Intel’s Onslaught into Mobile
Intel’s processors power 80% of all desktops worldwide. Yet, Intel which dominates the processors space, recognizes that mobile is the next direction. It has gradually been repositioning itself not to get left behind in this sector, especially in emerging markets where the growth of the mobile phone , especially the smartphone, is significant. Intel continues to report slower growth in the consumer segment of mature markets, and is betting on emerging markets such as Africa where the growth of the mobile phone is expected to rise.
Mobile Computing Power
The mobile device is becoming more and more powerful as more is demanded of it. Intel, which has increasingly let its customers lead the way, will have no choice but to listen, as consumers demand and expect more from their mobile devices. Intel’s challenge here will be to design chips that are both powerful enough to be used in handsets, and that at the same time use little power – an important consideration for this market, where energy supply remains a problem in many African countries.
Previously, the company has focused on Netbooks, and now Ultrabooks, a sector Intel continues to dominate. However, consumer habits are demanding the dual capability of a productivity device such as the notebooks, and a communication device – mobile phones. Intel is not about to miss out.
Of course it’s not about to let that happen, which is why Atom (Menlow) was created and why its roadmap has it getting smaller and lower power in future. That’s also why it has announced partnerships with TSMC, LG and Nokia, why it’s buying embedded software maker Wind River, and why it continues to invest heavily in WiMAX.
The exponential growth in mobile over the past few years and decline in PC sales triggers the question: how will semi-conductor firms such as Intel be affected? Here, the chipset giant will pretty much be on Qualcomm’s turf. Intel’s traditional competitors have been AMD, Freescale Semiconductor, Texas Instruments, Toshiba, STMicroelectronics, Elpida Memory and Renesas Electronics among others.
Only two years ago, Qualcomm was in ninth place among chip makers worldwide. This is the first time that Qualcomm has ranked as high as third in the chip market. Intel and Samsung are No. 1 and No. 2, respectively.
Qualcomm, also a chipmaker, is one of the companies that has benefited greatly from the surge of mobile devices. This is no surprise when one considers the sheer number of chips that are being produced to go into mobile devices worldwide. Qualcomm, apart from licensing its technologies to other technology companies, primarily makes communication chips for communications devices. Its chips are to be found at the ‘heart of countless mobile devices’.
“China continues to be a big market for us. Africa is one of the new markets and important market for us. We have offices in Africa to support our customers. Steve Mollenkopf, president & chief operating officer, Qualcomm. “We are seeing low cost handsets and future phones. There is penetration of Internet. We are investing heavily in chipsets for strengthening our channels” (In an interview on telecomlead.com)
All is not lost for Intel however as:
Intel is benefiting from the mobile era in other ways … for every 600 smartphones sold, one Intel server is required. And for every 122 tablets sold, one new Intel server is required.
Where Will Intel Bet Its Chips?
Where Mobile is largely thought to have pushed Qualcomm’s growth as the demand for mobile devices rises, Intel will have to use its position as dominant player to gain ground, especially in emerging markets, which are driving mobile use… Intel is repositioning and adapting to the increasingly mobile world where they are not very relevant now, and has been taking major steps into the mobile market.
They began doing this way back in 2008, when now exiting President and CEO, Paul Otellini identified the company’s expansion into ultra-mobile PCs and Mobile Internet Devices (MIDs) (all low power products) as the future. This meant that whereas Intel’s traditional competitors in computing were IBM and AMD, it would now have newer competitors in ARM and Texas Instruments – both mobile device processor manufacturers.
In September, Intel announced that it would be revealing a “new class of mobile consumer computers called Ultrabooks” , adding that “that 40 percent of consumer laptops will be based on Ultrabook designs by the end of 2012.”
Already, Qualcomm’s advantage is in integration:
It’s the only company that designs the CPU, graphics (don’t forget it bought most of the ATI handheld division from AMD at the start of this year) and connectivity silicon and thus can integrate it all better than anyone else. This integration is what Qualcomm considers to be its key advantage, not only over Intel but over other members of the ARM ecosystem, such as NVIDIA with its Tegra platform.
Snapdragon, is the culmination of all this integration.It is low power enough to be used in smartphones, but high performance enough to run netbook sized devices.
So it might seem that Qualcomm is largely better positioned to take over the mobile ecosystem in terms of chips, but – the company still has to deal with forces such as competition, economy and execution capability in this region.
It remains to be seen, as both companies fight for market share in the region, who will succeed against these forces to dominate the market here in Africa where devices that have low power, yet are able to perform a multitude of tasks are key.
Intel’s advantage here will be its large economies of scale, which it can still rely on, even as it catches on to low power processor cores for Mobile Internet Devices.
