In an earlier post, i had written about how the fight for Tablets and Embedded Devices (Google TV, eBooks) would redefine the microprocessor space and would possibly be the showdown between ARM and Intel. This post examines how the business model of ARM scores over that of Intel in creating new segments and future in mobility processing.
ARM-designed processors are still expected to remain the dominant technology in microprocessors for three contributing factors: ARM’s well-established network of silicon partners allowing downstream players to diversify their solution providers, energy-saving features which provide higher microprocessor computing speed and ability, and software support around the chip architecture enabling mobility devices like tablets and other embedded devices like Google TV and E-Book readers. The idea is pretty simple: ARM processors may be lower-performing cores, but they use less power; and in an era where one of the big defining characteristics is limiting power to the server room, multiple ARM cores might deliver more processing for a set amount of power.
The distinction between Intel and ARM is the business model. Intel, designs and manufacturers its processors end to end , where as ARM, designs the processors for other companies such as Texas Instruments, Marvell, and Samsung to license, refine, and build themselves. This in effect redefines the battle. Quoting Herman Hauser, co-founder at ARM, ‘it’s not Intel versus ARM, it is Intel versus every single semiconductor company in the world.’ That threat to Intel is not ARM per se, but from vertically integrated manufacturers like Apple — who do everything from product design right down to processor design. If a company like HP decided to follow suit, e.g. by buying Palm for its OS and licensing ARM, that might be a nightmare scenario for Intel.
Intel is clearly under pressure for the first time in its history and finds itself in the status of underdog when compared to the popularity and ubiquity of the ARM ships in the mobility and embedded devices space. Approximately 95% of the world’s mobile handsets and more than one-quarter of all electronic devices use an ARM chip. Intel’s recent purchase of the Infineon was an attempt to re-position the company away from microprocessors and towards producing baseband processors, the key component of the mobile phone. Whether they can morph themselves into a baseband company remains to be seen
It’s hard to argue with ARM’s corporate performance: this year the company has collected more revenue from its licensed designs than Intel has on its microprocessor sales, while still allowing its customers to make a profit of their own from the chips they manufacture. Increasing interest in the low-power chips from netbook, ultra-portable, and even server manufacturers shows that ARM’s long absence from the desktop and server markets could be drawing to a close.