Reasons why Intel will not dominate ARM (for the foreseeable future)

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2timer

Golden Member
Apr 20, 2012
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Oh. So Intel is moving Atom to 2 year architecture updates you say. That changes things, but not by much.

I like to make it analogous to a car. Say Honda makes a Civic with a 2.0 L, 4 cylinder engine, that gets 32 mpg, has 140 hp, and costs 20 grand. Now let's say that Toyota makes a 2.0L, 4 cylinder engine, that also gets 32 mpg. Except Toyota has been developing this for years, so it also has 250hp. Only difference is, the Toyota costs 35 grand.

Now, do you think that more people will buy the Toyota at the higher price, even though it has almost double the performance?


I know that's not a very good example, but I think you see my point.
 

Charles Kozierok

Elite Member
May 14, 2012
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The prognostications about Intel vs. ARM right now remind me of the prognostications of Intel vs. AMD oh, around 2005.

We know how that turned out.

It's far from a sure thing that Intel will make headway in the mobile market, but they've barely even started competing yet.
 

2timer

Golden Member
Apr 20, 2012
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Atom will be yearly updates and follow the tick/tock model.
Ok, so Intel is investing more in Atom now. That's great.

My point is this:

In the mass smartphone market, Intel's positioning on economics puts them at a serious competitive disadvantage .

In the emerging tablet market, Intel looks to capture the high end with Haswell. Same problems of economics on the low end.

Once again, it appears that Intel has the advantage in high end tablets. Other than that, I don't see any reason why they will muscle out ARM for the foreseeable future.
.
 

2timer

Golden Member
Apr 20, 2012
1,803
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The prognostications about Intel vs. ARM right now remind me of the prognostications of Intel vs. AMD oh, around 2005.

We know how that turned out.

It's far from a sure thing that Intel will make headway in the mobile market, but they've barely even started competing yet.

Perhaps.
 

Dribble

Platinum Member
Aug 9, 2005
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It's a margins thing. Intel needs high margins to sustain itself. Everything an ARM is in won't give it those high margins. In the PC world the high margin was on the components (cpu, etc), in the mobile world the high margin is on the finished product (iPhone) - the components (ARM chip, etc) are basically done at cost (ARM get $1).

In x86 Intel managed it by completely controlling the market - every PC had to have an x86 chip which only Intel was allowed to make and hence could almost charge what they liked for and had complete control of all demand (by adjusting prices) so could run their fabs very efficiently.

Now it's different. ARM don't control the market, they just provide a very cheap cpu design and openly allow anyone to use or design their own for peanuts. This is pretty well the opposite of what Intel does. Intel can't work that way - ARM is only worth a few hundred million, so even if Intel copied ARM's way of working and wiped them out it would make no difference to a company the size of Intel (a few hundred million is peanuts to them).

The only way for Intel to make the money it needs to in the phone market is to completely control it like they do x86, however there's no way the likes of Apple, or Samsung will ever let them do that. They don't want to go back to writing blank cheques to Intel. They like the new world where their end products make the money and the cpu and even OS (e.g. android) are cheap.

Hence Intel hasn't got a hope of dominating ARM.
 
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mrmt

Diamond Member
Aug 18, 2012
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Now it's different. ARM don't control the market, they just provide a very cheap cpu design and openly allow anyone to use or design their own for peanuts. This is pretty well the opposite of what Intel does. Intel can't work that way - ARM is only worth a few hundred million, so even if Intel copied ARM's way of working and wiped them out it would make no difference to a company the size of Intel (a few hundred million is peanuts to them).

ARM per se is irrelevant. It's the ARM ecosystem that Intel will fight, and last time I checked TSMC, UMC, TI, Qualcomm and others were far from selling their chips at cost.
 

Arzachel

Senior member
Apr 7, 2011
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Except that tablet/smartphones are not giving the exact user control like Windows or any full fledged OS would. A good tablet has its own niche and I can't see it totally replacing laptops/desktops as writing long and meaningful text is just slow on a touchscreen keyboard.

Laptops are adapting to the user requirements of a touchscreen and they do come at a very competitive price point. The laptops will provide the performance, flexibility and storage of a versatile OS but conversely, tablets do not have these characteristics. They do have better battery life but hopefully, Intel will change that.

Adoption rate of these laptops are slow only because W8 is underwhelming. Assuming that the next iteration addresses the issues, laptops will regain its lost market.

You are looking at this from the same angle as Microsoft: "People would like tablets more, if we'd stick Windows into them!". So far this line of thinking has produced Windows 8, an underwhelming desktop OS and a slightly better but still underwhelming tablet OS, and Surface Pro, an underwhelming tablet that can be used as an underwhelming laptop if you squint a bit. The truth is, the Surface Pro, the touchscreen laptops and the transform and roll out laptop/tablet thingies are actually targeting a niche audience that wants both a PC and a tablet in a single device even if the experience is a bit shit on both sides and, looking at the sales, the niche isn't particularly big. Most people would rather have a cheaper and better content consumption device(although this is misleading, taking notes on a tablet with a stylus and a decent digitizer is much nicer than doing it on a laptop for example) with an older backup laptop/desktop if required, because content consumption is what they're going to do for the majority of their spare time.
 

