A New World for Intel and AMD

Intel’s dominant position in consumer computing took another hit recently with the Windows 8 announcement. During the demo, Microsoft was showing the new operating system running on an ARM processor. As mobile computing continues to climb in terms of use and popularity, Intel is finding itself on the outside looking in. It isn’t encouraging. More and more of those mobile devices aren’t including Intel processors. The big dog of the tablet world, the iPad, uses an ARM processor, as does the iPhone. A lot of the Android phones use ARM processors as well. Granted, Google is looking to ensure Android supports Intel processors, but the reality is that Intel doesn’t rule the mobile roost. Windows 8 won’t help that situation, and a rumoured release of MacOS on MacBook Airs also indicates that ARM may be moving into notebooks in a bigger way.

So, does this hurt Intel? It does and it doesn’t. While the CPU is the most visible Intel component, Intel does make other chips, and many of those make their way into these devices. Bus controllers, memory and storage, video and display are all areas where Intel still has a presence. But, their highest margin products are those that are the most visible, and the most talked about, and it is here that Intel is scrambling. Intel has tried to build a mobile story for a long time now, but ARM has been getting the attention.

The company that may be hurt even more by this is AMD. AMD has been largely about being a “cheaper Intel”, providing processors that are compatible at the lowest level, the instruction set. They have done adequately in the low-price PC market, but have yet to make any sort of noise in the mobile space. Their last big “strategic push” was when they acquired ATI to be able to offer high-performance CPUs and graphics processors as “one-stop shopping”. Having Windows 8 and possibly MacOS hits AMD where they live: the low-end space. By having Windows support, not just for the operating system but for the applications, boosts ARM’s value and position. Since this will be on lower-priced portable devices like tablets and netbooks, that’s right in AMD’s kitchen in terms of customer demographic: they want something useful but inexpensive. If MacOS appears on ARM, that would effectively put a dagger in any possibility of AMD processors appearing in lower-end (i.e. cheaper) Mac notebooks and desktops.

If the trend is going where it appears to be heading, what I see is Intel being left with the niche market of high-end desktops and notebooks, as well as a still-significant market for commodity servers running either Windows or Linux. AMD might get a slice of those markets, mainly being available on low-cost machines, but I’m not convinced the volumes for AMD will be all that high. However, the netbook and low-end notebook market, already smarting from the rise of tablets, will become ARM’s playground over time, leaving very little for AMD. I could see AMD being relegated to being primarily a graphics processor company (with the Radeon line), and quite possibly pushed out of the CPU market entirely. Intel might be able to recover some, and see some action with some ultra-ultra-low power processors, mainly to act as a counter to ARM. But I’m not sure that AMD has the time or the cash reserves to be able to build up into this space. Intel has been working on it for years, and is struggling. AMD hasn’t appeared to be doing much here, and that could hurt them in the end. Instead of the hoped-for AMD-vs-Intel battle for CPU supremacy, it is shaping up to be Intel-vs-ARM, with AMD left on the sidelines without any ammunition at their disposal.