Here's Why You Should Cut Intel Some Slack

Back at Mobile World Congress 2014, Intel (NASDAQ: INTC  ) launched its next-generation smartphone platform, codenamed Merrifield. At the heart of the platform are a dual-core Silvermont processor and Imagination Technologies (LSE: IMG  ) PowerVR G6400 graphics, and it weighs in at about 70 millimeters squared on the die size (suggesting that its manufacturing cost is perhaps just $5). The modem that will initially come with the platform is Intel's first-generation XMM 7160, but customers could choose to pair it with the much-improved XMM 7260. Nearly two months following the launch, not a single design win has been announced. What gives?

Not being in the loop isn't fun
The development cycle for a mobile processor is about four years, suggesting that when Intel's marketing group was deciding what features to put into this processor, a "smartphone" was basically the 3.5-inch iPhone with a 480x320 display, a single-core ARM Holdings (NASDAQ: ARMH  ) Cortex A8 at 600MHz, and an Imagination Technologies PowerVR SGX535.

Now, when you're Apple, the company that leads the industry, it's easy to know what kind of processing power your phone needs -- which is why Apple builds its own chips. Or, if you're Qualcomm (NASDAQ: QCOM  ) -- the leading smartphone chip vendor today -- you're working closely with heavyweights like Samsung (NASDAQOTH: SSNLF  ) and LG to understand exactly what the requirements are for next-generation phones. But what if you're Intel, new to this industry and with no "friendly" customers to tell you what to design?

It must've seemed crazy fast at the time
Back in 2009, when Intel was likely drafting the initial specifications for the Merrifield platform, the idea of two Silvermont cores -- cores significantly faster than the best netbooks available at the time -- in a phone must've seemed like a pretty significant leap. After all, the ARM Cortex A8 at 600 MHz couldn't hold a candle to the 1.6GHz+ Intel Atom at the time.

Indeed, two Silvermont cores running at 2.13GHz max turbo (the speed of the top-bin Merrifield, known as the Atom Z3480) are pretty dramatically ahead of what the iPhone 3GS had to offer and probably seemed like a reasonable design point to target for leadership in the smartphone market for a 2013 rollout. Unfortunately, Intel underestimated just how quickly the ARM folks (as well as Qualcomm) would be able to scale up the performance levels of their processors.

Hey, notice how phones got really big all of a sudden?
With Intel likely aiming for an iPhone or an iPhone-class design, there was another thing the company probably didn't count on when it first sat down to develop the Merrifield platform -- bigger phones. Larger phones, like the Samsung Galaxy S and Galaxy Note products, offer larger batteries and allow the processor to dissipate more power, particularly for short bursts of time.

Intel's reasoning behind Merrifield was probably an aim to be able to sustain fairly high performance for long periods. A dual-core Silvermont (Silvermont dissipates less than 1 watt per core at maximum load) would be able to peg top frequency for quite some time without throttling back. Contrast this with, say, the quad-core Qualcomm Snapdragon 800, which -- as Anandtech showed in testing the Nexus 5 -- throttles back from its peak advertised 2.3GHz to about 1GHz under heavy load.

Technical elegance has given way to marketing
Look at some of the ridiculousness in the mobile market today, with "octa-core" processors, big.LITTLE, and other technical abominations that at best serve as marketing points. Most mobile software is probably unable to use more than a single core, let alone eight, which means that singe-core performance is of the utmost importance to a top-shelf user experience. Many of these "octa-core" solutions sacrifice single-core performance for the insane core-count marketing point.

That being said, it's likely that the high-end custom solutions from Intel, Qualcomm, and even Apple long-term, will top out at four "usable" cores. Apple, in fact, appears to be pushing the envelope on single-core performance and opting for dual-core solutions in its flagship iPhone and iPad products. It's likely that this will continue for at least another generation. But, of course, Apple doesn't need to compete on core count -- the iPhone brand and iOS are what sells these phones.

Foolish bottom line
Will Intel's Merrifield platform gain meaningful traction in phones? Probably not. With a quad-core variant coming shortly after Merrifield, and with the company's integrated LTE part known as "SoFIA LTE" featuring quad Silvermont cores, it seems that Merrifield will be short-lived indeed. Does that mean I expect it to not show up in any designs? No, but the real commercial success duo should be SoFIA LTE at the low end and Broxton from the mid-range up in 2015.

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Read/Post Comments (6) | Recommend This Article (4)

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 April 17, 2014, at 2:43 AM, Shaduck007 wrote:

    I put a sell order for the majority of my INTC holdings (7 yeArs of drifting). Thanks for the guidance. Ashraf!

  • Report this Comment On April 17, 2014, at 7:03 AM, TMFAeassa wrote:

    @ Shaduck007

    I hope you are cashing in at least some decent gains! :-))

  • Report this Comment On April 17, 2014, at 10:19 AM, ApuQatar wrote:

    Your headline doesn't match your story. Title : be patient with INTC. Story: INTC is screwed.

    Intel needs to give up on designing mobile processors. They need to grab all the majors in their foundry business and screw TSMC and others to the ground with superior process technology. If they continue to try to compete with those who should be customers, they will drive that foundry business elsewhere and give other fabrication facilities the economies of scale to catch up to Intel on the process side. At that point INTC will be lost.

  • Report this Comment On April 17, 2014, at 11:26 AM, JeffreyHF wrote:

    Intel was able to dictate to the PC industry what they would get. They would keep improving CPU performance, and render previous versions obsolete. In mobile, it works conversely. The industry dictates to the silicon suppliers what they want. In addition to anticipating where the future will go, Intel will need to learn how to satisfy customers' needs.

  • Report this Comment On April 17, 2014, at 7:00 PM, H2323 wrote:

    Actually it's the GPU that drives the user experience in smartphones more than the ARM cores. Adreno and PowerVR are the best and drive the best experience in the high end phones. Core power is important to apple due to the 64 bit OS that chugs bad outside of A7. KitKat Runs good farther down the line on droid.

    Intels mobile issue is x86, they need an ARM license. x86 as the go to chip in mobile is a pipe dream. There ego will kill them

  • Report this Comment On April 18, 2014, at 5:05 PM, keeperoftheq wrote:

    AMD announced good earnings and guidance.

    AMD has done what INTC has failed to do.

    AMD reported that even with the PC market decline that they expect to see growth in all areas including the PC market.

    Yes folks, that means market share.

    AMD has been beat down prior to earnings but the surprise report and forecast looked goo so AMD was up over 5% after hours.

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