Many people use ATOM servers. Because many applications do not need much CPU power at all. ATOM is also very good as a static webserver in combination with a separate database server.
ATOM D525 is actually pretty fast overall.
You will see that many people look at server load - see that it is high and give the fault to the CPU while in most cases, I/O bottlenecks are increasing the load.
Many servers use high end quadcore CPU's that are idle 90% to 99%
We have many customers with Atom servers, and they are happy with them.
There are a few reasons why:
The servers itself are cheap - so it does not take long to make a good profit with them.
They eat practically no Power - Which makes it possible to offer them very cheap.
It is dedicated Hardware, for the price of a good VPS.
The newer Atoms are dualcore (+HT) and use max. 30W, can take 4Gb(+) Ram and up to 4 HDDs which is perfect as development server or for small/middle sized sites that dont have a really high budget.
We have customers that use them and they are satisfied.
For a low-medium traffic server, they are great.
Much better than a VPS because it's a dedicated machine, not a shared enviroment. They are also cheap to buy and to maintain, consume very little power so the customer gets a very good price.
I'm sure people are buying them, but if you're thinking of selling them I don't recommend it. It's easier to find people willing to pay $100 / mo for a reasonably powerful server than it is to find people willing to pay $50 / mo for an atom.
Finding customer always is hard deal. Does not matter what you sell - cheap Atom or expensive Six Core Xeon. You could fail on both. Successful business always find his customers and that is why it is called as successful.
Rustelekom LLC Dedicated server since 2002, RIPE NCC member, LIR, AS51168
Instead of the endless speculation of "will ATOM work?" just research the actual speed of the processor. I would lookup benchmarks of the ATOM where they usually compare it with many other Intel and AMD processors. The benchmarks ive seen have shown ATOM to be about the same speed as P4's for the equivalent clock rate.
However people are more affected by how things are marketed then anything else. Ive seen people pay more for a P4 that's slower then an ATOM. Why? Atom is marketed as a "slow" and efficient processor and no one wants to believe that such a efficient machine could really suit their needs. To believe a efficient and "low end processor" could suit them means they don't have demanding needs. Most end customers want to believe they have really demanding needs even if they don't. Sometimes the end user is even insulted when you suggest they use an ATOM but not insulted if you offered a even slower machine if its a P4.
It would seem an Atom would make a good backup storage server. It should be plenty fast enough to store account and site backups on.
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