Intel (INTC +4.85%) recently hosted a press briefing, hosted by Intel's Navin Shenoy, VP and GM of the company's mobile computing group. The purpose of this event was to announce the following:
- Intel has been working very aggressively with Google (GOOG 0.20%) (GOOGL 0.57%) and various hardware OEM partners to bring a wide swath of Chromebooks based on Intel's processors to market; and
- It would be bringing its Bay Trail-M (initially targeted for low-cost Windows systems) to Chromebooks, finally enabling fan-less designs similar to some of the ARM (ARMH +0.00%)-based SoC Chromebooks.
In this article, it's worth digging a bit into just why Intel is pushing aggressively onto Chrome and how the company's recent actions and announcements position it in this market segment going forward.
The Samsung Chromebook disruption
When Samsung (NASDAQOTH: SSNLF) released its very first Exynos-powered Chromebook, it was quite a beauty sporting a nice display, small but fast storage, and a low-power system-on-chip capable of driving a fan-less machine. While in terms of sales volume it wasn't particularly disruptive, it was only a matter of time before the concept would serve to disrupt at least a portion of the low end of the PC market.
Chromebooks are proving among the most popular of notebook PCs among consumers. Source: Amazon.com.
In light of the clear secular headwinds in the PC space to begin with, losing significant share to ARM-based Chromebooks was likely not a headache that Intel wanted to deal with. In response, Intel began partnering with some of its key PC OEM friends (for example, Acer) to put its lowest-bin Celeron processors into these machines. These chips were faster than the fastest ARM-based chip at the time, but, unfortunately, that's where Intel's advantages at a technical level ended.
Sandy Bridge, Ivy Bridge, and Haswell take a stab at Chrome
Back in 2012, shortly after Samsung's disruptive little Chromebook hit the market, Intel and Acer rushed out the Acer C7 Chromebook. This was powered by the Intel Celeron 847 processor, which was a 32-nanometer "Sandy Bridge" chip that was as bottom of the barrel as it got for Intel processors at the time. Performancewise, it was much faster than the Exynos chip, but as far as power consumption and battery life went it wasn't even in the same ballpark as the Samsung solution .
The Celeron 847-based Chromebook was fast, but battery life suffered. And, hey, look at those vents! Source. Newegg.com.
Intel followed this up by putting Ivy Bridge in the Chromebook Pixel, an obscenely high-end Chrome device that likely didn't sell all that well. However, the next major step was to put Haswell (which brought substantial platform power and battery life improvements) into even dirt-cheap Chromebooks. The performance of these devices was well ahead of the ARM based products, and the battery life was much improved, but these chips still weren't low power enough for fan-less devices.
Bay Trail-M is Intel's savior on Chrome
Fortunately, as a result of the development work that Intel has done for its mobile processors, Intel built Bay Trail-M -- based on the low-power Atom "Silvermont" cores -- for low-cost Windows PCs. These consumed little enough power to enable fan-less systems, and they're cheap enough to build so that Intel can not only attack Chrome with the right performance/power product but do so with an excellent cost structure.
Intel's Bay Trail-M offers lower power and a good cost structure for cheap PCs. Source: Intel.
Sure, a Bay Trail-M isn't going to offer the performance of a Core i3 processor, but for people looking for inexpensive, fan-less secondary or perhaps even tertiary devices, this is the right "fit." Remember that Intel was selling full-blown (albeit lower-bin Celeron and Pentium class parts) Haswell-ULT chips into $199 Chromebooks, so replacing those parts with much cheaper-to-build, lower-power Bay Trail-M parts is a win/win, especially since Intel was probably compromising on margins to win those Chrome sockets away from the ARM vendors.
Is Chrome really that important?
The next question -- and perhaps the more philosophical one -- is whether Chrome is actually all that important a market for Intel. The simple answer is that is yes. There is a certain degree of cannibalization of very low-end Windows 8.1 systems in favor of Chrome systems, so if Intel didn't go after that business, however large or small, that would simply be exposing a crack in its core business (and remember, PCs aren't exactly a growth market so share loss is particularly painful).
Intel needed to thwart any ARM-based incursions into the PC market, and since the same tools it uses to try to win in mobile apply here, doing the legwork on the software side of things and getting its traditional crew of PC OEM partners to flood the market with Intel-based Chrome devices seemed a very low-risk/high-return move.
Foolish bottom line
Only the paranoid survive, according to former Intel CEO Andrew Grove, and in embracing the Chrome market full-on, Intel is being very paranoid. Intel has "won" Chromebooks, so whether Chromebooks take share from Windows 8.1 PCs or not, Intel is well positioned. Just as it needs to be.
