It has been encouraging to see Intel (NASDAQ: INTC ) become aggressive in pursuing the tablet market. It would have been nice to see that happen earlier, particularly as the company -- by CEO Brian Krzanich's own admission -- was in denial that tablets were cannibalizing PC sales. However, the elephant in the room is the company's smartphone effort, which continues to suffer from execution problems.
With Computex, one of the biggest tech trade shows in the world, fast approaching (it takes place from Jun. 3-Jun. 7), investors should listen closely to Intel's keynotes and presentations for any updates that the company can provide on its smartphone strategy.
Intel didn't win a single major design with Merrifield
The brand-name handset vendors that matter -- HTC, Samsung (NASDAQOTH: SSNLF ) , LG, and Motorola -- have all more or less chosen Qualcomm's (NASDAQ: QCOM ) Snapdragon 800/801 processors for their next-generation high-end smartphones. This was mostly expected, as Intel's high-end solutions still aren't really competitive with what Qualcomm offers today.
The real failure on Intel's part is that it struck out on the "Mini" variants of every single flagship smartphone. The HTC One Mini 2? That went to Qualcomm's Snapdragon 400. The LG G2 Mini? That also went to the Snapdragon 400 for the widely distributed models, along with NVIDIA's (NASDAQ: NVDA ) Tegra 4i for some foreign models. How about the Samsung Galaxy S5 mini? It's not official, but from the spec leaks that looks like a Snapdragon 400 design, too.
How did Intel's Merrifield platform -- which offers strong graphics and CPU performance, as well as a capable discrete modem -- fail to win any of these designs?
Pick your poison: availability, integration, cellular capability
There are three likely reasons that Intel may not have won those designs:
- Merrifield was simply unavailable for the time frame of those designs. The platform was launched in February, while the Snapdragon 400 was available much earlier;
- The XMM 7160 paired with Merrifield isn't as featured as the MDM9x25 block integrated inside of the Snapdragon 400 (Qualcomm's platform features carrier aggregation and CDMA support, while the 7160 does not); or
- The lack of integration on the part of the Merrifield platform drove a platform bill of materials that was simply too expensive, leading the OEMs to choose the Snapdragon 400 for total cost reasons.
Whatever the reasons are, it is unfortunate that Intel wasn't able to win those designs. The Silvermont CPU core, the Imagination GPU block, and the very nice 22nm FinFET transistors would have made a stunning showing in terms of performance and power for more compute and graphics-oriented applications -- but of course smartphones require more than that.
SoFIA may fix this
While I am personally looking for Intel's 14-nanometer Broxton part to start winning sockets at the high end, the real growth in handsets (and the segments where the device vendors are less likely to want to roll their own silicon) is in the low end and midrange. This is where Intel's SoFIA processor -- which integrates a cellular baseband in the main SoC -- should remedy that deficiency. Furthermore, since this will be a Silvermont-based product, it should also offer good performance (although it remains to be seen what graphics processor Intel integrates).
While Broxton may arrive too late to win the round of high-end phones that will come at Mobile World Congress 2015, the SoFIA products should arrive on time to compete for the "mini" versions of these products. For the first time, Intel will actually have products that can compete from all perspectives with the low-end chips from Qualcomm, MediaTek, and others. This by no means guarantees success, but Intel should be in a better position in smartphones than it has ever been.
Ultimately, Intel's massive investment in mobile cannot be paid off simply with tablet chips -- it needs to do well in smartphones in order to bring this division to profitability. While only time will tell if Intel is successful, it does seem that for the first time since the company began its mobile adventures, it is taking a customer-centric view rather than building what it believes is the "right" product. And that mentality could mean all of the difference in the world.
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