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.
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.