Intel's recipe to make it in mobility

Intel is brewing up a potent recipe of wireless technology, imaging devices, authentication systems, and complete ODM turnkey solutions for its Atom X-series of chips, in its efforts to establish a hold on the highly competitive global mobility market.
Written by Leon Spencer, Contributor

Microprocessor manufacturing giant Intel -- long known for its distinctive "Intel Inside" logo stickers that have graced the cases of high-end PCs for decades -- has been spending a lot of money carving out market share in the rampantly competitive mobile device market.

The company spent much of 2014 propping up mobile microprocessor shipment growth by subsidising its chips for partners, recording the transaction as "contra revenue".

Intel's third-quarter financial results last year highlighted the strategy, revealing that its Mobile and Communications Group made revenue of just $1 million, while racking up a $1.04 billion operating loss.

At the time, Intel CEO Brian Krzanich said that the company was likely to ship 10 million to 12 million mobile processors in the fourth quarter, to hit at least 40 million units for the full year.

"We were losing billions of dollars to achieve the position we had in mobility ... because we thought it was important to establish a position, but we truly changed the game in the last year," Intel's senior vice president and Client Computing Group general manager Kirk Skaugen told ZDNet.

While the strategy cost its Mobile and Communications Group a bucket of forfeited profit, it is clearly paying off. Skaugen revealed in April that the company has easily surpassed its goal of shipping 40 million mobile processors, with the final tally for the year resting at around 46 million.

Additionally, Intel's chief financial officer Stacey Smith revealed in April that the company is on track to achieve its annual goal of improving mobile profitability by $800 million, with the majority of improvements to be realised in the "back half of the year".

Intel's prospective turnaround in its battle for mobility market share comes about a year after the company announced that it would pump $100 million into its Smart Device Innovation Center in Shenzhen, China.

It made the move in part to better compete amid the proliferation of microprocessors made by British rival ARM Holdings that had been flooding into the Chinese market, where ARM chips have become the chips of choice for many smartphone vendors.

ARM's ecosystem business model has seen the company grasp the upper hand in the Chinese mobility market, so it is no surprise that for Skaugen, Intel's efforts to ramp up its ecosystem in the country are central to its success.

Skaugen believes the company has established a complete turnkey solution for its original design manufacturer (ODM) partners on its entire range of new-generation Atom x-series microprocessors, a move made in order to develop a rich ecosystem like that of ARM's.

According to Skaugen, the seemingly unstoppable juggernaut that is the Chinese technology market has been particularly receptive to this approach.

"What's really helping the China tech ecosystem is the scaling -- what we call our turnkey program support that we're doing," Skaugen said. "We're really giving them a full recipe, where we give them the board, and the testing, and the software, and the system designs to bring these products rapidly to market.

"Today, we have 14 ODMs and more than 48 designs. Last year, we had 30 ODMs, 350 designs, and it shipped into 50 countries. Just for tablets last year," he said.
Intel Atom x3 processor, formerly code-named 'SoFIA'
(Image: Intel)

The company announced at April's Intel Developer Forum 2015 in the southern Chinese city of Shenzhen that it plans to build on its turnkey program for the Intel Atom x3 and Z3700 processors, expanding it to include the Atom x5 processor, in a bid to help reduce its customers' cost and time to market for Intel-based tablets.

The program is aimed at giving partners a customisable reference design with differentiated applications and software, quality and certification support, software tools, and a component catalogue.

"A year ago, people didn't think we had figured out performance or battery life, competitive with ARM, but that argument is basically gone," he said.

"Last year was a year of proving that we could address the issues of performance and battery life, and now this year, with SoFIA, we're proving that you can build a cost-competitive product and not have to augment those dollars with our OEMs [original equipment manufacturers]."

While Intel has made a name for itself as a performance brand for high-end equipment, Skaugen is certain that its move to take on the low-cost mobility market will pay dividends. Literally.

"Cheap doesn't mean not profitable. The benefit of Moore's law is that we can build very low-cost silicon, and still make enough base profit for our shareholders," said Skaugen. "We can sell at low price points and just sell a lot of them."

Indeed, Intel has been making some concerted forays into ultra-compact computing, with its Curie button-sized computing module aimed at the wearables market, its postage stamp-sized Edison development platform, the Quark integrated system on a chip, and its USB flash drive-sized Compute Stick mini PC all standing as evidence of the company's new-found focus on the smaller end of the market.
Intel Curie module button-sized prototype
(Image: Intel)

Skaugen suggested that much of the tech Intel has packed into these little devices will enable the company to position itself as a major player not only in the mobility market, but also in the emerging Internet of Things (IoT) industry.

In fact, Skaugen claims the company already does quite well in small devices, such as point-of-sale machines, kiosks, and peripherals.

"Our Internet of Things business is one of the fastest-growing areas of Intel," he said.

However, he added that Intel is moving to be more open with its brand in order to help position itself in the mobility market, allowing its logo to grace smartphones and other mobile devices.

"It represents more things than just the PC today, but it does represent safety, technology, and performance, and so we're allowing the Intel Inside logo on the back of phones, and many of our phone customers say they get a premium by having the Intel Inside logo on the back of a phone or a tablet," he said.

A will for a wireless world

With the mobility market increasingly driven by the proliferation of integrated circuits loaded with multiple wireless connection capability, Intel has been charging full steam ahead into its research and development of wireless technology.

The company has not only been building more wireless communications technology into its microprocessors, but has also been making leaps and bounds in wireless charging technology.

Last year, Intel showcased its wireless charging bowl, which the company claims is unlike other wireless charging systems because the mobile devices being charged do not need to be positioned precisely in order to charge up.

At Computex in June last year, Intel also demonstrated WiGig wireless docking and simultaneous wireless charging of a laptop, smartphone, headset, and tablet with a pad placed under a tabletop.

Intel CEO Brian Krzanich demonstrates RealSense during his keynote speech at 2015 International CES in Las Vegas, Nevada.
(Image: Intel)

While Skaugen claimed that these emerging offerings are all part of Intel's grand pursuit of doing away with wires for all devices, it is clear that the technology involved will position the company well for its mobility play.

"On the wires thing, we want to eliminate all wires for charging, display, data transfer, and for docking," he said.

With the expected launch of the Skylake CPU architecture at the company's Developer Forum in San Francisco later this year, Skaugen said Intel will have the first reference designs, where "you would literally never have to connect a wire to your computer to do all those things".

He reiterated Intel's claim that it is now a "computing and communications" company -- a repositioning effort in the global market that has had plenty of resources thrown at it.

"We're a computing and communications company now, and obviously our resources have adapted to that. It's thousands, and thousands, and thousands of people dedicated to communications and connectivity," he said.

Intel has also been increasingly flashing its RealSense 3D camera technology around, with the company having previously made plans to put the cameras in laptops in the second half of 2014 and into tablets this year.

However, at Intel's Developer Forum in Shenzhen during April, Krzanich showed off a 6-inch prototype smartphone with the RealSense camera built into it.

Now, with a version of the RealSense 3D camera designed for smartphones likely to soon be ready for commercialisation, its wireless technology emerging as a central pillar of its overall product offering, and its microprocessor ecosystem set to boom, Intel's mobility end game is in sight.

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