The company announced on Tuesday that Lenovo would release a phone with an
Intel processor in China in the second quarter, and that Motorola would ship
Intel phones in the second half. But the real hurdles are gaining
significant market share and making money.
Long way
Even if the products roll out as promised, Intel will have a long way to go in
a market where chips based on Arm Holdings’ designs have 100 per cent market
share. Why would handset makers rush to Intel when Arm licensees from
Qualcomm to Nvidia to Texas Instruments are already competing for their
business, and their software is already a proved fit with Arm designs?
Intel has a history of paying up for a foothold in a new business. The company
invested $1.6bn in Clearwire in the hope of cultivating WiMax wireless
technology, aimed at breaking up the iron grip of Qualcomm’s CDMA.
Intel may be protecting Motorola and Lenovo from any downside on the new
products. But as the failure of WiMax highlights, even Intel is not rich
enough to buy its way in to an established market.
Hardly huge
Smartphone sales grew by more than 40 per cent in the third quarter, when 115m
units were sold, according to Gartner. But smartphone processors are much
cheaper than PC processors, at $10-$15 a pop.
So even if Intel can take an impressive 25 per cent share in a year or two -
and sell a lot of chips into tablets, too - it might sell $2bn in mobile
chips. That is a respectable number, but it is hardly huge in the context of
Intel’s $55bn in sales this year. It is no wonder that Intel wants to
reignite PC sales with high-end “ultrabooks”.
An aggressive entry by Intel could hurt the margins of Arm or its licensees.
Near term, they may have more to fear than Intel has to gain.
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