Why cloud, not PC, drives chip innovations

Tilera, a specialty chip company making massively multicore chips for the data center and network markets, has cracked a barrier for getting its chips into the enterprise Tuesday by launching 64-bit processors, just a day after Intel (s intc) launched its own massively multicore chip (it has 50 cores) for the high performance computing market. The two moves by the world’s largest chipmaker and a startup that has raised more than $100 million illustrate a larger shift happening in the world of computing.

For decades, innovation in the chip industry has largely been governed by the needs of personal computers. But thanks to the proliferation of connected mobile devices, the growth of the consumer web and services of all types being available online and on-demand the PC’s influence on chip design is fading. That’s providing a new opportunity for host of up and coming startups such as Tilera and Calxeda as well as larger players like AMD, (s amd) Qualcomm (s qcom) and Nvidia (s nvda). And Intel has to adapt to keep up.

Thus, on Monday it announced its many integrated core architecture, or MIC, that pairs a 50-core chip with a traditional CPU to deliver better performance for supercomputer at a slower power envelope than an all-x-86 machine would deliver. This is a market that Nvidia has started to advance in during the last few years thanks to greater concerns about the feasibility of continuing to improve supercomputing power performance without requiring a separate power plant to run each next generation supercomputer. When it comes to high performance computing using a PC chip, the PC chip no longer scales.

Meanwhile, Tilera’s massively multicore chips aren’t aimed at supercomputers, but they are responding to the needs of web companies that are trying to build out low-power processing without sacrificing performance. The way many web services and application companies are running their data centers is changing. Companies like Google (s goog), Salesforce.com (s crm) Twitter and Facebook are building out their infrastructure to serve a monolithic service, as opposed to the enterprise model of running a variety of different services based on departments or business needs. Other companies are building out platforms to solve for specific workloads, such as delivering a database as a service or a transaction processing cloud.

This is a significant shift, because it means general purpose CPUs designed for general purpose machines don’t always make sense. Thus, companies such as SeaMicro, Tilera and others are confident they can deliver specialized hardware that is optimized for specific workloads, generally by reducing power or by boosting speeds. None of them think Intel’s commodity servers will ever go away entirely, but all argue those boxes shouldn’t be the only ones in data center racks anymore.

Now we;re watching the erosion of the PC’s influence, not just in the consumer market as people pick up tablets and mobile phones instead of desktops and laptops, but also in the broader computing market. Intel knows it must act, but can it shift its mindset and tweak its architecture to stay relevant?