June 25, 2024


Google is trying to make cloud computing more affordable with a custom-built Arm-based server chip. At its Cloud Next conference in Las Vegas on Tuesday, the company said the new processor will become available later in 2024.

With the new Arm-based chip, Google is playing catch-up with rivals such as Amazon and Microsoft, which have been employing a similar strategy for years. The tech giants compete fiercely in the growing market for cloud infrastructure, where organizations rent out resources in faraway data centers and pay based on usage.

Google parent Alphabet still derives three-quarters of revenue from advertising, but cloud is growing faster and now represents almost 11% of company revenue. The segment, which contains corporate productivity applications, is also profitable. Google held 7.5% of the cloud infrastructure market in 2022, while Amazon and Microsoft together controlled around 62%, according to Gartner estimates.

Market leader Amazon Web Services introduced its Graviton Arm chip in 2018. “Almost all their services are already ported and optimized on the Arm ecosystem,” Chirag Dekate, an analyst at technology industry researcher Gartner, told CNBC in an interview. Graviton has picked up business from Datadog, Elastic, Snowflake and Sprinklr, among others.

Alibaba announced Arm processors in 2021, and Microsoft did the same in November.

Arm isn’t completely new to Google, which started selling access to virtual machines, or VMs, that use Oracle-backed startup Ampere’s Arm-based chips in 2022.

Porting applications to Arm machines has made sense for organizations seeking to reduce spending on cloud computing because of economic worries. When Arm Holdings filed to go public last year, it pointed to Amazon’s claim that Graviton could give up to 40% better price performance than comparable server instances, such as the common “x86” model used by AMD and Intel processors.

Google has used Arm-based server computers for internal purposes to run YouTube advertising, the BigTable and Spanner databases, and the BigQuery data analytics tool. The company will gradually move them over to the cloud-based Arm instances, which are named Axion, when they become available, a spokesperson said.

Datadog and Elastic plan to adopt Axion, along with OpenX and Snap, the spokesperson said.

Broader use of chips drawing on Arm’s architecture might lead to lower carbon emissions for certain workloads. Virtual slices of physical servers containing the Axion chips deliver 60% more energy efficiency than comparable VMs based on the x86 model, Google cloud chief Thomas Kurian wrote in a blog post. Arm chips, which are popular in smartphones, offer a shorter set of instructions than x86 chips, which are commonly found in PCs.

The chips can also speed up applications.

Axion offers 30% better performance than the fastest general-purpose Arm-based virtual machines in the cloud and 50% better performance than comparable VMs based on x86, Google said.

“I think it completes their portfolio,” Dekate said.

Correction: The Cloud Next conference is on Tuesday. An earlier version misstated the day.


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