Lost amid all the news this week out of Barcelona’s Mobile World Congress and elsewhere was a small notice about Intel’s incipient foray into the low-end smartphone market.
Intel is known for its powerful chips, and most watchers took note of the company’s announcement of phone design wins with Orange (Europe), ZTE (China), and Lava (India), the more powerful Atom processors that will drive many of those phones, and the fact that they will run Google’s Android operating system.
But along with more powerful Atoms, Intel also announced a stripped-down version that will be aimed at mass markets. With roughly 1.5 billion phones shipping this year, smartphones still constitute less than half. Their share is growing fast, but there’s still plenty of upside.
All phone chip vendors, particularly Qualcomm and nVidia, are looking at ways to raise this percentage faster, and semi-smart phones seem like a good way to go about it. Most of the people still buying “feature phones,” as these low-end jobs are called, live in the developing world and are highly price sensitive. Giving them a way to buy up without having to stretch too far seems like the right idea.
Phone chip makers are using software to put more smarts into their dumb phones without raising the cost of the bill of materials. Warren East, CEO of British licensing company ARM, whose design is behind most phones on the market now, put out a statement yesterday saying that he is taking Intel’s entry into the phone market seriously.
East has good reason to be wary. Intel has been threatening to enter the smartphone market for years. Now, it finally has the parts, and customers are lining up.
But while many market watchers are focusing on the 2GHz Atoms with multiple cores, the 1GHz chip could be the volume leader. With a lower clock rate and various functions removed (“fused off,” in industry parlance), the Z2000, as it’s called, will merely sip power, which means a much longer battery life. A lot of equipment makers are interested in a chip like that.
Post Script
As it deals with the discomfort of transitioning from an emphasis on PCs to a focus on phones, Intel can also say it survived to witness the end of another era.
The last Japanese memory chip maker, Elpida, declared bankruptcy this week, citing a host of ills, including $5.6 billion in debt, fierce competition, a poor economy, and a move on the part of consumers away from PCs, which use traditional DRAM memory, to high mobility devices like phones and tablets, which use flash memory. Flash is mostly made by Korean vendors.
Elpida, which was composed from the combined assets of NEC's and Hitachi’s memory businesses, has been on life support for years.
From its founding in the late 1960s through the 1970s, Intel’s main business was memory chips. As Japanese vendors like NEC and Hitachi entered the memory market with government subsidies and predatory pricing, Intel’s business came under assault. In 1983, then-CEO Andy Grove made his famous decision to leave the memory market to focus on microprocessors, which, he reasoned, had a higher level of intellectual property and therefore represented a more defensible market.
He was so right.
Today, Intel is a colossus, and the last of its former nemeses just left the business.
Disclosure: Endpoint has a consulting relationship with Intel.
© 2012 Endpoint Technologies Associates, Inc. All rights reserved.
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