Intel: Fear and Loathing in Las Vegas

For months I've wondered if Intel (Nasdaq: INTC  ) and Apple (Nasdaq: AAPL  ) were almost through as chip partners. Now, after sitting in on Intel's press conference at this week's Consumer Electronics Show in Las Vegas, I'm convinced that's exactly what's about to happen.

For those who don't know, Intel yesterday took the wraps off its latest Core processor for PCs at CES. Code-named "Sandy Bridge," the chip integrates graphics processing on the same die and is manufactured at the extra-small 32 nanometer scale to stuff more transistors into a smaller space. More transistors generally equal more processing power.

CEO Paul Otellini and PC client group general manager Mooly Eden also touted Intel's close ties with Microsoft (Nasdaq: MSFT  ) in shepherding Sandy Bridge. Hewlett-Packard (NYSE: HPQ  ) will be among the first to ship Windows machines based on the Sandy Bridge chipset. Additional technology for encoding digital rights into streamed high-definition video also received support from Time Warner's (NYSE: TWX  ) Warner Bros. studios.

If all that sounds important, you're right. But it's not the "what" of the Sandy Bridge announcement that had me curious as an investor. It's how Intel talked about the chip that really grabbed me.

Eyeing the "eye candy"
Otellini and Eden ticked off stats as each took their turns on stage, almost as if they were play-by-play announcers:

"Users watch 2 billion YouTube videos daily!"

"Consumers upload 2.5 million photos to Facebook monthly!" (Impressive, but still not enough to justify a $50 billion valuation.)

The implication? Next-generation PCs must be capable of transcoding digital media at very high speeds, and they can't afford to outsource the job to a separate video card. No doubt NVIDIA (Nasdaq: NVDA  ) would disagree. And, I suspect, so would most gamers.

Nonetheless, Eden said consumers would demand more from central processing chips in an age where transcoding -- i.e., the process of preparing and moving video from one device format to another -- is becoming more common.

Here, Intel and chief rival Advanced Micro Devices (NYSE: AMD  ) have common ground. AMD has made an all-in bet on integrating the ATI graphics technology it acquired into core chipsets.

Apple, too, should love this idea. Earlier reports had the Mac maker moving away from NVIDIA and toward Sandy Bridge for its low-end MacBooks with an eye on AMD graphics for higher-end offerings. Space-constrained Macs should love the efficient Sandy Bridge design. So why didn't anyone mention that at the Intel presser?

Mr. Otellini, I have Mr. Jobs on the line for you ...
No one did. Isn't this just a little curious? I think so. But I'm even more fascinated by how Intel chose to demonstrate Sandy Bridge's processing power. In a head-to-head demo, Eden virtually mocked the processing power of the Core 2 Duo, a common Mac chip made by Intel. Sandy Bridge was 830% faster, Eden said. Ouch.

What makes this especially troubling is that Apple has a history of haggling with chip component makers. Even NVIDIA, long a close partner, has suffered the Mac maker's cheapskate ways. If Intel wants a bigger slice of the processing pie, expect Apple to cry foul -- especially now that it has built its own chipset to support iOS devices, the A4.

On the other hand, maybe Intel is the problem. Perhaps fearing the rise of the A4, Eden left the Mac maker out of the Sandy Bridge discussion to leave room for an eventual parting. Nothing else makes sense, especially if Apple does have designs on moving away from NVIDIA as its long-standing graphics chip partner.

Now it's your turn to weigh in. What do you think of Sandy Bridge? Will Apple ever show an A4 Mac? Use the comments box below to let us know what you think, and be sure to check back here daily as we report on other CES stories as they emerge.

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Read/Post Comments (17) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 06, 2011, at 8:27 PM, BuyemHoldem wrote:

    hmmmm... so is Apple moving toward Fusion?

  • Report this Comment On January 06, 2011, at 9:31 PM, austec wrote:

    Uh.... I don't think it's going to be the A4. Could it POSSIBLY BE? DO YOU THINK? ARE WE DREAMING? ...

    BECAUSE I THINK APPLE WANTS FUSION AND ITS ABILITY TO CROSSFIRE! Think about it... Llano combined with a discrete AMD graphics card would give dual-GPU graphics performance.

