Intel Turning Its Attention To Cloud Computing (NASDAQ:INTC)

Intel will be investing up to $100 million in software to improve its cloud computing capabilities. That amount will include a $75 million equity investment in cloud software start-up Mirantis and a $25 million investment in its own cloud computing business. Mirantis software is an open-source product that allows about 50 computer servers to operate in concert, crafting one flexible machine out of many.

Cloud computing has become a popular method for improving and enlarging computing systems. Cloud-driven businesses like Google, Microsoft’s Azure and Amazon Web Services are eating into Intel’s market share by lessening the number of companies interested in machines that use Intel’s server chips. One analyst estimated that roughly one-fifth of the applications that companies build would be made on cloud systems by the end of this year.

Intel does not want to rely on a handful of customers, so innovation and expansion is critical for the company. Intel is currently the world’s largest maker of computer chips. However, the company does not dominate the market for chips for smartphones the way it did the market for chips for PCs. Intel’s PC chip business contracted 14 percent in the last quarter when compared to the same quarter a year ago, falling to $7.5 billion. Intel’s data center chip business grew 10 percent in the same period, rising to $3.9 billion.

A number of older tech giants have made considerable investments in start-up companies to help them remain competitive in this fast growing industry. Since April, five of the six companies acquired by Cisco Systems or that the company has announced its intentions to acquire have been in cloud systems. EMC has owned a cloud computing software company called VMware for years. For the start-ups, there are plenty of prospects to work with large companies both inside and outside the tech industry.

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