I have long said publicly that Intel will have to enter the public cloud market. The reasons are quite simple. There was a time when majority of the hardware was bought by individuals, or smaller and medium size companies. As these entities had limited bargaining power, Intel was able to get high margin for their hardware products.

Enter the Cloud players like Amazon Web Services (AWS), Azure, Google, Rackspace, etc. Now small and medium size companies no longer buy a lot of hardware, but mostly use virtual machines from Public Cloud players. These Public Cloud companies in turn buys large amount of hardware in bulk and thus has a huge amount of bargaining power. Imagine the threat to Intel, if Amazon AWS tomorrow announces that it will start using AMD hardware and will slowly move to all AMD datacenters. I am sure it will not only put a big dent in Intel stock prices, but other Cloud provides might move in that direction too. Not a good scenario for Intel. Even without this, a world in which a big chunk of Intel hardware is sold to a selected few Public Cloud Providers who has huge leverage is not a comfortable position for Intel for sure.

Thus Intel needs to be a Public Cloud provider, selling its hardware virtually, directly to end users. The path is not simple, and they might need a lot of preperation. Today Intel announced something which can be thought of as a first step in this direction. Intel bought API portal management company Mashery for $180 million. For any Cloud offering, you need your physical datacenters, and then software that can expose these datacenters via APIs. We believe Intel partnered with Mashery to test the waters, and now has bought the company to bootstrap their Cloud Offering. Can we see a Public Cloud offering from Intel in near future? We believe so.

To read more about the acquisition Click Here.

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