Intel fights to keep customers from defecting

July 17, 2012 By Steve Johnson

Some of chip colossus Intel's biggest customers and partners are exploring a competing microprocessor design, signaling the start of a much-anticipated tech donnybrook that analysts say could trigger a dramatic shift in the computer industry.

At the same time, the clash between Intel and its chip challengers could prove a boon for consumers, as it fills stores with a greater array of gadgets and creates added pressure to keep prices low.

Hewlett-Packard and Dell, which account for a third of the Santa Clara, Calif., giant's sales, are considering using chips in some devices based on British firm ARM's energy-efficient design. Intel's longtime collaborator Microsoft just announced it will sell an ARM tablet. And some analysts believe Apple - which already uses the British-designed chips in its , iPod and - also may use them in its laptops, which now run on Intel circuits.

Unwilling to yield sales without a fight, Intel is pushing hard to move beyond personal computers and get its own chips into smartphones and other devices dominated by its competitors. But if it suffers significant customer desertions, some experts say, its iron grip on the could be weakened.

"It's starting to get interesting," said Mike Feibus of TechKnowledge Strategies. "Everything that we sort of knew and took for granted is being thrown out the window."

Life for Intel used to be much simpler when computers were big, clunky contraptions and phones were just for chatting. Its processors, which employ a design known as x86, were dominant in PCs and Microsoft's popular ran exclusively on x86. But the business has changed.

While of PCs this year are expected to grow by less than 5 percent over 2011, according to the firm, sales of smartphones and tablets are expected to jump by 39 percent and 98 percent, respectively. But nearly 100 percent of those small mobile device use ARM processors, primarily because those circuits are more power-efficient - an advantage Intel is trying hard to erase.

Intel recently announced its chips are being built into three smartphones, more than 20 tablets and a variety of tablet-laptop hybrids dubbed ultrabooks. At the same time, ARM chipmakers - which include Nvidia, Texas Instruments, Qualcomm and Samsung - are seeking to move into servers and personal computers, Intel's turf, using a new version of Windows that runs on their chips.

While analysts have predicted the rivalry between the two chip camps will flare into all-out war in the next couple of years, Intel spokesman Jon Carvill said his company isn't overly concerned.

"Our view when working with our customers is to build the most compelling products with the best hardware and software, rather than worry about what our competitors may or may not bring to market," he said.

Nonetheless, Intel can't be happy about the prospect of its customers straying from its fold, said Nathan Brookwood of the market consulting firm Insight 64.

"Of course they are worried about it," he said, adding that at Intel, former CEO Andy Grove's legendary "paranoia about competition is still very much alive."

Despite Microsoft's disclosure about its ARM tablet, Intel won a battle last month when HP decided not to use ARM chips in a new tablet and server. But HP officials say they still may use that chip in other tablets and servers. In addition, Dell, which has said it is considering using Intel's competitor in servers, also may use the chip in tablets, according to a recent note by JPMorgan analysts, adding "there is a high likelihood" Apple will use ARM in its laptops.

Dell and Apple declined to comment.

Intel supplies the vast majority of processors in PCs and servers, a dominance that has grown in recent years since the other x86 supplier - Advanced Micro Devices of Sunnyvale, Calif. - has struggled. So analysts say device-makers are eager to find another chip source in hopes the competition keeps prices low. Mercury Research analyst Dean McCarron suspects the current explorations of ARM could be just the beginning.

"What we're looking at right now are toe-in-the-water kinds of experiments," he said. But for Intel, "the stage is being set for some potential market-share erosion."

ARM's energy-efficient chips traditionally have offered better battery life than the x86 variety, with the latter providing greater computing power. But with ARM developing increasingly powerful chips and Intel cutting its processors' energy consumption, those differences are beginning to diminish.

Stores already are filling with laptops, tablets, e-readers, ultrabooks, "sleekbooks," "ultrathins" and other gadgets outfitted with Intel chips in some models and ARM in others, which could prove a challenge for the buying public, according to JPMorgan. "We think the consumer could be confused," its note concluded.

That may be true in the short term, said Linley Gwennap, an analyst with the Linley Group. But ultimately, he said, tech-hungry shoppers will benefit. As device-makers take advantage of the growing microprocessor competition, he said, "that's going to help drive prices down and create more choices for consumers."

Explore further: Intel launches chip for tablet computers


Related Stories

Intel launches chip for tablet computers

April 11, 2011

Intel Corp. has launched a new chip for tablet computers, Atom processor Z670 based platform, as the world's most powerful semiconductor company aims to become a contender in the market for mobile chips.

Motorola pledges to use Intel chips in smartphones

January 11, 2012

Motorola Mobility and Lenovo on Tuesday said they will use Intel processors in smartphones and other devices, giving the chipmaker its first entry into a market it has long coveted.

Intel makes more inroads in mobile market with new phones

February 27, 2012

Further demonstrating its resolve to expand beyond the personal computer market, Intel Corp. on Monday announced that three more new smartphones incorporating its microprocessors will be introduced in other countries this ...

Quad-core Snapdragon S4 is firing up for laptop wars

April 3, 2012

( -- Google is moving toward social; Facebook is moving to search; and now the chip kings are doing a similar dance into different territory. Intel is muscling in on smartphones and Qualcomm wants a big bite out ...

Oracle abruptly drops chip developed with Intel, HP

March 24, 2011

Oracle Corp. made waves on Wednesday with a sharply worded announcement that it will cease all efforts to develop technology around Intel Corp.'s Itanium chip - a move that apparently took both Intel and its partner Hewlett-Packard ...

Recommended for you

Cryptocurrency rivals snap at Bitcoin's heels

January 14, 2018

Bitcoin may be the most famous cryptocurrency but, despite a dizzying rise, it's not the most lucrative one and far from alone in a universe that counts 1,400 rivals, and counting.

Top takeaways from Consumers Electronics Show

January 13, 2018

The 2018 Consumer Electronics Show, which concluded Friday in Las Vegas, drew some 4,000 exhibitors from dozens of countries and more than 170,000 attendees, showcased some of the latest from the technology world.

Finnish firm detects new Intel security flaw

January 12, 2018

A new security flaw has been found in Intel hardware which could enable hackers to access corporate laptops remotely, Finnish cybersecurity specialist F-Secure said on Friday.


Adjust slider to filter visible comments by rank

Display comments: newest first

Standing Bear
Jul 17, 2012
This comment has been removed by a moderator.
not rated yet Jul 17, 2012
Intel are v.expensive that is probably the core reason. AMD are much cheaper in comparison. Although i still stick with intel for now but the prices take the cake some times on their new CPUs
Jul 18, 2012
This comment has been removed by a moderator.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.