    Apple has been optimizing their computers to use the GPU for years. AMD Fusion makes perfect sense - especially now that we know that Zacate and Ontario get amazing processing/watt. Llano will only be better.

    Yay.. When is the Llano/Apple announcement? C'mon, don't keep us waiting like this!!

  • Report this Comment On January 06, 2011, at 9:55 PM, techy46 wrote:

    Apple's A4 is a multicore ARM chip built for low watt, low cost devices sold are high prices (iToys). Intel's offering for that will be Oak Trail, mid 2011, for phones and tablets. Sandy Bridge is for more functional desktops, laptops, servers and such. Apple probably wants more control over Intel and less direct comparison with Microsoft than commodity chips will offer. Microsoft move to ARM (QCOM, TI, etc.) is probably Apple's worst nightmare. Apple better be working on an iBox or puff goes the strategy.

  • Report this Comment On January 06, 2011, at 10:19 PM, zillady wrote:

    I think Intel is fighting and losing digital war as msft is also in trouble of it's integrated software. As more and more we're hearing about cloud computing, this would give more ideas of disintegrating the load of current program which requires tons of horsepower from a cpu. the problem of cpu (inte/amd alike) is that it's not good of doing large scale calculation (can't run digital media alone nor can it crunches big files of spread sheet). Apple and Nvdia are on right track of future digital computing. Apple design it's chip around the software application that it's system intended to be used. Nvida just need to incorparate a mcp (ARM) into its multicores (hundreds - unlike Intel/AMD pathetic 4/6 cores) which can handle digital contains seemlessly. My prediction into 5 yrs that Intel/AMD will see blood on their face. After all, the world fastest supercomputer uses gpu instead of cpu alone.

  • Report this Comment On January 07, 2011, at 1:22 AM, austec wrote:

    Uh, yeah... The FTC's August 2010 Consent Decree forbids Intel from continuing to pay OEMS to limit or eliminate their use of AMD-based processors.

    Apple was obviously engaged in an exclusivity agreement with Intel... I guess that agreement had to go out the window 4-months ago after the Federal Trade Commission asked Intel to stop monopolizing the entire world's computer industry.

    Yup.. Intel is pretttty "EVIL INSIDE"

  • Report this Comment On January 07, 2011, at 1:58 AM, TerenceFL wrote:

    There's three points I disagree with you on:

    1) Sandy Bridge is Intel's next step toward System-on-Chip (SOC) for inexpensive desktop and set-top devices. That, coupled with higher margins for the new manufacturing processes, gives Intel better positioning against other SOC chip makers. But Apple isn't really in the low-cost business for desktops and notebooks. This move is really for HP and Dell more than anybody.

    2) The performance numbers being quoted are highly biased, AMD and nVidia are already preparing push backs on Intel's claims. And what Intel giveth, Microsoft taketh away; the overhead of Windows and off-the-shelf software nullify a lot of Intel's raw speed enhancements. Some of those enhancements are badly needed by Microsoft just to stay even.

    3) The Sandy Bridge DRM is not a customer feature, it is a weapon against consumers that the media cartel has demanded from Intel for years, and they finally got it. When that weapon begins to make itself felt, Intel and video apps developers are going to be faced with a lot of ill feelings and potentially even more OEMs bailing to open-architecture ARM platforms. I'm watching that with anticipation.

  • Report this Comment On January 07, 2011, at 4:51 AM, TheBlindCat wrote:

    NVIDIA already spelled it out, making public what many have suspected, ARM is going mainstream. Not only are we going to see ARM in laptops very soon, we will see ARM based SoC in desktops, workstations and supercomputers. Even Microsoft has seen the writing on the wall.

    Apple will likely demonstrate ARM in the MacBook Air first (where they usually deploy cutting edge tech). Much as they did with the PPC to Intel transition, we will see both architectures supported for several years, eventually Apple will streamline, using ARM across all mobile and desktop devices (Xserve redux?) owing to the great flexibility the ARM license agreement provides for customization.

    If you think about it, Apple's AppStore will make the delivery of the proper binaries trivial, one only needs to look at the ease with which developers supported the transition from iPhone to iPad. The world has truly changed.

    http://caps.fool.com/Blogs/ViewBlog.aspx?t=01004704790345071...

  • Report this Comment On January 07, 2011, at 9:51 AM, EquityBull wrote:

    I disagree 100% with the poster just above me.

