Qualcomm is finally talking about design wins surrounding its server chip platform called Centriq, unveiled this past November. Early excitement and technical interest in the company’s first attempt to bring a processor to the server space have been high, though without firm commitments from major system vendors or cloud service providers like Amazon and Microsoft, the markets have been hesitant to buy-in to this and similar Arm-based designs.

The first customer Qualcomm has partnered with is a relative unknown but provides concrete proof that the hyper-scale server infrastructure that is expected to grow throughout the deployment period of IoT and other services, is real. Start-up Hatch Entertainment is building a cloud-based streaming gaming service for mobile devices and will utilize Qualcomm Centriq 2400 server chips as the datacenter heart of its platform.

Though only a single customer, the potential for revenue growth as the primary technology provider for Hatch is substantial. The 2017 revenue for smartphone gaming was $46B and 2018 is projected at $57B. Separately, advertising revenue for mobile gaming was an additional $39B last year. Hatch is looking to be the first streaming gaming provider for Android (and eventually Apple iPhone and iPad hardware) to succeed. Streaming games don’t require downloads or installation on consumers’ smartphones and start playing instantly. Bandwidth requirements for the cellular carriers are half that of streaming video, a unique trait for the Hatch + Qualcomm design that uses capabilities of Qualcomm’s server processor and local hardware on smartphone chips simultaneously. Staking a claim to this market segment could mean significant growth for Qualcomm’s budding server unit.

For all its talk and technical prowess, Qualcomm needs customers and proof-points to validate the cost and investment by management in this highly competitive space. Intel dominates the enterprise market with 98-99% market share with fellow x86-architecture competitor AMD releasing competitive processors last year for the first time in nearly a decade. Other Arm-based designs, including ones from Cavium, Applied Micro, and recent newcomer Ampere led by an ex-Intel President, have struggled to gain solid footing. Qualcomm has a strong brand in the consumer mobile chip and infrastructure markets but moving in on space dominated by Intel takes additional effort.

Hatch developers tell me that by utilizing Qualcomm chips in the cloud, it can take advantage of architectural similarities between that processor and the ones that exist in smartphones from the Android and iPhone ecosystem. The cloud-based games will run logic on the Qualcomm Centriq based chips and then send specific instructions on what and how to render the graphics on the smartphone itself. This splits the processing between the cloud and local device, improving the gaming experience over previous streaming gaming solutions.

Hatch views the benefits of an Arm-based design like Qualcomm’s as the key, with no need to convert games from their native Arm-based code that was developed for smartphones. This conversion would be required using Intel or AMD servers and would mean a reduction in performance. Using Qualcomm Centriq 2400 chips saves processing time and power, making the service more scalable and less expensive to operate.

For Intel and AMD, both of which are fully entrenched in the traditional server space with x86 processors, this is a warning sign of a potential shift in the landscape of cloud services. As the available options of Arm-based servers continues to increase, developers will find more ways to utilize their capabilities for unique integrations, including what Hatch is showing. Other workloads typically run in the cloud that could shift to Qualcomm Centriq 2400 or competing designs include web hosting and long-term cold storage (hard drives that are accessed infrequently) that companies like Facebook and Google use to store the massive amounts of data uploaded by users every day.

The Qualcomm and Hatch announcement is only a single step in what must be a long journey for the San Diego chip giant to prove that it can attack the competitive and Intel-dominated server space. At a time when Qualcomm must substantiate the value of its adjacent product offerings due to the hostile takeover actions of Hock Tan and Broadcom, it must continue to bring in new, larger, and more impactful customers.

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