Why is Intel propping up Apple's competition?

Why is Intel propping up Apple's competition?

Summary: Apple, like most PC makers, buys its PC processors from Intel. So why is Intel funding competitors to one of its largest customers? Apple should ask for $400 million off its next Intel CPU order.

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TOPICS: Apple, Hardware, Intel
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In a tacit admission that low-margin Wintel vendors can't compete with Apple, Intel announced last year a $300 million Ultrabook Fund to:

. . . invest in companies building hardware and software technologies focused on enhancing how people interact with Ultrabooks, achieving all-day usage through longer battery life, enabling innovative physical designs and improved storage capacity. The overall goal of the fund, which will be invested over the next 3-4 years, is to create a cycle of innovation and system capabilities for this new and growing category of mobile devices.

Then they upped the ante with a $100 million AppUp fund:

The fund will invest in software tools and services companies developing innovative applications and digital content for the mobile and PC ecosystem available at the Intel AppUp center, Intel's convenient, personalized and secure app store for netbooks, consumer laptops and Ultrabooks.

Intel's App Store Then there's the Intel AppUp center, which looks a bit like the Apple App Store, minus all the apps:

The Intel AppUp center delivers all the latest PC apps, all in one convenient place.

Originally started in 2010 to promote Atom apps, they've retooled for Ultrabooks.

Exit strategy? It's rare for OEM suppliers to invest big money to prop up one customer against another. It's as if German transmission maker ZF Friedrichshafen - founded byFerdinand von Zeppelin - invested millions to promote Chrysler over BMW.

But the bigger question - assuming these investments are intended to produce a return - is: how will Intel get its money back? HP isn't investing much in PCs. All the other PC vendors are cash-strapped. Only Apple regularly lays out a few hundred million for promising companies.

So if Intel Capital picks a winner - and the record of agenda-driven investing is spotty - Apple could end up owning them anyway.

The Storage Bits take Intel sees the same innovation weakness - thanks to low margins - in the PC industry that I discussed in last week's debate and in Can Wintel win the Ultrabook market? And they're worried about it.

The big problem is the Wintel model: Microsoft makes the OS and Intel makes the engine - both with large profits - leaving PC vendors on the margins, both from a product and financial perspective. But Intel's investments aren't going to help that.

Intel as a whole will do best by making products that make sense for customers. Sadly Intel's engineering culture seems wedded to grand architectural visions - NetBurst, Itanium, RDRAM, FB-DIMMs - instead of a clear-eyed focus on the real trends and needs in the market (see Intel's best and worst).

If they're true to form, Haswell - the power-efficient architecture due next year - still won't be competitive with the best from ARM. And with consumer needs congealing on a mix of email, surfing, music and movies, power consumption may be more important than improved performance.

I hope Intel's investments turn out well for the company and the industry. But it isn't easy to see how, given the systemic problems of the Wintel model.

Comments welcome, of course. Still, I want a Haswell quad-core MacBook Air. And thanks to Austin for raising the issue. Update: I originally said the Z in ZF stood for Zeppelin, but that is wrong. The company was founded by Ferdinand von Zeppelin to build gears he needed for his Zeppelin airships. End update.

Topics: Apple, Hardware, Intel

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  • RE: Why is Intel propping up Apple's competition?

    I guess the question is why does this bother you?
    jonandkelly
    • I was thinking the same thing.

      @jonandkelly
      I guess that some of the Apple diehards get upset that there are other PC companies besides Apple.
      William Farrel
      • RE: Why is Intel propping up Apple's competition?

        @William Farrel
        i guess the cult of softies get upset that apple leads the way.
        oneleft1
    • RE: Why is Intel propping up Apple's competition?

      @jonandkelly

      "We are not here to solve America's problems"

      Apple
      TelstarII
      • RE: Why is Intel propping up Apple's competition?

        @TelstarII
        Neither is the Republican party.
        R Harris
    • RE: Why is Intel propping up Apple's competition?

      What bothers me is that the "Z" in ZF is not Zeppelin, but Zahnradfabrik Friedrichshafen...
      Roque Mocan
      • RE: Why is Intel propping up Apple's competition?

        @Roque Mocan
        You're right. The company was founded by Ferdinand von Zeppelin, but not named for him. I regret the error.
        R Harris
    • RE: Why is Intel propping up Apple's competition?

      @jonandkelly
      As I noted, it is very unusual behavior for an OEM supplier to favor some customers over others. So why are they doing it?

      There might even be anti-trust implications, since monopolies are supposed to treat all customers of the same class similarly. But unless Apple complains or the Justice Dept grows a spine, we'll never know.
      R Harris
  • Apple should buy AMD

    They have better processors, better graphics, and would fit into Apple's x86 strategy.

    Just buy AMD, keep them a separate company (like FileMaker) and just buy from them. And pump R&D into them.

    Then they could give Intel the ultimate F-U!
    itguy10
  • RE: Why is Intel propping up Apple's competition?

    As Apple becomes more cash-rich and gets more market-share, Intel will lose further negotiating leverage with them. And, to say the least, Apple is not a reliable customer...they are known to be hardball negotiators.

    Regarding one commenter saying that Apple should buy AMD, I say go ahead Apple. All big organizations die of one thing: hubris!
    ssubra2000
    • RE: Why is Intel propping up Apple's competition?

      Also, it is in Intel's best interest to make sure that the other 95% of laptop/notebook customers get good machines that are fast, sleek, and portable. Ultrabooks including "Convertible Ultrabooks" (notebook with swivel-type screens for tablet functionality) will provide majority of the customers the device they are looking for.
      ssubra2000
  • RE: Why is Intel propping up Apple's competition?

