Why Intel Keeps Losing Money In Mobile (Op-Ed)

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While I like Intel's capitalism. I think they should stay out of the mobile market. If they keep failing like this and loosing money, they should just stick to the CPU/CPU server market and make better products out of those.
 

gsxrme

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While I like Intel's capitalism. I think they should stay out of the mobile market. If they keep failing like this and loosing money, they should just stick to the CPU/CPU server market and make better products out of those.
Let them fail, It doesn't matter its computation in that market and computation is good. Only if we had real computation in the desktop x86 and server x86 area. AMD hasn't been pushing into at all in years and look what has happened, NOTHING but smaller dies.
 

CaedenV

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While I like Intel's capitalism. I think they should stay out of the mobile market. If they keep failing like this and loosing money, they should just stick to the CPU/CPU server market and make better products out of those.
I disagree, Intel has been bleeding out money in the mobile space the last few years, but it is quickly turning around. Moving from a $1B loss to a $200M loss in a single year is a huge improvement, and they are finding huge ways to reduce chip costs as the technology matures and they get much better yields per chip and they pay off their R&D costs. In another 2 years they should be in a position where it becomes a profitable business.
While the server market is quite secure, Intel cannot be the big robust company that it is today merely by living off of their server products alone. The desktop and laptop space is their "bread and butter" market, and it is a market that is currently starting to transition out, and will be relegated to a niche market of hardcore gamers and content creation professionals in 10 years. People like you and I may always have our desktops... but in my own extended family I think there are really only 3-4 people who 'need' a traditional desktop or laptop for what they do (and we are talking about 100+ people here). The reason they have desktops is because they are familiar with desktops and are unaware of what phones and tablets are actually capable of today.
And even for myself it has been interesting to see the transition. I use to have 2 desktops, a laptop, and a server, paired with half a dozen portable devices (from CD players, to phones, to GPS, PDAs etc.). Up until I went back to school last year I had cut all of that down to a desktop, a home server, and a smartphone. With school I added a laptop to the mix, but with 'real' office coming to phones later this year my laptop will become useless again and I will probably sell it for a newer smartphone.
Not only do people have fewer devices, they hold on to them much longer. I use to upgrade my computer every 2-3 years... now my desktop is coming up on 4 years old and it really just needs a new GPU to get me through the next 2-4 years and I am more than happy with the performance the system gives me. Heck, the home server I am running was my Core2Quad desktop from 8 years ago and it is still running very strong and makes for a rather overkill home server. And I am not alone in this. Most people are dropping the number of devices they keep, and holding onto them much longer... Intel simply cannot remain Intel with this trend.

But the mobile space is much more important. The mobile space is not just phones and tablets. The mobile space is cars, TVs, receivers, video players, connected sensors, smart toys/gadgets/robotics... it is an extremely large industry that is being birthed right now. Choosing to miss out on that while the traditional desktop and laptop markets phase out over the next 10 years would be extremely short sighted. Anything they can to do break into these markets will more than pay for itself in the not too distant future, and it is worth whatever price needs to be paid to become the dominant player.
 

Vlad Rose

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Ever hear the saying, "You can't make an omelet without breaking a couple eggs"? That's what Intel is doing in order to be competitive in the mobile market. The have the financial backing to be able to throw tons of money and research into a project to achieve their end result. Once they've attained that end result, they will finally show profit in that sector.
This is similar to what Microsoft and Sony have been doing with their console markets. Sell them for a loss to get market share and years down the road make it back in profits.
 
Intel will make..
ONE MILLION DOLLARS!! *DUN*DUN*
from mobile chip sales.

Atom based desktop boards (the ones with BGA chips) are still rather expensive. and those DDR3 SODIMMs (for atom nuc barebones) aren't getting cheaper either.

one of the ways Intel can bleed less money if/when ARM inevitably raises license/subscription/royalty fees which has a domino effect over the whole ARM ecosystem.
 

edwd2

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at least we're getting dirt cheap baytrail phones and tablets right now. just ordered a zenfone2 for $299 (Atom Z3580 G6430 4GB 32GB 5.5" 1920x1080)
 

TNT27

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socket 1150 same generation i7/i5/i3/pentium/celeron all start out as the same basic identical chip, the i7. This is suppose to be not known by public, and is done so to keep costs down for producing chips, its easier and cheaper to produce one chip, then go from there, than create different special chips right from manufacturing.

They then destroy/blow fuses to limit the cpu's potential, bringing it down to i5/i3/pentiums and so forth.


They have been doing this forever, even when my father worked with intel, where he was testing/developing the max frequency on p3/p4s hooking it up to car coolant.

There use to be a huge problem back then of other small companies (mostly foreign companies) buying up huge quantities of cheapo celerons, and then fixing these fuses together to unlock it to what was fastest of its day, the pentiums, this would lead to of course stability issues. Its the same reason the little e, in Intel use to be dropped, to help find false relabeled pentium chips that were previously celeron chips.