    ARM will not replace INTC chips on mac or pc desktops, servers and mid to high end laptops. They could get some play in low end netbook class laptops but I do not think they will fare well there and will end up giving way back to INTC even on the low end.

    Why? Same reason apple left PowerPC chips to go to Intel. Nobody will beat the performance, price and manufacturing capability of Intel. Apple has to keep up with the PC world and the last thing they want to become is a full fledged chip maker going head to head with Intel. They will lose that battle very bad.

    Consumers will compare cores and clock speeds on devices and those with the higest will gain the share. This is why PowerPC failed even though it was supposedly faster then INTC. Even if it was consumers see the specs and buy based on that, period. Ultimately we found out Intel was indeed much faster. Making chips is no simple task.

    Same with msft supporting ARM. In anything but small mobile devices it is a non-issue for intel. Intel will eventually carve out a space on mobile and use their patents and expertise to compete here as well.

    The moat continues to remain extremely wide around intel but those outside tech and those in the financial world won't see that until it is obvious that ARM won't be taking over the world anytime soon. Just not happening.

    All the buzz though around ARM is providing an excellent opportunity to create or add to a position in Intel which is priced for death here at it's lowest valuation in some time. You will get paid to wait a 3.4% dividend and I price fair value today at $30 giving 50% upside with maybe another dollar or two downside if the market swoons.

  • Report this Comment On January 07, 2011, at 10:14 AM, TheBlindCat wrote:

    "The moat continues to remain extremely wide around intel but those outside tech and those in the financial world won't see that until it is obvious that ARM won't be taking over the world anytime soon. Just not happening."

    It never ceases to amuse me when individuals think they have the only valid viewpoint and that anyone who disagrees with them "must be outside of tech".

    Clearly the highly qualified engineers at ARM, MARVELL and NVIDIA think otherwise or they would not be investing their companies futures in such endeavors.

    So yes, while Intel is a great company with first rate engineering, times change, usage patterns change, business models change. The future is cloudy and there are many possible outcomes, one of those outcomes is that Intel in no longer the dominant provider of computing silicon.

  • Report this Comment On January 07, 2011, at 10:25 AM, rav55 wrote:

    A4 is a RISC-32. And nothing but tablet and smartphone apps run on it. Don't expect to see ARM go 64 bit anytime soon. ARM has announced 64 bit by 2014. x86-64 IS the dominant species in the cpu foodchain. The world is designed with it and runs on it. You can expect too see x86-128 next year as AMD's Bulldozer is a 128 bit number crunching monster and Windows 8 is waiting for it.

    ARM and A4 is so far behind that performance that it just can't keep up. A4 is standing in the dust.

    To add insult to injury AMD new Fusion APU's are reaching down in to that low energy high performance market niche and you can expect to see AMD grabbing Tablet market share from ARM. And why not? If you can run x86 softwarewith Windows on your Tablet isn't that preferred to Android?

    Do we need another PC operating system? Don't have enough already?

  • Report this Comment On January 07, 2011, at 1:12 PM, medicalquack wrote:

    Well we may be coming back to processor wars again and i think both Microsoft and Intel have been focusing a lot on the enterprise, for Xeons and load balancing with servers as we are getting speeds now at warped rates. Perhaps the consumer side is secondary? I still wonder about the flash crash in the fact that perhaps we had a mechanical delay in virtual server fail over processes but we will never know that answer. From what I read and after observing data and how it posts, it just looked like that was a possibility that nobody wanted to even talk about:)

    There's still the battle of speed and battery life too as if you give up some functionality you get longer battery life and if battery life is what you want then functionality gets adjusted. For a little bit of history this was my pure speculation on the flash crash and may make for some interesting reading as I based this on what everybody else read in the news:) This is fine tuning for the software on the silicon chip to function with everything that is thrown at it to include memory disambiguation:)

    http://ducknetweb.blogspot.com/2010/05/was-server-fall-over-...

  • Report this Comment On January 07, 2011, at 5:01 PM, GPUisFuture wrote:

    To equitybull, the reason Apple switched from PowerPC to Intel has to do with power usage, not performance. Indeed, Apple had to wait until dual core processors were available from Intel before moving their iMacs from PowerPC, because it took two Intel cores to finally provide performance equivalent to a single PowerPC from IBM. But continuing to use IBM's PowerPC was not sustainable because it required so much power, and it was virtually impossible to make a laptop with this processor.