Khato

Golden Member
Jul 15, 2001
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It's a margins thing. Intel needs high margins to sustain itself. Everything an ARM is in won't give it those high margins. In the PC world the high margin was on the components (cpu, etc), in the mobile world the high margin is on the finished product (iPhone) - the components (ARM chip, etc) are basically done at cost (ARM get $1).

You might consider actually looking at the margins for players in the ARM ecosystem. My favorite simple example being TSMC because they represent the actual manufacturing gross margins present in the market and they actually report out margins in their financials. (Technically it's the manufacturing gross margins for everything they fab, but they're going to be charging pretty much the same per 28nm wafer whether it's an ARM SoC or massive GPU.) So what are the gross margins like for the manufacturing side of the ARM ecosystem? Typically around 45%.

Now keep in mind that's the baseline, you then get to add the design gross margins on top of that... Which likely would get you up to around the levels that Intel's used to. The ARM SoC space is not 'low margin'.
 

Blandge

Member
Jul 10, 2012
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You people don't seem to understand that Intel makes good money on Atom, and die size is only getting smaller going forward. In embedded devices there are three metrics: power, performance and price. So far Intel has primarily focused on the power and performance side, but Intel's already got a product out targeting low price in emerging markets with Lexington.

Seriously people, look up the difference between margin and ASP. Atom sells at decent margin and low ASP.
 
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ShawnD1

Lifer
May 24, 2003
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Atom eats up Intel's low end.

This is problematic for Intel's profit models. I do not expect Intel to cannibalize it's lineup just to spite ARM.
Why not? Intel is an extremely profitable company that has seemingly unlimited cash. Selling Atom processors at cost and reducing profits by a billion dollars in order to destroy all competitors is a great business plan.
 

2timer

Golden Member
Apr 20, 2012
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Why not? Intel is an extremely profitable company that has seemingly unlimited cash. Selling Atom processors at cost and reducing profits by a billion dollars in order to destroy all competitors is a great business plan.

Fine. Let's examine that idea for a second. Let's say that Intel totally slashes all its profit margins to compete with ARM in the mobile market. In the meantime, the next few years, the consumer PC market is dying.

Remember that ARM sells about 24 times the volume of Intel chips. So Intel will be selling larger volumes of chips it fabs itself , at cost, while ARM continues to license it's designs to other chipmakers.

I just don't see how Intel can continue to spend about $5 billion every couple years to build a new fab without the revenues it generates currently. And those revenues are generated from a thriving PC market where x86 is dominate. The scenario of "Intel slashing profit margins" and "Intel maintaining dominance" doesn't add up.

So no, I don't see it being that simple.
 
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StrangerGuy

Diamond Member
May 9, 2004
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The prognostications about Intel vs. ARM right now remind me of the prognostications of Intel vs. AMD oh, around 2005.

We know how that turned out.

It's far from a sure thing that Intel will make headway in the mobile market, but they've barely even started competing yet.

Eh, you know AMD had the exact same business model as Intel back then right? Can you say the same now for ARM? Are Samsung and Apple in the business of selling chips or end mobile products?
 

blackened23

Diamond Member
Jul 26, 2011
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Ok, so Intel is investing more in Atom now. That's great.

My point is this:

In the mass smartphone market, Intel's positioning on economics puts them at a serious competitive disadvantage .

In the emerging tablet market, Intel looks to capture the high end with Haswell. Same problems of economics on the low end.

Once again, it appears that Intel has the advantage in high end tablets. Other than that, I don't see any reason why they will muscle out ARM for the foreseeable future.
.

How long have you been around? Intel has always adapted to the market when consumer demand necessitated it. As someone else mentioned, Celeron is a great example of precisely that.

You're assuming that intel will stick with tried and true and will refuse to adapt. That would be a huge error on your part.
 

ShawnD1

Lifer
May 24, 2003
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Remember that ARM sells about 24 times the volume of Intel chips. So Intel will be selling larger volumes of chips it fabs itself , at cost, while ARM continues to license it's designs to other chipmakers.
After Intel sells Atom processors at or below cost, there won't be any chip makers. They will die off, then ARM won't be able to fund new designs, so ARM dies.

Doesn't most of Intel's money come from servers and high end stuff? All of our CAD computers at work use Xeon processors, and those chips probably cost $500 per computer. The guys doing video stuff or Photoshop are all using expensive Intel processors. I can't imagine Intel making a lot of money on lower budget chips. AMD has a very strong presence in the low end market, and they're still losing tons of money. How much profit can AMD possibly make on a $50 CPU? Now how much profit do you think Intel makes on a $1000 CPU?
 

