servers or plan to do so. It is clear that for many of these new companies, the name on the box is not as important as the box itself and very few webscale customers appear willing to pay a premium for a label.

Moonshot servers are based on underlying fabric from HP networking, said Mark Potter, VP and GM of HP’s industry standard server (ISS)group. “This SDN switching is OpenFlow enabled so you can rapidly connect these computer architectures to any network,” he said during Monday’s web event. HP  is now running both 32- and 64-bit ARM-based Moonshot servers in the lab, he added.

Facebook outlined its wish list for webscale enclosures and servers which it pushed into the Open Compute Foundation. HP is part of that effort but it was unclear to me whether Moonshot servers will be fully Open Compute Project (OCP) compatible.

Update: Jim Ganthier, VP of marketing and operations in HP’s server group, confirmed that Moonshot is not OCP compatible but said the new servers would be great for powering similar webscale workloads.  He also took exception to the notion that HP server marketshare is being eroded by white box makers. Existing HP servers “power 8 out of 10 of the world’s most visited web sites and 3 out of 4 of the biggest social media sites,” he said. In addition, he said research like that from Gartner and IDC that shows branded servers — including HP boxes — losing ground to white box ODMs came out “before the world knew about Project Moonshot.”

So we’ll have to wait and see.

This report was updated at 9:19 a.m. PST with more detail on the servers and again at 12:55 p.m. PST with additional HP comment.

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To build the internet of things we’re going to need a lot of chips — orders of magnitude more than we have in use today. Generally those chips will fall into three categories, and each of those categories is poised to become a booming business with a lot of volume and room to grow. Let’s break it down:

Connectivity: This one is a no-brainer. If we want things to connect to the internet, we’re going to have to put radios in them. It may be Wi-Fi, Bluetooth, Z-wave, ZigBee or even a 3G or 4G cellular standard (or all of the above) but there has been and will continue to be a land grab for radios among the big chip companies. The rise of connected devices is the reason Qualcomm bought Atheros back in 2011 and the reason little known microcontroller company Atmel purchased Ozmo Devices in December.

We’ll also see new products aimed at integrating radios together, not just from Broadcom — the king of radio integration — but also smaller companies such as Redpine Signals, Altair and others. And these radios will be going into more devices. Just a quick scan of Kickstarter or Indiegogo shows a plethora of home gateways, Wi-Fi enabled devices and sensors that have radios integrated from a variety of vendors. A report from the OECD on the internet of things estimates that a family of four will go from having an average of 10 devices connected to the internet now to 25 in 2017 and 50 by 2022. Every single on of those will have a radio — or multiple radios.

Control: These chips are the brains of the operation. But unlike in the personal computer or server market, where Intel and AMD fought for dominance (more truthfully, AMD tried to at least achieve profitability), or the smartphone market where Qualcomm has taken out competitors ranging from Texas Instruments and Freescale on the application processor side (leaving Apple, Samsung, Broadcom and Mediatek standing), this market has a much wider variety of players known for their embedded processors and microcontroller. The one name that spans all of these industries is ARM.

At the low end, microcontrollers can range from 8-bit processors that manage setting on your microwave to higher-end chips inside a set-top box. Companies like Freescale, Texas Instruments, Atmel, Intel and STMicroelectronics all are pushing their microcontrollers (MCUs) inside the internet of things. The variety of use cases and devices inside connected devices mean some gadgets will need more power savings than performance or merely just a cheap 32-bit chips designed for a more industrial application. Many of these companies have an advantage for the internet of things because they are used to supporting a wide variety of end products with their firmware and sales teams.

They have designed their chips to be modular. If the bigger players want to play here they will have to build out multiple lines of chips with differing performance specs that can be supported across a wide range of end devices. That’s very different from building out a line of chips with slightly different specs all designed for servers. I bet a few of the big vendors, especially on the connectivity side, might try to acquire this knowledge.

Botanicalls moisture sensing system.

And since many of these sensors will be integrated onto small packages with radios and maybe even MCUs there will be a lot of value for a company that can pop all of the above onto a system on a chip — it’s cheaper, smaller and more power efficient. So consolidation will happen within these categories as well as across them as more devices get online and we ask them to share more information about their environment.

So be they MEMs, microcontrollers or radios, there’s a lot of silicon (or maybe gallium arsenide) inside the internet of things. And the types of chips required will stretch the silicon industry — that has been primarily focused on keeping up with the performance requirements of Moore’s Law — into new directions. Power savings, integration and size will matter when it comes to connected devices more so than the all out race for performance that has dominated the chip industry for decades.

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A microserver uses a bunch of densely-packed, low-power chips. The configuration makes more sense for less demanding compute jobs, such as serving up contact information on one website user, than a server with a more capable brawny core, which tends to use much more power. Webscale companies such as Facebook and Yahoo want to add them to lower their operating costs.

Microserver shipments are going up faster than general servers and blade servers, according to IHS.

And the product sales won’t stop this year. The forecast shows shipments increasing substantially each year until 2016 (see data at left). By then, it will represent one-tenth of overall server shipments.

Still, those normal server shipments are huge; roughly 8.4 million servers were sold last year. The microserver market, for its part, is clearly still nascent. Nevertheless, the report does give an interesting insight: the microserver trend will only grow, not level out, through 2016.

