Intel has yet to play a major role in the exploding tablet and smartphone spaces, but the Web traffic generated by these devices is fueling strong growth in its enterprise server business.
Intel is yet to be much of a player in the booming tablet and smartphone
spaces, a concern for industry observers in the long term. However, for now the
burgeoning markets are helping drive demand in some of Intel's traditional
businesses, and company executives continue to promise a strong presence in
both device segments as 2011 rolls on.
a Jan. 13 conference call with analysts and journalists announcing the chip
maker's record fourth-quarter and full-year numbers, CEO
Paul Otellini said Intel will become a much
larger player in both tablets and smartphones. In tablets, Otellini said he
expects a host of Intel-powered devices to hit the market this year.
key differentiator for Intel over rivals who use ARM
or MIPS designs is that Intel's Atom
platform can run Microsoft's Windows 7 operating system, Google's Android and
MeeGo, jointly developed by Intel and Nokia.
designing Atom-based tablets, [OEMs] have the opportunity to run multiple
operating systems on it, which I think is unique to Intel," he said.
also reiterated that he expects smartphone designs powered by Intel technology
to hit the markets this year.
had a record fourth quarter that topped off a very strong 2010 that saw it
bounce back from the global recession thanks in large part to its enterprise
business, which helped buffer it against weakening consumer PC demand. In the
fourth quarter, revenue came in at $11.5 billion-up 8 percent over the same
period in 2009-with net income hitting $3.4 billion, a 48 percent jump.
the year, Intel's revenue came in at $43.6 billion-the first year the company
has generated more than $40 billion in revenue-a 24 percent increase over
recession-ravaged 2009. Net income was $11.7 billion, 167 percent over the
the bulk of that came from Intel's traditional PC and server businesses, and
executives are anxious for the company to become a larger player in rapidly
expanding markets like mobile and embedded devices. Though the dominant chip
maker in the world, with more than 80 percent market share, Intel still has
made few inroads into these areas that currently are the domain of ARM
Holdings, whose designs are used by such vendors as Qualcomm and Samsung.
has looked to expand into these areas through internal development-particularly
of its Atom platform-and external acquisitions, such as its proposed $1.4
billion purchase of Infineon's
wireless business, which Otellini and CFO Stacy Smith said should close
while Intel makes its push into the mobile space, the rise of such devices as
tablets and smartphones is helping fuel the company's strong server chip
business, Otellini said. In 2010, about 245 exabytes of traffic crossed the
Internet, he said. Over the next five years, 1 billion more people will get
online and 15 billion more connected devices-from smart TVs to smartphones to
tablets and PCs-will link into the Web, with traffic growing to more than 1,000
is all driving the need for more servers to handle the traffic, Otellini said,
pointing out that the company's data center group saw quarterly revenue rising
15 percent over the third quarter, and yearly revenue jumping 35 percent over
world of PCs plus new emerging computing devices is increasing the demand for
servers of all types," he said.
Richardson, an analyst with Technology Business Research, said the trend will
continue to help Intel.
devices, such as tablets and smartphones, are leading to an explosion in data
and volume, resulting in growing demand for cloud and virtualized
said in a research note. "Intel capitalized on the increased demand."
enterprise business will reap benefits from the tablet space, he said. The chip
maker will be able to use its commercial presence in both servers and PCs to "establish
a toehold in the business tablet space," Richardson
said. Intel's server and storage businesses also will capitalize on the
skyrocketing Internet traffic, particularly in such areas as virtualized and
he warned that Intel is missing out by not being a larger player directly in
the tablet space, which was revived by Apple and its iPad last year. Since
April 2010, more than 10 million consumers worldwide have bought a tablet.
rub: To this point, these devices have been built on architectures that don't
belong to Intel," Richardson
will try to gain traction in the space with its upcoming "Oak Trail"
Atom platform, but the company also must be able to quickly learn to play in
such a lower-priced consumer device space, which is a different market from
traditional servers and PCs, he said.