Can Intel Corporation (INTC) Do to ARM Holdings plc (ADR) (ARMH) What it Did to PowerPC?

Page 1 of 2

In 2006 Intel Corporation (NASDAQ:INTC) pushed International Business Machines Corp. (NYSE:IBM)’s PowerPC processor architecture into obscurity when Apple Inc. (NASDAQ:AAPL) switched its Macs over to Intel processors. In its quest to conquer mobile computing, can Intel overwhelm the ARM Holdings plc (ADR) (NASDAQ:ARMH) architecture in the same way?

Reversal of fortune

The market’s current valuation of Intel Corporation (NASDAQ:INTC) (P/E of 10.18, courtesy Motley Fool) suggests that many have written off Intel’s efforts to get into mobile computing. After all, since the iPad’s introduction in April 2010, no competitive tablet with an Intel processor had even existed through the end of last year. And Intel’s efforts to get into mobile phones fell very flat with its mobile phone platform only making limited appearances overseas but not in the US.

Intel Corporation (NASDAQ:INTC)Early this year, this situation started to change as tablets, such as Hewlett-Packard Company (NYSE:HPQ)‘s ElitePad 900 and the Microsoft (NASDAQ:MSFT) Surface Pro, began to hit the market. Intel’s next (4th Gen) Core architecture, code named Haswell, which is due possibly in June, has the potential to combine the thin and light form factor of ARM Holdings plc (ADR) (NASDAQ:ARMH) tablets with the computational power of Intel Core processors.

The stage seems to be set for Intel Corporation (NASDAQ:INTC) to recapture its role as the purveyor of commodity processors for personal computing, but in the mobile arena. Indeed, in a previous article, Why Microsoft Needs Intel’s Haswell CPU, I proclaimed this future and urged Microsoft Corporation (NASDAQ:MSFT) to embrace it. It is, I believe, the only future that Microsoft has. But is it inevitable that the rest of the mobile device makers will follow suit? Is the future of mobile devices the same rather bland present of commodity Intel PCs?

History repeats?

In trying to arrive at some answer to this question, I was struck by the similarities as well as differences with Intel’s battle with PowerPC.

Similarities:

Both ARM (which stood originally for Advanced RISC Machine) and PowerPC implemented RISC (Reduced Instruction Set Computing) processor architectures that were supposed to provide higher performance in a simpler, lower-cost implementation. Although it was argued that RISC had inherent advantages compared to Intel’s x86 processors, Intel Corporation (NASDAQ:INTC) was able to mitigate or eliminate those advantages through heavy investment in design and fabrication improvements.

Apple was the principal user of PowerPC processors, and was part of the PowerPC alliance along with IBM and Motorola. Today, Apple is one of the most important users of ARM architecture devices, and at one time held a stake in ARM Holdings (NASDAQ:ARMH). Microsoft, as before, is closely associated with Intel processors, despite its Windows on ARM initiatives.

Differences:

Unlike the PowerPC, ARM Holdings plc (ADR) (NASDAQ:ARMH) architecture processors have a much larger customer base. In addition to Apple, there is the whole of the Google Inc (NASDAQ:GOOG) Android ecosystem, especially Samsung, with an interest in defending ARM against Intel. PowerPCs were the upstart challenger to Intel, but now the tables are turned and it’s Intel challenging the incumbent ARM hardware ecosystem.

Perhaps the most important difference is that in mobile computing, RISC processors may have found their perfect niche. Intel could easily overpower PowerPC in desktops, where power consumption wasn’t a consideration. Intel Corporation (NASDAQ:INTC) has and will continue to find it difficult to achieve the low power performance of ARM processors that consumers have come to expect in their mobile devices. However, I wouldn’t discount Intel’s resourcefulness in this regard.

Conflicting paradigms

Intel Corporation (NASDAQ:INTC)’s impending assault on the mobile device market involves another deeper conflict of technological trends. As processor manufacturers have been able to squeeze ever more transistors onto their chips, more and more functionality has been moved onto them. This has resulted in two divergent mobile device manufacturing paradigms.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!