Would you consider that to be a victorious situation for Intel?!?
ARM server vendors don't have to win the game, they just need to score points. Intel NEEDS to win... Like you said, it's a market that's too important to cede. But selling server processors at cost is not an option that Intel could sustain for very long.
Just keep pretending there's no demand for ARM servers there, and nobody will ever be capable of meeting that demand.
First company that touted these ARM servers chips-AMCC is no where to be seen. Its stock price is lowest in last 12 months-close to $6.00. None of these small companies can keep up this development cost as you stated.