Today, these falsified chips are much harder to produce for those small companies.

Im not sure on the exact process they do for producing atom chips, but im sure its very similar.
 

Brian_R170

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socket 1150 same generation i7/i5/i3/pentium/celeron all start out as the same basic identical chip, the i7. This is suppose to be not known by public, and is done so to keep costs down for producing chips, its easier and cheaper to produce one chip, then go from there, than create different special chips right from manufacturing.

They then destroy/blow fuses to limit the cpu's potential, bringing it down to i5/i3/pentiums and so forth.


They have been doing this forever, even when my father worked with intel, where he was testing/developing the max frequency on p3/p4s hooking it up to car coolant.

There use to be a huge problem back then of other small companies (mostly foreign companies) buying up huge quantities of cheapo celerons, and then fixing these fuses together to unlock it to what was fastest of its day, the pentiums, this would lead to of course stability issues. Its the same reason the little e, in Intel use to be dropped, to help find false relabeled pentium chips that were previously celeron chips.

Today, these falsified chips are much harder to produce for those small companies.

Im not sure on the exact process they do for producing atom chips, but im sure its very similar.
This is not universally true. You can easily tell when two chips are not the same by looking at the die sizes. The socketed Haswell desktop CPUs (LGA1150) have 2 die sizes (130mm^2 and 177mm^2), the dual-core variants are 130mm and the quad-core variants are 177mm). Yes, they use fuses to disable hyper-threading and some of the cache in some chips, but you are wrong about it not being known by the public, pretty much everyone knows this.

You think the little e in Intel was dropped to prevent faked CPUs? Seriously? That e was dropped in 1968.
 

ta152h

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This is an uninformed article, that fails to understand any of the real intricacies.

Intel is making processors at TSMC because the technology they bought from Infineon has not been brought over to their own fabs, yet. They will be moving all manufacturing to Intel fabs in 2016. So, no, not because of cost, all because they haven't moved all their technology to Intel processes yet.

Intel had negative revenue in Q4, for the MCG group. Forget the other nonsense about $80 chips, they don't need nearly that much. They generated NEGATIVE money for each sale, so of course lost money.

Also, the price listed for Intel Celeron and Pentium parts is completely irrelevant. If you look at the price of a Celeron, then look at the price of the same part on a motherboard, you get an idea of how different the list price is from the actual price. The Celeron on the motherboard costs very close to the same. Also keep in mind, a large part of cost can be the GPU, which will vary greatly between a phone and desktop processor.

So, no, they don't need $80 per chip, or anywhere near it. That's pure fabrication.

The question is, why would anyone want these chips? Forget the fluff, the reality is, unless Intel essentially gives them away, no one is using them in tablets. AMD's Jaguar/Puma is better in laptops and desktops, so Intel has to price them low to make them attractive. So, there's no area they are better than competing solutions, so Intel has to compete entirely on price. Thus, the losses.
 

PaulBags

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If it's not because part of the chip didn't come out right, then they could just make every chip i7 and sell them for less. But I assume it is a yield thing, they fuse damaged parts off in testing; or being fuses they blow themselves in testing. Whatever part of the chip that's left, if it's stable and preforms to a spec, slap that spec model number it and ship it out.

At least that's what I always assumed when people talk hobbled chips.
 
G

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Intels founder wrote a book called"Only the paranoid survive" They were a memory company,cpus were just a side business for them. They switched to cpu's to survive. Then they saw there 8080's and later 8088 cpus running cp/m and Dos bring mainframe giant IBM to it's knees. The mainframes are gone. But Unix, through Minix then Linux then Android has survived like a Sith lord. My little 100 dollar tablet has Intel terrified. And they should be.
 

Colley

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With the way tech is moving, the standing tower will be obsolete in ten years. The key to the future is going to be to create efficiently powerful mobile processors. I think Intel is just doomed if they stay with the notably inefficient x86 architecture. They'll have to innovate far harder, and more expensively, to keep the clunker engine race ready.

I'm personally looking forward to ditching the desktop. Goodbye Intel. Goodbye Microsoft. Two of the worst companies in computer history finally lumbering off into the tar pits.
 

reggjoo

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Intel will be competitive in time, just like apple, they're too big to fail. Eventually, they will come out with something. The pc market is shrinking in importance to the average consumers life, you can take it with you now ,on powerful mobile platforms. Intel knows it must change their strategy, computing is entering a different stage in people's lives, in a ever changing world. Intel wants to be in that world, and will throw $ at it, till it gets it right.
 

amk-aka-Phantom

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With the way tech is moving, the standing tower will be obsolete in ten years. The key to the future is going to be to create efficiently powerful mobile processors. I think Intel is just doomed if they stay with the notably inefficient x86 architecture. They'll have to innovate far harder, and more expensively, to keep the clunker engine race ready.

