Is anyone running the ship? Does the captain know where he’s going? Is there a lack of confidence among the Intel workers? I’m sure these are the types of questions that if you are an Intel employee, you have asked these questions and as a former contractor at Intel and overall technology guru, I am asking the same questions. To bring everyone up to speed, Intel in recent years past set out to control and own the mobile PC market which consisted of laptop and netbook PC’s. The interesting thing about this was while they were taking good market share, they got lazy with their chip revisions, power requirements and speed; now they have lost the netbook/small notebook market to AMD’s FUSION series processor which is vastly more power efficient as well as does an overall better job of rendering HD content. Meanwhile on the backburner of Intel’s plate, we’ve got the imitative of them entering the tablet and phone market. Now, if memory serves me correctly, they actually were poised to go after this market in early 2010 and have something developed and in the hands of consumers by early 2011. So what happened? It’s now almost June, end of Q2 of 2011 and Intel has nothing but excuses as to what happened.
Recently in an interview with Reuter’s news agency, Paul Otellini (pictured above) spoke on this initiative and where it is at regards to the competition. To qualify his statement, the market segment right now is comprised of a couple of key players: ARM (Advanced RISC Machine), Qualcomm, Apple and Nvidia. It was suggested that Intel adopt ARM’s technology to help aid them with their venture into the mobile computing market. Here’s what Paul Otenllini said about that…
“There’s no advantage going in there, we’d be beholden to someone else, beholden to ARM. We’d pay royalties to them so it would lower the overall profits,” Otellini said. “I think we can do a better.”
There’s a couple of things going on here of which we need to take a step back and look at some of Intel’s ventures of the past to pinpoint what is happening with Paul’s statement.
First and foremost, Intel started back in mid-2005, pursuing health care equipment. I remember this quite vividly as Intel was spinning up campuses around the Hilllsboro area at a frantic pace and filling positions like crazy to go after this next arena of computing space. Well, fast forward to 2006 and the project had stalled. They were not making any head way into gaining corporate acceptance as a “valid” player in the healthcare market space and begin looking at niche areas of healthcare in which they could possibly salvage the millions if not billions they lost on that venture. Fast forward to 2011, I haven’t heard anything about Intel’s “healthcare” division in terms of if it still exists or if it is still something they are pursuing. So what is the take away from that? Intel I think saw that as the next big thing that Government would throw money at (and they have) and they wanted a piece of the pie. To me, it seems like they just wanted to pad their revenues or maybe it was a legitimate imitative.
Moving on and onto a completely different market… The gaming market. Intel had whispers of a GPU (Graphics Processing Unit) that would rival if not beat Nvidia or AMD’s ATI offerings. These rumors started gaining momentum and in late 2008 early 2009, the cat was out of the bag and “Project Larrabee” was under the microscope of the gaming world. Boasting to be able to trounce the current graphics cards, everyone waited with bated breath to see if Intel’s promise could be true. Fast forward to end of 2009 with Paul Otenllini stated that “Larrabee” would be fleshed out even more in 2010 and maybe ship in that same year as well. Guess what? 2010 has come and gone. Where is Larrabee you ask? Intel decided to scrap the project as they were not seeing the “yields” that they wanted from the product. The gaming community went on to continue to buy Nvidia and AMD graphics cards most likely at the distaste of Intel, but the project just didn’t pan out for them. 2 for 2 I see.
Now that we’ve seen the last couple of tries on Intel to break into new markets, we get back to the original thread of the mobile computing tablet and smart phone market. If you remember the statement Paul made up above to Reuter’s, he basically said that he thinks they can make a better product. Hmm. Looking back at the previous two examples I gave of healthcare equipment (powered by Intel) and Gaming on an Intel graphics card, would it be fair to say that he thought they could make a better product? I’d say the correlation is there. However, what is driving this? Is it money? Is it power? Is it market control or is it pure arrogance on the part of the CEO? My analysis of Intel is that they make a killer server, desktop and laptop chip for computing devices that a lot of us here in the States use on a day-to-day basis. Right now as I type, I’m running a Dell Core i5 mobile of which screams in terms of performance (but then again, maybe that’s because I’m running Linux on it…) and Intel wants that and I applaud them for it. What I don’t like in a computing company nor from a CEO that is so hell-bent on capturing market share

Motorola Xoom featuring Nvidia Tegra 2 CPU
that he isn’t willing to eat crow on the fact that maybe Intel can’t make a superior product to ARM or Qualcomm? I find it funny that they are so (embarrassingly so) far behind in the mobile smart phone and tablet market that they think they have a prayer of a chance come next year. Right now other companies are bringing to market what Intel only wishes they could. Android tablets running Nvidia chipsets (of which I’m sure ticks Intel off as they are fiercely competitive towards each other), Apple running its own custom-built ARM chipset on its iPad products and Intel is left out in the cold with absolutely nothing to share other than the fact that they are still a year or more away from getting their product into the hands of the consumer.
So why did I write this blog? Few reasons. One, I really have been a strong supporter of Intel since the very days as I knew that they built a superior product to AMD. While I believe that still holds true in the computer segment, I’m starting to have my doubts on if they have soul and will power to try to take on the mobile tablet and smart phone space in a reasonable way. If I were a stock holder, I would be very worried about how much money Intel is dumping into this project based on the roadmap of previous failures. Secondly, Intel like everyone else is human. They are bound to make mistakes and some are larger than others. I would say that this one is fairly large one and Otenllini needs to dig down deep and figure out if this is one he is willing to stake his CEO’ship for the sake of the company. From an outsiders perspective, he doesn’t have a choice. The tablet and smart phone market eventually (maybe in my lifetime) will replace conventional desktop and laptop PC’s so Intel cannot afford to flop on this. Lastly, Intel needs to learn from the past to embrace the future. One of the things I’m learning in school right now about finances and companies is risk. If Intel didn’t venture into healthcare, maybe their processors now wouldn’t be as low powered as they are? If Intel didn’t try to make a dedicated graphics card with “Larrabee”, their mobile graphics platform wouldn’t be as robust as it is now. If Intel didn’t start going after the tablet and smart phone market last year, they wouldn’t be where they are now… at a crossroads.
Intel has a long way to go to become a competitor in the mobile segment. I also think they need to give credit to their competitors as they have the luxury of micro-focusing on simply that segment of the consumer and maybe from that they can learn what it takes to win over consumers. At the end of the day, consumers don’t want to be told you have a good product, they want to experience the goodness of that product themselves. If Intel can refocus and regroup, I would say they are going to be a formidable company in the tablet and smart phone space. If they do not, will it end up being another multi-billion flop?