When MediaTek started talking about "eight-core" mobile processors (in particular, ones with eight weak CPU cores rather than 2-4 stronger ones), those with an appreciation of technical elegance (like mobile apps processor leader, Qualcomm (NASDAQ:QCOM)) got egg on their collective faces. Indeed, former Chief Marketing Officer Anand Chandrasekher claimed (and, from a technical perspective, rightly so) that 8-core mobile CPUs are "dumb". Fast forward to today with Qualcomm announcing a nearly identical solution with ARM's (NASDAQ:ARMH) low-end Cortex A53 CPUs, and it is clear that Qualcomm is subject to the same market forces as everybody else.
Don't blame Qualcomm, blame the market
One of the key reasons that MediaTek has been so successful is that the company essentially builds whatever the market wants. If customers in Asia want a low cost "eight-core" phone, even if it provides inferior performance and battery life to more powerful dual-core solutions, then give the customer what he/she wants. Remember, when it comes to business, the customer is always right, and when it comes to marketing nonsense like "eight cores," it's tough to educate your average consumer that less is more.
Now, despite having some pretty serious technical chops, Qualcomm recognizes that, at the end of the day, the goal is to give the customer (in this case, the handset vendors) exactly what they want. Why? It's all about making the sale and generating that profit for the shareholders. Even though Qualcomm's top-end Snapdragon 800/801/805 chips feature "only" four brawny cores, these processors will be significantly faster than any of these eight core Cortex A7/A53 solutions. And, for now, it's what the customers want.
The lesson here – don't fight the market
At the end of the day, Qualcomm is "just" a component supplier. Granted, it is probably the most technically competent mobile chip vendor today and this competence has translated into some pretty serious market share and key design wins -- particularly at the high end. However, in order to succeed in such a consumer-oriented and fairly fashion-conscious market, component suppliers need to deliver products that ultimately match up with what the device vendor is trying to sell. In this case, usable performance is less important to customers (primarily in Asia) than simply having "eight cores."
Interestingly enough, this situation is extremely similar to the situation that Intel (NASDAQ:INTC) faced with its recently launched Merrifield platform targeted at high-end phones. While the solution offers pretty fantastic CPU/GPU performance, it is a dual core and doesn't sport an integrated modem, which is likely to stifle adoption. There are good technical reasons to want an integrated modem (primarily lower board space/lower platform bill of materials), but the move from dual to quad core is really for show. But, even Intel is learning its lesson by rushing out Moorefield (quad-core Merrifield) and SoFIA (integrated modem).
Foolish bottom line
The companies that ultimately succeed are those that build products that ultimately sell. The most technically elegant solution is likely to eventually win out (and in a closed ecosystem like Apple's, it already has), but in a fast-growth market with tons of competition ready and willing to "out-market" you if you lack any critical features, the time for that technically elegant solution – at least in the mainstream – isn't now, unfortunate as it is.
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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, Intel, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.