By prasad, on 
July 15th, 2010
Om Malik, of GigaOm, has written several interesting posts regarding Why Wintel should be worried about ARM’s advance, and how Intel is going to lose the battle for the Mobile space. He makes several compelling points about why Wintel (Windows on Intel) is going to lose the Mobile war. Some of his thoughts summarized below:
- The PC market has saturated, with no huge growth prospects, whereas the tablet PC market is poised for a huge growth phase.
- Intel’s recent launch of Moorestown and Atom Z600 is not going to have a significant impact, as it will be months before the chips show up on production devices, and since its a low-margin segment, will not have an impact on Intel’s bottom line anytime soon.
- With the arrival of high performance, dual-core Snapdragon chips from Qualcomm, and Nvidia’s Tegra and Tegra 2 chip sets, Intel will also loose its performance edge in the mobile chip set market, and ARM always had the upper hand on low power consumption
- Unlike the PC market, where Intel’s only major competitor was the cash-starved AMD, Intel’s competition in the mobile segment are cash rich.
- Qualcomm currently leads in providing chip sets in the Android ecosystem, and Intel is locked out of the Apple ecosystem, where both the current iPhone and iPad are based on the ARM architecture. RIM, which is another serious competitor in the mobile segment, also runs on ARM architecture.
- it will be at least another year and the next version of Atom before Intel can get its power consumption to be low enough to address the smartphone market, and make a push into the ARM market.
- Microsoft with its Windows, which is the other half of Wintel, has already started working closely with Nvidia, and others to get Windows running on the ARM devices
All well taken, but my thoughts about Intel’s position in the mobile market is different. Here’s what i think:
- While we have seen that tablet PCs are going to be big in the coming years, and the PC segment is not going to see much growth, we should also appreciate that in terms of absolute numbers, and especially in terms of revenues, the PC and Server market is still huge. And this situation is not going to change anytime in the near future.
- The same report also shows that Desktops, and Notebooks will make up 60% of the sales in the various PC categories in 2015. Netbooks will account for another 17%, (and a large majority of the Netbooks still run on Intel Atom chipsets). Tablet PCs only account for 23% and even there, Intel should have its chip set powering a reasonable number of these tablet PCs.
- While the above report doesn’t include Smartphones as one of the PC categories (and I agree that a huge majority of the Smartphones are powered by ARM chip sets. In fact Intel’s share here is close to zero), we should realize that it also doesn’t include the enterprise and Server market, where Intel (or definitely at least the x86 architecture) still has a stronghold.
- I know Server, Desktops, Notebooks don’t exactly fit the definition of the Mobile market, but you can’t talk about Intel and not talk about these segments. These are high margin segments that are sure to keep Intel’s coffers full and also help fund or subsidize Intel’s foray in the Mobile space. Having finished Q2 this year with a $2.9 Billion in profit, Intel’s profits are comparable to Qualcomm’s Revenues. While Qualcomm is a name to reckon with in the Mobile space, it is several orders of magnitude below Intel in terms of Revenues, Profits, and Cash flows. There is just no comparison here.
- Intel for now seems to have the best of both worlds – high volumes (the Smartphone market is still lower in volumes than the PC and Server market), and higher (comparatively) margins
- To do a fair apples to apples (not Apple as in the iPhone
) comparison, we will need to look only at the Tablets (Slates) and Netbooks market, and here while i don’t have hard numbers, my gut feel would be that Intel enjoys a better share (ARM has a small edge in slate tablets, while Intel has a better than small edge in netbooks) - Just looking at the tablet and slate PC market, Intel still enjoys the better reputation, when it comes to high-performance devices (and typically this means higher margin too). Yes, ARM will soon have a 1.5 GHz or 2GHz processor and dual-core processors to boast of, it will still be a good while before they can hope to beat or even catch up with Intel in this performance game.
- Yes, it will also be a while before Intel can catch up in the low-power consumption game, but there is enough space for both high performance and low power consumption devices in the tablet market, and with newer, better, and improved battery technology, the significance of a processor’s power consumption is going to diminish a tad
- Finally, Intel has also realized the significance of the Operating System in the mobile space. Its working on a native x86 version of Android, to ensure it powers a fair share of high-end Android tablet PCs. Intel had also made early investments in the Moblin OS for their prototype MIDs, and now partnered with Nokia in the development of the MeeGo OS. While we are yet to see the first set of devices running MeeGo, it is progressing well along its planned roadmap, and from what we have seen so far of the pre-alpha demonstration of the MeeGo for tablet, and MeeGo for handsets, I am convinced that it is going to be a strong contender in the mobile space.
To conclude, i will have to admit that ARM has been and will continue to be a force to reckon with in the Mobile space, however, Intel cannot be written off as yet. The battle is just beginning, and if anything, Intel seems to be equipped with a very capable arsenal to hold its ground and thrive.
