Intel (NASDAQ:INTC) has announced that it will release its first-ever Xeon CPUs for laptops soon. The chips will be based on the same Skylake architecture used in its recently introduced high-end desktop chips. .
Intel calls its mobile Xeons "workstation-grade" chips, but they will initially have a maximum of four cores. That's significantly less than recent chips based on the Haswell architecture, which include six-core Core i7 chips and 18-core Xeons. However, mobile Xeon chips will still offer a lot more horsepower than Intel's other consumer-facing chips.
Let's discuss the potential impact that mobile Xeon processors could make on the notebook market.
Powerful and pricey
Lenovo, the largest PC maker in the world, has already unveiled two Xeon-powered laptops -- the ThinkPad P50 and ThinkPad P70.
Both devices have two USB Type-C Thunderbolt 3 ports for rapid data transfer, and can support 64GB of RAM and up to 1TB of SSD storage. Both laptops have 4K displays -- the P50 sports a 15.6" one, and the P70 has a 17" one. Neither model is designed to compete against lightweight ultrabooks -- the P50 weighs 2.5 kgs, and the P70 weighs 3.4 kgs. By comparison, Apple's (NASDAQ:AAPL) new MacBook weighs just 0.92 kg.
Depending on the configuration, the P50 will cost at least $1,599, while the P70 starts at $1,999. Based on those specs and prices, it's clear that Xeon-powered laptops aren't designed for most mainstream consumers.
But Apple might be interested
Over the past few years, many Windows laptop makers have raced to the bottom of the market with cheap laptops to compete against Chromebooks. As for high-end ultra-thin laptops, Apple controlled about a third of the market with the MacBook Air in 2013. Apple's new MacBook uses Intel's fanless Core M processors, which emphasize low power consumption over raw horsepower.
However, Apple still uses Intel's Xeon processors to power its Mac Pro series of workstation and server computers, which start at $3,000. Compared to Intel's mainstream PC processors, the Xeon has a bigger Level 3 cache, which significantly boosts the performance of certain applications. It also supports ECC (error correcting code) RAM, which reduces crashes by detecting data corruption. However, those Xeons had three big drawbacks -- they consumed more power, ran hotter, and were only compatible with pricier RAM.
But now that Intel has shrunk down the Xeon for laptops, Apple might install Xeons in other Macs as well. Skylake notably supports Thunderbolt 3, a new data transfer standard, which offers twice the bandwidth of Thunderbolt 2. This would make it possible for Apple to launch external displays with graphics that could match the new 5K iMac. Installing mobile Xeons in top-tier versions of the MacBook Pro or iMac could also allow Apple to boast that its Macs have "workstation-class" horsepower.
Of course, this doesn't mean that Apple will add mobile Xeons to all of its Macs. It will likely stick with cheaper and lower-power designs for its ultra-thin MacBooks.
The introduction of mobile Xeons might seem insignificant for Intel, but it makes sense in light of the performance plateau that the company now faces. For many years, Intel relied on "tick-tock" launches for its chips. A "tick" launch shrinks the existing microarchitecture, which is measured in nanometers. The "tock" launch introduces a brand-new architecture, but the size remains the same.
Up until 2011, the gap between the "tick" and "tock" was about one year. But with the transition to 22nm chips between 2012 and 2013, the gap widened to 13 months, then expanded to 15 months with 14nm chips in 2014 and 2015. Skylake, Intel's 14nm "tock" launch, arrived in August -- 11 months after its delayed "tick" predecessor, Broadwell.
Looking ahead, Cannonlake, Intel's 10nm "tick" launch for Skylake, was delayed to 2017 due to manufacturing issues. Intel's next major launch will be Kaby Lake, another 14nm "tock" launch. This clearly indicates that Intel's ability to put more transistors on smaller chips is slowing down.
That's why Intel is now carving out new "high performance" niche markets, like Xeon-powered laptops, to ensure that its brand remains synonymous with top-tier processors.
The key takeaway
Xeon-powered laptops won't help Intel escape declining shipments of PCs worldwide, which fell 9.5% annually during the second quarter, according to research firm Gartner. But with the support of PC makers like Lenovo (and possibly Apple), Intel might create an interesting subclass of devices that bridges the gap between laptops and professional workstations.
Leo Sun owns shares of Apple. The Motley Fool recommends Apple, Gartner, and Intel. The Motley Fool owns shares of Apple and Intel. 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.