Thin clients - are you being served?

So what beef does Intel really have against the current Web 2.0, "datacenter plus thin client" model? I think the answer is a bit more nuanced than the simple "they spent $5.5 billion in capex last year and don't want to see the desktop and mobile processor portion of it go to waste" explanation that I started this post with. The fundamental challenge that Intel faces in a computing market that's dominated by massive datacenters is that power constraints will, for the foreseeable future, limit the number of integrated transistors that you can pack into (and therefore sell into) a single datacenter. Even at current transistor counts, most datacenters have large empty regions in them because you just can't get enough power out of the grid to run enough transistors (and, to be fair, hard disks, which are a bigger problem) to fill a modern datacenter.

So datacenter floor space may be theoretically infinite, but the power grid acts as an external economic and physical constraint that places a hard limit on the growth of the market for transistors in any one local datacenter, and this depresses the global market for transistors that datacenters represent.

The solution, then, is to spread the load around by moving as many transistors as possible off of a single point on the power grid (the datacenter) and connect them to all of these other points on the power grid that still have plenty of spare capacity (homes, schools, offices).

This simple, power-optimization and load-balancing problem is why Intel has to keep selling rich clients. The datacenter market alone just doesn't have the capacity to absorb enough 45nm and 32nm transistors to make the massive investment in fabricating them worthwhile, even if you factor in a concomitant proliferation of (low-transistor-count) thin clients. So to have a robust market for transistors at this level of integration you have to keep selling more and more of them across a wider, more broadly distributed swath of the power grid.