Intel has been trying to promote its low-power x86 Atom processor for mobile devices. However, most mobile devices are utilizing ARM processors licensed through major firms such as TI. Now, with Intel's August 30, 2010 acquisition of Infineon's Wireless Solutions business for $1.4 billion, Intel gets ongoing relationships with handset makers and wireless operators, a profitable wireless chipset business, and (again) a license to the ARM processor.
This will be Intel's second major attempt to build a business around ARM. In 1997, Intel acquired the StrongARM unit of Digital Equipment Corp., turning it into XScale. While the CPU was technically advanced, Digital (and therefore Intel) didn't have ongoing customer relationships with handset makers and wireless operators.
After failing to achieve success in the mobile market, it sold the XScale unit in June 2006 to Marvell along with the license to ARM. Fast forward to August 2010. Intel now regains access to ARM. But this time, Intel gets ongoing customer relationships-which could be very important to achieving success in the large mobile handset market.
Further, on September 8, 2010, ARM announced the new Cortex-A15 MPcore processor that delivers a five times performance improvement over existing advanced smartphone processors, within a comparable energy consumption. The ARM Cortext-A15 MPcore processor will provide software support for Android, Adobe Flash player, Java Platform Standard Edition (Java SE), JavaFX, Linux, Microsoft Windows Embedded and Symbian environments-the leading platforms used in the mobile handset business.
Does this mean an end to the Atom processor family? I suspect that Atom will end up being utilized more in both the tablet and wireless Internet device markets, while ARM's Cortext-A15 MPcore processor will be utilized in the smartphone market.
Intel seems determined to become a major player in the mobile market. The mobile handset market is 10 times as large as the notebook and PC market-with roughly 3.5 billion mobile handset units being produced this year versus 367 million notebooks and desktop PCs. The acquisition of Infineon's Wireless Solutions Business could be one of the most important acquisitions Intel has ever made, especially if they end up successfully competing against TI and Qualcomm.
Finally, this story seems like a classic "make versus buy" argument for Intel. They decided that it would be less expensive and provide faster time to market (TTM) to buy Infineon's Wireless Solutions Business than to build an equivalent business around ARM by itself. Intel also gains a level of customer credibility in this space through the Infineon relationships that would have taken years to establish independently.
Kudos to Intel. Now, let's see what they do with the important asset they have acquired.
J. Gerry Purdy, Ph.D. is Principal Analyst of Mobile & Wireless at MobileTrax LLC. As a nationally recognized industry authority, Dr. Purdy focuses on monitoring and analyzing emerging trends, technologies and market behavior in the mobile computing and wireless data communications industry in North America. Dr. Purdy is an "edge of network" analyst looking at devices, applications and services, as well as wireless connectivity to those devices. Dr. Purdy provides critical insights regarding mobile and wireless devices, wireless data communications and connection to the infrastructure that powers the data in the wireless handheld. He is author of the column Inside Mobile & Wireless that provides industry insights and is read by over 100,000 people a month.
Dr. Purdy continues to be affiliated with the venture capital industry as well. He currently is Managing Director at Yosemite Ventures. And he spent five years as a Venture Advisor for Diamondhead Ventures in Menlo Park where he identified, attracted and recommended investments in emerging companies in mobile and wireless. He has had a prior affiliation with East Peak Advisors and, subsequently, following their acquisition, with FBR Capital Markets. For more than 16 years, Dr. Purdy has been consulting, speaking, researching, networking, writing and developing state-of-the-art concepts that challenge people's mind-sets, as well as developing new ways of thinking and forecasting in the mobile computing and wireless data arenas. Often quoted, Dr. Purdy's ideas and opinions are followed closely by thought leaders in the mobile and wireless industry. He is author of three books as well.
Dr. Purdy currently is a member of the Program Advisory Board of the Consumer Electronics Association (CEA) which produces CES, one of the largest trade shows in the world. He is a frequent moderator at CTIA conferences and GSM Mobile World Congress. He also is a member of the Board of the Atlanta Wireless Technology Forum. Dr. Purdy has a B.S. degree in Engineering Physics from University of Tennessee, a M.S. degree in Computer Science from UCLA, and a Ph.D. in Computer Science and Exercise Physiology from Stanford University. He can be reached at firstname.lastname@example.org.
Disclosure Statement: From time to time, I may have a direct or indirect equity position in a company that is mentioned in this column. If that situation happens, then I'll disclose it at that time.