I'm personally looking forward to ditching the desktop. Goodbye Intel. Goodbye Microsoft. Two of the worst companies in computer history finally lumbering off into the tar pits.
This is the silliest comment in this thread. Microsoft, thanks to which computers have been made ubiquitous - no, Linux and Mac could never do that. Macs are too expensive for most, Linux is too fragmented. Microsoft did what no one else could and it's one of the worst companies? Sure, they are often annoying, but they are by far not the worst and a lot of people and companies in IT owe it all to them. And Intel? Where do people keep getting this "notably inefficient x86" nonsense? Have you used some of Asus' latest Android products powered by Intel? They perform much better than similarly priced Mediatek-based garbage and last longer (mostly). This stupid delusion "ARM efficient, x86 obsolete and wasteful" needs to stop, it's simply not true.

The question is, why would anyone want these chips? Forget the fluff, the reality is, unless Intel essentially gives them away, no one is using them in tablets. AMD's Jaguar/Puma is better in laptops and desktops, so Intel has to price them low to make them attractive. So, there's no area they are better than competing solutions, so Intel has to compete entirely on price.
They are giving them away to get market share. They will gradually increase the price as their market share increases and will slowly recover profits. See Vlad Rose's comment.

My little 100 dollar tablet has Intel terrified. And they should be.
They're not. Your little 100 dollar tablet will be powered by Intel soon.
 

zodiacfml

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It is simple as Intel investing madly at mobile while selling it few and at a loss.

Mobile is very important as is IoT where Intel could expand. They merged it with the PC division so as stockholders wouldn't stop the mobile division from trying. Mobile/small chips business can be as big as their big chip business in the future.

They are outsourcing fabbing atoms because they couldn't as their cutting edge fabs are used for their more expensive chips with several times bigger profit margins. Yet that was a mistake in my opinion as the Atom was late into the mobile business. Intel has that changed already with Atom SoCs and CPUs being made at their 14nm process. I think they will fare better now as ARM increases performance while Intel lowers power consumption.
 

albert 89

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Intel typically over charges for C grade CPU's like Pentium and Celeron when no one wants to give the public a break with state of the art AMD APU's which have shown repeatedly that they have superior graphics at an affordable price. I guess the high Intel pricing can be justified by kick backs to reviewers and third part manufactures !
 

so misplaced. amd doesn't have any stake in mobile (i.e. smartphones, tablets etc not laptops).

you're projecting intel's shenanigans in PC (desktop and laptop) space on mobile. the only part you accidentally got right was the kickback part. only in name though, the rest is still hilariously misplaced. it's very well explained in the article (albeit diplomatically).
 

tomfreak

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x86 & Android doesnt work.

What intel need is to work with Microsoft to get x86 phones with windows. Even if microsoft is refuse to do it, Intel could still do those with a linux.

We need a desktop/laptop replacement phone with a "HDMI output. A mini productivity computer.
 

JPNpower

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x86 & Android doesnt work.

What intel need is to work with Microsoft to get x86 phones with windows. Even if microsoft is refuse to do it, Intel could still do those with a linux.

We need a desktop/laptop replacement phone with a "HDMI output. A mini productivity computer.
Chromebox?
 

cats_Paw

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To me it sounds more like they want to shift loses from mobile to desktop in order to have better numbers.
A quote from the joker comes to mind "If you are good at something never do it for free". Well, If you are bad at something, how about not do that.

 

i meant that amd doesn't have any stakes in mobile devices like smartphones, tablets and such. by mobile i meant those devices, not laptops.
i considered hybrids, detachable screen 2-in-1s, convertibles (the ones that almost completely flip to form a tablet-like appearance) among laptops as those are slightly larger in size and possible for amd to sick one of it's binned low power socs in those. sorry for not wording it clearerly. :)
 

DbD2

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In desktop pc the profit is in the parts - Intel/Nvidia/whatever charge a big markup for the bits that make up your pc. The people building the pc get a very small margin.
In the tablet/phone market the profit is in the end product - the bits that make up the device have a very small markup, but the company that puts them together brands it and makes a huge markup.

The reason for that is basically Intel/Nvidia/AMD can't control the market and force high prices. Intel can't lock down the cpu using patents like they do with x86, and the likes of apple or samsung aren't going to let them get into that position - they like taking all the profits for a change.

Hence Intel can never make big money in mobile just selling chips, they can't compete with ARM which only needs $1/chip to survive (it's a tiny company). The only way they can make big money is by becoming another apple, or samsung - something they have no experience with and something they don't know how to do.
 

Cyril Ardin

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I don't know if Intel will ever succeed in the mobile CPU space, but they're sure putting a lot of effort into killing off the extremely profitable quasi-monopoly they have on x86 CPUs and Motherboard chipsets.

What will they fund their mobile CPU ambitions with, once they've finished killing off the x86 platform ?
 
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