    Intel is faced with an ever weakening PC market, and they have no presence in hot new tablet and mobile device space. Like Microsoft, they're trying to prop the old WinTel guard up.
    dave95.
    • You make the common

      @dave95. .. and foolish assumption that just because ARM (..or any other new computing technology, for that matter) takes the mobile space (..or any segment of the computing industry, for that matter) by storm, and Apple and Android have locked up the tablet & smartphone space / market (..or any existing or emerging technology market / niche), that *automatically* that somehow means anything x86 / x64 / Wintel is dead or dying.<br><br>I'll tell ya what, show me a corporation, organization or .edu that's about to (..No, willing to) trash-can the millions they've (collectively) poured into Wintel and related legacy as their operational backbone *and* start again from scratch *and* with the millions (count it, billions - industry-wide) that it'll cost to restart and retrain staff, customers ... over many years, mind you ... and i'll show you a winged, flying pig that's faster than a hawk.<br><br>Here's the basic math. Read it and commit it to memory ...<br><br>ARM + W8 Tablets + iPhones + Android != death of x86 / x64 / Wintel<br><br>Apple Mac + iPhones + ARM, W8 Tablets + Android + Amazon + x86 / x64 / Wintel + Linux (et al) = Computing Universe<br><br>When you've let it sink in, get back to us here in the real world. <br><br>(... gotta love choice, huh? No? You prefer the mindless, servile drone thing? Yeah? Then knock yourself dead.)
      thx-1138_
  • Intel and Microsoft are both running scared...

    You can only prop up your numbers to Wall Street for so long, before the crap starts hitting the fan. Wintel is dying a fast death. Intel knows that Apple is preparing the Air and later the Macbook Pro for ARM.

    What that really means is OSX can already run on ARM. Once they beef up the speed, Intel is toast with Apple.

    What's going to blow them away is when the iPad starts running OSX this year!

    Ballgame
    orandy
    • RE: Why is Intel propping up Apple's competition?

      @orandy: Why would Apple run its OSX on the iPad...it will only cannibalize their high-end, high-margin MacBook lines...doesn't make any sense.

      Also, with the impending 22nm and 14nm processors from Intel, Apple would be compelled to move their entire line to x86 (that is, including iPad) than move their MacBook lines to ARM. Till date, Apple have prided themselves on providing high-end, high-performance machines...now they are going to turn around and provide 32-bit machines to the market? What are you smoking?
      ssubra2000
      • Well, Apple does its own ARM design, so...

        If they can get the high end performance out of them, then there's no reason for them not to ditch Intel.

        Me, I've been interested in massively parallel systems for a while and it seems that that could be done well using ARM. That and with iOS, Apple's already got a partial port to ARM roving wild and free swimming in vast schools across the surface of the Earth.

        Switching off PPC and on to Intel went pretty well for Apple, so it's possible (although I admit unlikely) they'd go to ARM.
        ego.sum.stig
      • RE: Why is Intel propping up Apple's competition?

        @ssubra2000
        AMD has announced a 64bit ARM that supports up to 128 cores - @2W each - with a coherent (cache I assume) fabric interconnect for servers. Single thread performance is still important, but 128 cores at 256W is way ahead of Intel right now.

        Maybe Intel knows something about Apple's plans that we don't.
        R Harris
      • @R Harris ... Irresponsible and audacious

        ... reporting does not a respectable reporter make. It does (however) bode well for a burgeoning, wannabe aiming for a career in the tabloids though.<br><br>Now, you may well be correct in the premise that ARM are 'currently' leading performance-to-economy ratios in the chip design and performance race, but that doesn't (by no means) mean Intel (or for that matter, AMD) are automatically redundant. That's basically your whole, click-bait premise: that Intel and AMD are dead ducks on the new, chip-architecture, development front.<br><br>So in your eyes the "industry talks" would go something like this: <br><br>Intel & AMD Owners (to ARM Chiefs): <i>" Wow! You guys are soooooo amazing! We wish we were half as good as you. If you'll excuse us, we're just going to lay down and die now. Oh, and by the way, here's our multi-billion dollar business and customer-base; the keys to the kingdom, and the shirts off our backs. Let us know if there's anything else we can do for you. "</i><br><br>C'mom Rob! You can do a lot better than that - especially if you want readers to take you seriously (..even remotely) . Try that guardhouse bull$**t on pre-teens, not here. <br><br>But y'know, one thing's true about you .. you're good for a laugh every now 'n then, i'll grant you that.
        thx-1138_
      • RE: Why is Intel propping up Apple's competition?

        @ssubra2000
        They wouldn't want to run OS X on an iPad your right. but they're also not going to run OS X on Macbooks either. You may believe that Apple prided itself in "high-end & high-performance machines" but it was never about the speed of the processors. It's about customer experiences.
        The iPhone 4S is a great example. At 400MHz slower clock speed it still outperforms the Galaxy SII in every speed test I've seen. To think that their business over the coming years is the non post-pc era your insane. It's mobile devices (PERSONAL computers) and services. What are YOU smoking?
        hikarunakamura
    • Really? How fast and when does it start? Because MS has put together

      quite a nice string of consecutive record quarters and their diversification is only helping that. OSX running on ARM probably doesnt keep anyone at Intel awake at night. Intel has plenty of growth opportunity that dwarfs the osx market. And exactly why would Intel care about the iPads that dont use Intel anyway running osx? No actually the next 2-3 years look really good for both MS/Intel growing their market shares.
      Johnny Vegas