Time Will Tell Whether the Contenders Can Follow Through on Their Ambitious Plans
Whether ARM and its partners can follow through on those expectations remains to be seen, but the company poses a large enough threat to Intel that some analyst are taking note. In a Jan. 9 research note, Sterne Agee analyst Vijay Rakesh said that Intel could see some "headwinds in its core PC market" due to the threat of ARM chips (coupled with Microsoft's upcoming Windows 8 OS) and falling prices. Rakesh is predicting that top-tier PC makers eventually will offer ARM-based chips in 10 to 15 percent of their systems over the next two years, adding that Intel's efforts to sell smartphones based on Medfield won't be successful enough to fully offset the notebook losses. Not everyone agrees. Bernstein Research analysts in a note Jan. 10 questioned whether the idea that ARM can make a sizable dent in the mobile PC space is too optimistic, though they did say the possibility was there.Intel is showing its capabilities in these areas in the ultrabook space, where it has established a $300 million fund for vendors creating hardware and software for the form factor to encourage the development of such components as displays that will fit within the design parameters set by the chip giant. Intel also is pushing efforts to drive down the cost of ultrabooks to below the $1,000 mark, where they will be able to better compete against tablets and Apple's MacBook Air. And less than a year after launching the ultrabook effort, Intel will see the new systems play a dominant role at CES. Market research firm Canalys said in a report earlier this month that ultrabooks would be the focus of most mobile computing announcements at the show, with as many as 50 new systems expected to be announced. But CES will prove to be only the beginning of what could be an intense competition between Intel and ARM. Intel is expecting this year to see new tablets and ultrabooks hit the markets powered by its upcoming 22-nanometer "Ivy Bridge" Core processors, which will offer the company's new Tri-Gate 3D transistor architecture that officials say will help drive 37 percent better performance than current 32-nm chips and 50 percent power reduction. For its part, ARM may get another strong partner for its PC and server push. At a speech at the IT Supply Chain show in December and in discussions with analysts at the event, new Advanced Micro Devices CEO Rory Read indicated that the company has not ruled out adopting the ARM architecture, particularly if it means gaining new customers in areas that AMD is not a player in now. "Mr. Read (for the first time, we believe) suggested that an ARM-based system on chip is not out of the question if that's what customers prefer," Raymond James analysts Hans Mosesmann and Brian Petersen wrote in a research note. "Heresy by AMD's historical standards, but quite consistent with Mr. Read's philosophy of winning in the market: execution, innovation and convergence." At the same time, ARM and its manufacturing partners this year also are taking steps in their attempts to gain a foothold in the low-power server space, whose growth is being fueled by the demand from companies like Google, Microsoft and Amazon, which run massive data centers used for cloud applications. ARM is looking to shore up deficiencies in its chips to make them more attractive enterprises, including adding 64-bit capabilities and better support for virtualization. Hewlett-Packard in November announced a partnership with Calxeda, which makes ARM-based server chips, in which the two will build systems that HP officials said will offer the same performance as x86-based systems but consume only 5 watts, use 90 percent less power and space, and come in at half the price of traditional servers. The servers will be part of HP's Project Moonshot, designed to drive up the energy efficiency of data centers. The first test systems are due this year. The announcement was seen as a blow to Intel. However, Roger Kay, principal analyst with Endpoint Technologies Associates, said Intel has been pushing in this direction for a while, even creating a new class of low-power systems called "microservers." "For more than two years, Intel has been developing an array of microservers from high performance to low power using 64-bit versions of both its Xeon and Atom chips," Kay wrote in a note in November. "It runs a development lab for microservers and has published a microserver specification. And it has its processors in microserver products on the market today from Dell, SeaMicro, Super Micro, NEC and Hitachi. Of course, many of these are Xeon-based performance-oriented systems. So, this business comes up again of what actually is a microserver."
Gartner's Mushell said Intel is in a difficult position. A key issue is that the company was relatively late trying to get into the mobile computing space, letting ARM and its partners get a dominant position there. However, Intel's massive manufacturing capabilities and its ability to drive pricing shouldn't be underestimated, he said.