StrangerGuy

Diamond Member
May 9, 2004
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After Intel sells Atom processors at or below cost, there won't be any chip makers. They will die off, then ARM won't be able to fund new designs, so ARM dies.

Suuuuuuuuuuuure. Maybe it would kill pure SoC makers like Qualcomm, Broadcom and NV, but Samsung or Apple? Good luck.

And what is going to pay the enormous R&D and fab bills of Intel now?
 

2timer

Golden Member
Apr 20, 2012
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Atom doesn't really have a market right now. They were put in netbooks for a while, but netbooks are pretty dead. They weren't small enough for smartphones (although Intel is supposedly working on that). So, I'm not sure what you mean by saying that there wouldn't be any chip makers left.

Intel uses it's position in the consumer market as leverage to sell low volume, massive margin chips to enterprise customers. Anand calls this Intel's "magic formula" : http://www.anandtech.com/show/6355/intels-haswell-architecture

If Intel doesn't have that large consumer base, it also loses that margin. Which means it can still make those enterprise chips - but at reduced profits. Because the PC market is anemic, Intel's leverage is slipping. It really needs large sales for Haswell to maintain it's huge cash reserves. I'm just wondering where those sales will come from?
 

2timer

Golden Member
Apr 20, 2012
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How long have you been around? Intel has always adapted to the market when consumer demand necessitated it. As someone else mentioned, Celeron is a great example of precisely that.

You're assuming that intel will stick with tried and true and will refuse to adapt. That would be a huge error on your part.

No, to be precise, I am assuming that Intel will try to muscle it's way into the smartphone market with the same x86 strategy it's had for the last five years: brute forcing more power onto it's CPUs. You can't do that on the smartphone level, it just doesn't work. ARM processors are literally perfect for smartphones. Intel can't make any meaningful headway against them with Haswell, and Atom really isn't much better at the present.
 

Imouto

Golden Member
Jul 6, 2011
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I see two options:

- Intel hires all ARM engineers, game over for ARM.
- Intel starts its monopoly stuff again, game over for ARM.
 

dma0991

Platinum Member
Mar 17, 2011
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You are looking at this from the same angle as Microsoft: "People would like tablets more, if we'd stick Windows into them!". So far this line of thinking has produced Windows 8, an underwhelming desktop OS and a slightly better but still underwhelming tablet OS, and Surface Pro, an underwhelming tablet that can be used as an underwhelming laptop if you squint a bit. The truth is, the Surface Pro, the touchscreen laptops and the transform and roll out laptop/tablet thingies are actually targeting a niche audience that wants both a PC and a tablet in a single device even if the experience is a bit shit on both sides and, looking at the sales, the niche isn't particularly big. Most people would rather have a cheaper and better content consumption device(although this is misleading, taking notes on a tablet with a stylus and a decent digitizer is much nicer than doing it on a laptop for example) with an older backup laptop/desktop if required, because content consumption is what they're going to do for the majority of their spare time.
W8 isn't as underwhelming as Surface RT/Pro. The only deterrent of Surface products is its given price which is a premium product compared to comparable tablets. W8 however has made it to laptops which is light, thin and more importantly, affordable to make it competitive against tablets.

Compare an Asus VivoBook X202E versus an Asus Transformer Prime TF201 + dock. Both could almost do the same task except one has greater flexibility and performance versus another which its only forte is its battery life and apps. The only major downside to laptops such as Asus VivoBook X202E is a half baked implementation in W8.
 

krumme

Diamond Member
Oct 9, 2009
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Sorry, but who in their sane minds thinks Apple and Samung is letting their future profit and strategy be influenced by some supplier like Intel, when a quad core A7 at 2mm2, can do the job?

I can say those cooperations go a long way to defend their independence and strategic opportunities. And using the ARM ecosystem is even a free meal. Its a no brainer.
 

ShintaiDK

Lifer
Apr 22, 2012
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Sorry, but who in their sane minds thinks Apple and Samung is letting their future profit and strategy be influenced by some supplier like Intel, when a quad core A7 at 2mm2, can do the job?

I can say those cooperations go a long way to defend their independence and strategic opportunities. And using the ARM ecosystem is even a free meal. Its a no brainer.

Samsung and Apple only develops CPUs in lack of better alternative. Samsung even uses non Samsung CPUs in the wast majority of their products.
 

StrangerGuy

Diamond Member
May 9, 2004
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Samsung and Apple only develops CPUs in lack of better alternative. Samsung even uses non Samsung CPUs in the wast majority of their products.

The first has to do with having complete control over their designs and avoid paying for chips from the other CPU makers like Intel.

The second has to do with sourcing their chip supply from other ARM makers due to their insane unit volume than Intel having more attractive chips.

The fact you spin "lack of better alternative" when there isn't one from Intel for a long time until the dual core Clovertrail is laughable. And that has won soooo many design wins that Lenovo has to pay lip service to pretend Intel is in the game.