A leaked internal memo states that the company is forming a new business unit called the mobile and communications group. It will consolidate the four existing divisions, mobile communications, netbook and tablet, mobile wireless and ultra mobility. It will be led by former Palm and Apple VP Mike Bell and Professor Hermann Eul.
Earlier in the year Gartner predicted that smartphones would overtake PCs by 2013 in web views. The Economist has forecast tablets and mobile to outsell PCs this year, with mobile devices to double PC sales by 2013.
Intel, while absolutely dominant in the PC and server markets is almost completely absent in the mobile and tablet market. Nearly all mobiles and tablets (98% in 2005) run on variants of the British ARM processor architecture, a leftover from the now defunct Acorn Computers.
The iPad 2 runs Apple’s A5 chip. Its A4 powers the iPhone 4. Samsung’s Galaxy Tab and Galaxy SII mobile phones use Samsung’s Exynos chip. Nvidia, traditionally a graphics card manufacturer for desktops, has even got in on the game, claiming that its latest quad core Tegra 3 will outperform an Intel Core2duo desktop. HTC is using it to power its latest phones. What do all these chips have in common? ARM processor architecture.
The relative simplicity of ARM processors makes them suitable for low power applications. As a result, they have become dominant in the mobile and embedded electronics market, as relatively low-cost, small microprocessors and microcontrollers.
The very architecture of ARM processors is an anathema to Intel’s business model which has been based around Moore’s Law. ARM processors are specialised – designed to power up quickly and perform simple tasks efficiently, allowing for longer battery life and quick internet connections. The battery to performance ratio is more important than raw power in this market.
Intel needs to pull out all the stops with its Atom series of processors and not just match ARMs offerings, but beat them. Software written for ARM is incompatible with any other processor based system. Matching ARM processor performance will be enough to persuade manufacturers to change their archictures and make a generation of software incompatible.
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The first Atom phones are expected to hit the market in 2012. Intel also announced an alliance with Google to get them on Android systems, but has not made any announcement concerning specific manufacturers – a worrying sign.
One advantage Intel does have is its production resources, which are tremendous. It still has the most high tech chip manufacturing plants in the world, and if they crack the market they will be able to ramp up production very quickly – potentially outstripping rivals.
If Atom is a failure, Intel could be locked out of the market in just a few short years, if it isn’t already. This could have a flow on effect to the rest of the business. Intel’s move has all the hallmarks of the same panic seen at Microsoft with Windows 8. Could another lumbering giant of the 90s desktop world be laid low in the 21st century’s mobile marketplace?
