With a flurry of new chips and strategies, Intel is mounting its biggest push ever into a mobile computing market that threatens one of its key business lines. But, it’s not the first time.
- In 1999, it supplied the computer processor for the early BlackBerry, but sold the business to Marvell in 2005.
- In 2004, it supplied the brains for the Palm Treo 650, an early smartphone that was discontinued four years later.
- And in 2006, to its lasting regret, it passed on a request from Apple to make a processor for the iPhone, sending the Cupertino company into the arms of competitors.
Now, under new CEO Brian Krzanich, Intel is trying again. It spent billions in 2014 and will again this year to gain a mobile foothold as it introduces new Atom microprocessors for smartphones and tablets. This is a critical move for Intel, which faces declines in the sales of personal computers, where they dominate as the supplier of silicon brains.
Just last week it revised a first quarter revenue estimate downward by nearly $1 billion, citing slower than expected PCs sales. The industry-watching International Data Corp. predicts a 4.9% fall in PC sales in 2015, with a $201 billion market in 2014 falling to $175 billion by 2019. Tablets are nibbling at the PC market and smartphone usage has soared.
Steering the giant chip company into a market dominated by well-established competitors won’t be easy, said Betsy Van Hees, who covers semiconductor stocks at Wedbush Securities. But she called Krzanich “a huge breath of fresh air. He’s got a lot of work to do. It’s a huge ship, and turning a ship of that size takes a lot of time. He is taking the right steps, the question is, will they be able to catch up?”
In March, Intel announced a range of new products for mobile computing at the Mobile World Congress in Barcelona. In January, Intel combined its mobile and personal computing businesses into a single computing group, recognizing the two product lines will probably merge in the future. It also formed alliances with two Chinese companies that make chips for mobile phones and consumer electronic products.
And last year it bought Basis Science, which makes a wrist-worn health tracker, adding to its Internet of Things arsenal. “They’re determined not to miss the next big thing,” said Mark Hung with the technology research group Gartner.
A strong performance last year was fueled by an upgrade of PCs when Microsoft stopped supporting the aging XP version of Windows. The rise of the smartphone and tablet also increased demand for data center servers and chips to power them, Intel’s second-largest business. The fourth quarter was Intel’s best ever quarter.
But some observers worry that the mobile business will never be the kind of money maker for Intel that the PC and data center business has been. But the personal computer is evolving in new directions. Laptops are beginning to look and act like tablets and some smartphones are looking more like tablets. It’s a trend that could provide and opening for Intel, whose Core M processor is designed for fanless PCs, laptops, or two-in-one devices.
Intel’s biggest lost opportunity was in 2006, tuning down Apple’s request for a chip to power a new phone, fearing that it couldn’t economically make it for the cost and volume Apple needed. So Apple designed its own chip using technology licensed from British firm ARM Holdings and had Samsung make it.
Today, most mobile devices run on ARM’s designs, which offer low power consumption, longer battery life and cost advantages. Seven million iPhones later, Intel is trying to find a way back in. The company has grown revenue from $35.4 billion in 2006 to $56 billion in 2014. It bought Infineon’s wireless business in 2010, making it a supplier of modems for mobile devices.
“This is the price you pay for sitting on the sidelines for a number of years and then fighting your way back into the market,” Intel’s Bryant said last November. “We will improve this. We will not continue to accept a business with multibillion dollar losses, but this is the price you pay to get back in. We are getting back in.”
Read Article (Pete Carey | mercurynews.com | 03/20/2015)
Unfortunately, successful dinosaurs like Intel or IBM have lapses where they tend to languish on the bench, while other players become stars.
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