The report attributes the shipment increase to the need for lower-performance, lower-power chips in the data center and in smartphones.

The billion-dollar question is, Which companies will capture the largest chunks of microserver revenue?

On the processor side, Intel is vying for a sizable cut. In December the company unveiled an Atom-based processor that uses just 6 watts, as my colleague Stacey Higginbotham reported. But last year AMD snapped up SeaMicro, and Rackspace has already certified the new SM15000 — available with Intel Atom, Intel Xeon or AMD Opteron processors — for use in OpenStack.

ARM could stand to gain from the microserver growth, too. In October AMD said it would license ARM’s chip technology to make chips for its own microservers. Plenty of other companies use, or plan to use, ARM’s intellectual property to build chips that could go in microservers, too, including Applied Micro and Calxeda, to name a couple.

This story was updated on March 7 to remove an incorrect attribution of one figure in the post to another source of market analysis, IDC.

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Bryant also added that the SoC has already made it into 20 designs so far, and that an unnamed storage vendor even swapped out an ARM design for the Intel SoC. And that’s what this press conference was all about: “Today there is no enterprise-class ARM-based server chip,” said Bryant in response to a question, but that competition is coming next year and Intel can’t afford to get caught flat footed.

After a few years of actively denigrating the idea of lower performance but power efficient chips in the data center, in 2011 Intel finally got the microserver religion, releasing a product roadmap and predicting the segment might become about 10 percent of the server market. But other than make a special 64-bit part for SeaMicro, which shoves hundreds of low-power Intel Atom chips into a dense machine, Intel talked a good game but didn’t seem to be excited about the opportunity in the way that ARM or other chip vendors such as Tilera were. It even let its rival AMD walk off with SeaMicro.

As one of our regular commenters Lucien Armasu put it, Intel is facing the classic innovator’s dilemma, by which lower-cost, good-enough products are coming from the bottom of the market to cannibalize the success of its higher-dollar cores. Lucien wrote:

Anyways, the problem for Intel is that they are very reluctant to even promote Atom for micro-servers, and it shows from how they talk about it. They have a conflict of interest, because they’d rather sell the much more profitable “bigger” chips.

The reason why this is a problem for Intel is because ARM has absolutely no problem trying to sell ARM chips for servers. In fact they have all the incentive in the world to do it, while Intel has the least incentive to do it. As Clayton Christensen puts it, Intel will be “happy to concede the low-end, non-profitable (for them) market to their disruptive competitors”.

Intel was a case study in Christenson’s Innovator’s Dilemma, so its position here is ironic. But despite analyst worries that Intel will see its margins drop from the mid-60 percent range to the 50-percent range in the coming two years (in part because it will have lower-margin chips but also because its overall competition will be tougher with ARM-based cores in the market). But Intel did note in its presentation that a highly dense Atom SoC configuration in a rack would net more revenue than a rack of fewer Xeon processors (there were roughly a fifth of the number of Xeon chips in that rack configuration). It was a bit more vague though, on the margins.

“From an Intel revenue perspective, Xeon v. Atom doesn’t matter — in fact the Atom is slightly greater,” Bruyant said. ” Across our portfolio it’s still a very good margin for us and we’re absolutely fine if the Atom SoC does well for us.”

Intel brought out a data center executive from Microsoft and one from Facebook to tout the value of this Atom SoC, although it was unclear if Facebook was actually using the SoC in its environment. Frank Frankovsy of Facebook seemed unclear on the pricing and in a discussion about the potential benefits of using this SoC, he extolled the virtue of so-called “wimpy cores” for some jobs from a price performance per watt perspective and said, “Theoretically you also drop the cost of those chips.”

It’s well known in the chip world that Facebook, as a large buyer of chips, isn’t shy about testing products from alterative chip vendors such as Tilera in hopes of keeping pricing pressure on Intel. What’s more interesting is if other vendors start doing this. At that point, Intel may have the products and features on its chips that webscale customers want, but it will have to be competitive on price in a way that it really hasn’t had to be when it was just competing against AMD.

Facebook has said it will use these wimpy cores(one promising segment might be in its planned cold-storage architecture), but the jury is out on which vendor will win its business. Intel clearly intends to fight for Facebook and other webscale business, but when it does, it’s going to be facing up against some real competition — competition that it hasn’t faced before in the Intel/AMD world.

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This brings Qualcomm up to the third largest chipmaker in the world for 2012 and shows how the shift to mobile devices and consolidation in the server and PC market has changed the fortunes of the chip industry’s biggest players. So while Intel is still the top chipmaker in the world, it is expected to see its sales decline by 2.4 percent, roughly in line with the chip industry as a whole. Of course, with an anticipated $47.54 billion in sales and a whopping 15.7 percent of the overall chip market this isn’t surprising.

Qualcomm’s growth came off of a much smaller base to reach an anticipated $10.2$12.98 billion in sales. Other notable bits from the IHS rankings include Samsung still at the No. 2 spot and experiencing growth above and beyond the overall industry thanks to its share in Samsung-LED. LED lighting and certain sensor components grew this year as well. Broadcom and Nvidia should also see higher percentage growth while both Texas Instruments, Freescale and AMD were the biggest losers. IHS iSuppli expects this downturn to be short-lived as long as the global economy continues to stabilize. It anticipates growth in 2013 to hit 8 percent.

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