For Intel to continue its revenue growth, they must expand into the consumer electronics/communications market and sell UMPC/MID platforms. Like most large companies, Intel’s method of gaining market share relies on trying to get large customers to adopt their vision. Although there is probably no better customer than Apple for the mobile devices space, we do not think Intel is getting anywhere with Apple in that regard. We believe this is because Apple takes a user-centric approach to product design, rather than hardware platform-centric approach. Intel, however, has only recently arrived at platform space from the CPU-centric approach, and keeps going back to its CPU roots whenever the market share gets impacted. Moreover, Apple’s purchase of ARM-based SOC company PA Semi is a strong signal that Apple wants their own custom hardware. Therefore, Apple mobile products will be a hard sell for Intel Atom.
So who would Intel try to woo next? Motorola is experiencing its own difficulties in this market (they did launch an ARM-based MID-like device, the V6096, but we are still trying to figure out exactly what this device is supposed to be). What about Nokia, who has met with limited success with their N800 internet tablet? That would be good match, but is Nokia going to bite? Their problem with N800 was not its hardware platform, so do they really need a different platform (for example, Nokia has Flash Lite working on several devices by leveraging their influence with Adobe, an important achievement which most ARM devices do not have). Instead, the problem is the user interface. The blind belief that higher resolution is always better has tainted the vision of many mobile devices.
Other large companies that Intel will probably target are Samsung and LG, especially Samsung for its early enthusiasm for UMPC. That team must be looking for next thing to design and so far all innovation from Samsung in this area has been incremental.
We think Intel should stop thinking like an incumbent, and instead think more like a newcomer in the mobile device space. Newcomers do best by partnering with many other newcomers instead of trying to partner up with gorillas. But, the Intel execs running the MID show came from running gorilla businesses and with gorilla ambitions. Can they successfully change their expectations of the business model to fit the mobile market?
So, what can Intel really offer which ARM doesn’t?
