Well-known Apple (NASDAQ:AAPL)-focused blogger John Gruber recently made a statement that caught a lot of people's attention. Following the launch of the Apple iPad Pro, which uses an Apple-designed A9X processor, he declared Intel's (NASDAQ:INTC) x86 architecture to be one that is "living on borrowed time" and a "dead man walking."
The future, he writes, "belongs to ARM (NASDAQ:ARMH)" and that "Apple's A-series SoC's [sic] are leading the way."
With all due respect to Gruber -- whose blog I do read regularly -- I think this claim is patently ludicrous. Here's why.
Intel's x86 is still a powerful force in the client market
To provide some context to the reader, Intel's client computing group, which mostly sells PC processors and related platform components, has brought in $23.4 billion in revenue year to date. If we assume this group brings in another $8 billion next quarter (down from the $8.5 billion seen in the third quarter), then that would put full-year revenue from this segment at north of $30 billion.
Qualcomm's (NASDAQ:QCOM) entire mobile chip business, which commands the lion's share of the applications processors sold into smartphones, took in $17.15 billion during the company's most recently ended fiscal year.
To make things even more interesting, if we add up the revenue from Qualcomm's chip business with analyst estimates for the revenue that Qualcomm's chief rival, MediaTek, is expected to bring in this year, we get a grand total of $23.55 billion.
This means that best case, assuming all of MediaTek's and Qualcomm's revenue came from the sale of ARM-based applications processors (it doesn't), those combined business still don't rake in as much in the way of revenue as Intel's client computing group business.
Now, one could rightfully argue the PC market isn't all that healthy while smartphones, as a whole, continue to grow. However, I don't think the PC market will "die out" going forward as some expect; the various form-factors of PC continue to grow and I generally agree with Intel that over the long term it should be a business that stays roughly flat with some "up" years and some "down" years.
The PC is by no means a growth market at this point, but I think the PC is here and it is here to stay for the long term. As long as the PC market remains, so too will x86 remain relevant in the client computing market.
Intel has also pushed to make x86 relevant in the mobile markets and to some extent it has succeeded; on Android, x86 is a completely viable instruction set and the installed base of x86-powered devices is probably large enough for software developers to start to pay attention.
However, as I wrote recently, Intel's products in the tablet/phone market have been pretty disappointing and I think its product portfolio would be stronger if it transitioned its chips to using licensed ARM IP. However, if Intel ever decides to get more aggressive with Atom CPU/SoC development and gets its act together in a number of other ways, I think x86 could be a viable architecture in the mobile market over the long term.
Intel's x86 powers the Internet
Although x86 in the client market is large but basically either flat or even contracting somewhat, x86's position in the data center has never been better. Intel essentially owns the market for server and workstation processors.
Additionally, although Intel's share in the market for networking-oriented processors is fairly small at around 7.5% as of last year, it has been gaining share. And, from what I can tell, the company's strategy to gain share looks quite compelling.
All told, Intel's data center business has generated $11.67 billion in revenue year to date and we'll probably see this number top $16 billion for the full year once the final numbers are in. The majority of this revenue comes from the sale of platforms, which means Intel is probably shipping well over $14 billion worth of x86 silicon into this market.
The best part is that this is a market where Intel has seen consistent and robust growth thanks to both a strong competitive positioning as well as good underlying secular trends. As the backbone of the Internet that all of these client devices -- x86 or not -- connect to, x86 is here to stay.
Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool owns shares of and recommends Apple and Qualcomm. The Motley Fool recommends 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.