    Apple cares very much about power usage. In this sense they are a very green company - if millions of people use their products, it is good for the environment. They are always trying to make their products smaller and smaller, and the less power they consume, the smaller they can be made. This is why I predict they will move to using ARM in all their products as soon as possible. Today, the performance is not quite high enough, but as the GPUs incorporated into these chips become powerful enough, there will be a very high incentive for Apple to move away from Intel/AMD, from the point of view of power usage and physical size of resulting products.

    I am not up to date with IBM's CPUs, but they continue to use them in their supercomputers. I understand at least in the 2009 time frame, they could get by with fewer cores for a given level of performance as compared to Intel/AMD CPUs, but can you imagine Apple trying to use these power-hungry CPUs to make the products they make today? They would certainly have higher performance, but that's not Apple's goal. The same comparison will be possible between Intel/AMD and ARM CPUs of the future.

  • Report this Comment On January 07, 2011, at 6:41 PM, TheBlindCat wrote:

    manufacturers with both hardware and software.  "What?", you say,

    "Those days are long gone, Apple is now solidly in the X86 camp".  To

    which TheBlindCat responds, "Not so fast ..."

    The move away from RISC based PowerPC chips and towards CISC based

    Intel chips was precipitated not by the need to compete based on clock frequency, rather on performance per watt basis.

    GPUisFuture has it exactly right.

    "In his keynote address on June 6, 2005 at WWDC, Steve Jobs officially

    stated that the reason for switching from PowerPC-based to Intel-based

    systems was:

    Because we want to make the best computers for our customers looking

    forward. Now, I stood up here two years ago in front of you and I

    promised you [a 3 GHz Power Macintosh G5], and we haven't been able to

    deliver that to you yet. I think a lot of you would like a G5 in your

    PowerBook and we haven't been able to deliver that to you yet. But

    these aren't even the most important reasons. The most important

    reasons are that as we look ahead, though we may have great products

    right now, and we've got some great PowerPC product[s] still yet to

    come, as we look ahead we can envision some amazing products we want

    to build for you and we don't know how to build them with the future

    PowerPC road map. And that's why we're going to do this. When we look

    at Intel, they've got great performance, yes, but they've got

    something else that's very important to us. Just as important as

    performance, is power consumption. And the way we look at it is

    performance per watt. For one watt of power how much performance do

    you get? And when we look at the future road maps projected out in

    mid-2006 and beyond, what we see is the PowerPC gives us sort of 15

    units of performance per watt, but the Intel road map in the future

    gives us 70, and so this tells us what we have to do."

  • Report this Comment On January 07, 2011, at 7:04 PM, TheBlindCat wrote:

    Apologies for the bad copy paste. Just wanted the Steve Jobs quote.

  • Report this Comment On January 09, 2011, at 3:09 PM, asH95 wrote:

    "Eden virtually mocked the processing power of the Core 2 Duo, a common Mac chip made by Intel. Sandy Bridge was 830% faster, Eden said. Ouch."

    Seems plauasable Jobs is reevaluating his Mac line relative to which CPU/APU, deciding best bang for the buck- AMD is the GPU of (Apple eyes) choice, for high end and offers a complete solution including chipsets, unlike Intel, ouch

    cant wait for Sandybridge 17W chips benchmark -is Intel up a creek?

    asH

  • Report this Comment On January 14, 2011, at 10:14 PM, djl07 wrote:

    You might be reading too much into this.

    Apple is extremely tight lipped on all future product plans; they expect all of their partners to be equally tight-lipped with regard to what they may or may mot be doing with Intel.

    Could it be as simple as that - that Intel avoided any comment on Apple's products since Apple is clear that there can only be one source of that?

    Think - what would annoy Apple more, demonstrating how your current product is a whole lot faster than your old product, the one that almost everyone including Apple uses, or making a comment on future Apple product - in other words, being an untrustworthy partner.

  • Report this Comment On March 13, 2011, at 4:53 AM, johnstalberg wrote:

    And the last person (djl07) nailed it.

    About the Intel/Apple chip era. They had other things to do, the Thunderbolt!

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