At Intel’s Analyst Day last week, the company spoke a great deal about its plans for the future of tablets and its belief that the PC market was done contracting. Along the way, almost incidentally, Intel gave notice that the company’s old plans for the mobile phone market were dead in the water. To understand how significant the change has been, we need to hop back two years to December 2011 and Intel’s (first) Medfield unveiling.
Two years ago, Intel invited journalists to Santa Clara for a series of in-depth discussions and demonstrations of the company’s first serious 32nm cell phone, codenamed Medfield. Unlike the flash and pomp that had characterized other mobile phone promises from Intel, the company went to great pains to keep its statements on message and believable. Medfield, Intel promised, would compete against midrange smartphones. It would demonstrate Intel’s ability to compete in mobile. Future products, like Clover Trail+ and Merrifield, would then really open the market to x86 devices.
Intel’s mobile problems can be traced to several issues. First, the company’s radio timeline has been anything but timely. When Intel bought Infineon more than three years ago, it pitched the acquisition as part of a plan to accelerate its deployment of LTE technology. That didn’t happen — the company’s first 28nm fully compatible LTE modem, the XMM 7260, just started shipping to customers this past month. Intel’s recent Fujitsu Wireless acquisition is part of a further effort to bring competitive LTE radios to market.
Intel’s decision to keep Merrifield a dual-core part may have also been a strategic mistake. Hyper-Threading helped Medfield and Clover Trail+ keep up with dual- and quad-core devices, but Merrifield is a conventional two-core solution. Hyper-Threading gave OEMs some cover for claiming the chips were “like” quad-cores at a very small penalty to die size. Merrifield doesn’t. Since consumers have picked up on the marketing message that quad core = high-end phone, this limits Intel’s ability to sell Merrifield as a high-end solution. Benchmarks, meanwhile, are often coded to take advantage of four cores, even when general applications don’t utilize them often, or particularly well.
Alongside the technical issues, there are a host of other potential roadblocks. Intel has always had certain margin targets it wants to maintain on its phone business, and while it was willing to reduce those rates to gain market share, phone manufacturers in the US are leery of being trapped and commoditized by Intel marketing. Historically, Intel’s business practices have done an extraordinary job of keeping Intel’s margins high. Dell, HP, and Lenovo’s margins? Not so much.
The large vendors that could pay Intel’s higher margin costs and focus mainly on high-end smartphones, like Samsung and Apple, are determined to create their own custom silicon and retain a greater degree of control over their own IP. Intel has enjoyed some success with smaller OEMs like Motorola and Lenovo, but can’t apparently offer the kind of breakaway performance improvement that would drive serious OEM engagement.
Next page: The road ahead…
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