Business, Cloud Computing, Enterprise, Hardware

ARM Servers Now in Doubt as Calxeda Dissolves

After only having personally met some people at Calxeda relatively recently, many people including myself were under the impression that ARM servers were going to be the next big thing. Clearly they had some sort of an impact on the market because companies like Intel have created products as responses to them. They seemed to be moving forward with their 32-bit ARM server designs as we had seen at ARM’s TechCon and they seemed to have customers on board. I believe that the problem was that they weren’t coming with a 64-bit technology yet and that they ran out of funding.

They supposedly had up to $90 million in funds to work with from investors and had completely blown through all of it. This means that whoever was in charge of the company clearly had burned a lot of money while being attacked from all angles by companies like Intel and AMD. The truth is that it isn’t easy being a new semiconductor startup, especially when you’re competing with the likes of Intel and AMD. The power of AMD’s SeaMicro technology and Intel’s Avoton processors proved to be too great for Calxeda and their technologies.

What’s the most worrying thing about this entire episode is the fact that Calxeda was kind of the darling of ARM microservers and led the charge against x86 powered Intel and AMD systems in the server space. While it remains to be seen what the impact could be for the rest of the server market, I do believe that it does cast further doubt upon the feasibility of some other ARM server players on the market. I think the timing for this announcement couldn’t have come at a worse time for Calxeda employees and we always hate to hear about people losing their jobs during the holidays.

Hopefully this doesn’t reflect poorly upon some of their other ARM competitors like Applied Micro, which currently is getting some short term stock punishment when it dropped about 1% earlier today. Clearly they’re a more established company and their investors and the SEC require them to be more responsible, so I don’t really see how this could hurt Applied Micro. If anything, this removes a competitor for Applied Micro, but they will have to prove to the market that ARM servers are a feasible and profitable business in the wake of Calxeda’s folding.

The company is currently in the process of restructuring, which includes restructuring their debt and have sent home all of their employees for the rest of the year as they figure out what to sell in order to pay off their investors. Calxeda’s technology isn’t worthless, so they’ll definitely have buyers onboard, but those buyers will likely be paying a lot less for the IP knowing that the company has already gone under rather than when they were considered to be strong. I don’t think many people saw such a sudden fall of Calxeda, not even their competitors like Intel and AMD.