Other Competition Points: ‘A Heck of a Fight’
• 3G vs WiMax
Qualcomm has long been recognized as an industry leader in wireless.
The company is the leading patent holder in advanced 3G mobile technologies, including CDMA000 1xEV-DO and its evolutions; WCDMA and its higher-speed variant known as HSPA and its evolutions; and TD-SCDMA; as well as patents on 4G. The license streams from the patents on these inventions, and related products are a major component of Qualcomm’s business. Companies such as Nokia have to pay Qualcomm whenever they sell a 3G device.
A pioneer of CDMA technology, Qualcomm enjoys the “first mover” advantage in wireless communications, which maintains with heavy investments in R&D; and with the recent acquisition of Atheros Communications (ATHR), Qualcomm has strengthened its leadership in the industry.
Wireless Intelligence estimates that the number of 3G users will reach 2.8 billion by 2014. This means that the company is expected to be the main beneficiary of the wireless communication upgrade cycle. The GSM Association expects telecom providers to spend $100 billion by 2015 -in High-Speed Packet Access (HSPA), 3G, and 4G.
Wireless 4G WiMAX technology, on the other hand, which Intel is pushing, delivers “incredibly fast, city-wide access to the Internet at speeds four to ten times faster than 3G.” Intel, has spared no efforts in pushing WiMax for this region.
WiMax, by the way, is an alternative to 3G – which Qualcomm is heavily focused on.
According to Intel’s site, the “WiMax standard supports mobile, portable and fixed service options. This enables wireless providers to offer broadband Internet access to areas underserved by telephone and cable companies.” Faced by Africa’s vast expanses where there are dense areas without connection, one can see why Intel is eager to push WiMax , which can blanket large areas , for the region.
*Why is WiMax important for the African market?
“Africa still offers WiMax a home”
WiMax is largely touted as a better alternative to Wi-Fi and 3G, due to its ability to drive cheaper connectivity in Africa. (Other technologies such as HSPA and LTE are still strong contenders for the African market, but WiMax has a longer history on the continent). A wide gap for connectivity still exists on the continent, and the arrival of cables in 2009 has led to an increased demand for connectivity.
One of its greatest advantages is that it is a technology that can address last-mile broadband connectivity, having the potential to make Internet connectivity a reality in rural areas.
• Industry Collaborations
“Technology innovation is a catalyst, and we believe the changes Intel is making to its roadmaps, together with strong industry collaboration, will bring about an exciting change in personal computing over the next few years.” Intel executive Sean Maloney (On Venturebeat.com)
There are rumors already that Apple could turn to Intel for iPhone Chips.
How the Ecosystem Works Now
Intel has traditionally focused on making chips for the PC market. It has however also been pushing for partnerships with major players in the handset market (LG, NOKIA ), with its lower power chips, such as the Atom processor designed for smartphones and tablets.
Qualcomm leads the ARM ecosystem as it makes chips based on ARM designs.
ARM designs low power processor cores and then licenses those designs to other companies (including Intel) to incorporate in their chipsets.
Intel’s x86 processors are still much more powerful than ARM chips, but ARM performance is more than adequate for smartphones and tablets, and are bound to get even more powerful thanks to Moore’s Law. ARM architecture (and not Intel’s) currently powers Apple’s mobile devices (iPhone and iPad) and Amazon’s Kindle Fire. (beta.fool.com). Apple is the world’s largest consumer of semiconductors.
The ARM design offers good performance with lower power consumption, which makes it ideal for mobile devices.
• Netbooks, Ultrabooks vs Smartbooks
“…We see the emergence of a new category of device, that we’re calling smartbooks to differentiate them from netbooks. These are more like a smartphone in a netbook form-factor. A smartbook is really focused on communications functionality.” Ben Timmons, senior director of business development for Europe, Qualcomm. (In a Telecomlead.com interview). (2010)
Intel has said it expects Ultrabooks will make up 40 percent of consumer notebooks by 2015. It hopes that under Haswell, it will use 20 times less power than today’s chips in “connected standby” mode, allowing all-day use or the ability to update email and social feeds in the background for up to ten days…The company says that 40 percent of consumer laptops will be based on Ultrabook designs by the end of 2012.(2012)
Intel has been pushing Ultrabooks to help it gain a strong foothold in mobile computing. The Ultrabook is Intel’s version of Apple’s MacBook Air.Its slow adoption to mobile computing has led to its trailing Qualcomm and Samsung who design their chips with ARM architecture. However, if the rumours are true that Apple will indeed make Intel its chip partner for iPhone and iPad, Intel will have gained a significant leap in and stronghold in mobile chips sector.
That, and the Ultrabooks, should help Intel cover lost ground.