Intel made a big splash at CES 2012 with the announcement that Motorola and Lenovo committed to Intel's Medfield 
smartphone solution. This came on the heels of a disappointing break-up between Intel and Nokia as well as a lack of previous traction with LG. While Intel has come farther than they have ever come before with one of their X86 SOCs, they still have a long way to go to claim smartphone victory. Of course Intel knows this and is working diligently and sparing no expense. The biggest challenge Intel faces is attacking a market where the incumbent, ARM ecosystem partners Qualcomm, NVIDIA, and Texas Instruments have almost 100% market share. To start gaining share in smartphones, Intel must demonstrate many things in the near future.
More Design Wins with Key Players
The Motorola announcement was impressive in that Moto has a respected name in smartphones, but they won't carry Intel that far alone. Lenovo is an even smaller player and while very successful in PCs, hasn't been able to secure a lot of smartphone market share even in their home country, China. Intel knows they need a few more partners to start chipping away at market share and I expect them to announce at least one at this year's Mobile World Congress.
One of the challenges is that many of the top players are already locked-in in one way or another, Intel has some negative history with, or has rapidly declining share. Apple already has their own A-Series SOC, Samsung has Exynos SOC, and Nokia rebuffed Intel last year and is clearly locked into ARM and Microsoft for the time being. RIM as a partner is a shaky proposition and HTC is an aggressive player but is recently dropping share. That leaves lower smartphone market share holders LG, Sony, Sharp, NEC and ZTE in the short term.
Longer term, I don't expect Apple or Samsung to get out of the SOC business because they have been successful with their own strategies. I cannot see Nokia or Microsoft motivated to drive a change or provide dual support for X86 until Windows 9. RIM is in a free-fall with no bottom in sight. Intel is forced to take the long-term approach as they are with Lenovo by developing smaller smartphone players to become larger ones. ZTE certainly is a good long term prospect as is Huawei. If Intel can leverage their PC franchise with them I could see them being successful.
Relevant, Differentiated, and Demonstrable Usage Models
In fighting any incumbent, the new entrant must provide something well above and beyond what the incumbent offers to incent a change in behavior. I am assuming that Intel won't lead in low price or lowest development cost, so they must offer handset makers or the carriers a way to make more money or get consumers to demand an Intel-based smartphone. Regardless of which variable Intel wants to push, they must devise relevant, differentiated and demonstrable usage models that ARM cannot.
By relevant I mean that it must be fixing a known pain point or creating a real "wow" feature consumers never asked for, but is so cool it cannot be passed up. One pain point example is battery life. Battery life is simply not good enough on smartphones when used many times daily. If this weren't true, car chargers and battery backs wouldn't be so popular. Wireless display is useful and cool but not differentiated in that Apple can enable this via AirPlay. Demonstrable means that it must be demonstrated at the store, an ad, or on-line on a web site. If something isn't demonstrable then it may as well not exist.
I would like to see Intel invest heavily in modularity, or the ability to best turn the smartphone into a PC through wireless display and wireless input. Yes, this is dangerous short-term in that if Intel does a great job at it then they could eat into their PC processor franchise. But, this is the innovator's dilemma, and a leader must sacrifice something today to get something tomorrow. I could envision an Intel-based emerging region smartphone that enables PC functionality. ARM cannot offer this well today but will be able to in the future with their A15 and beyond-based silicon. Intel should jump on the modularity opportunity while it lasts.
One other opportunity here is for Intel to leverage their end-to-end experience from the X86-based Intel smartphone to the X86-based data center. If Intel can demonstrate something incredible in the end-to-end experience with something like security or a super-fast virtualized desktop, this could be incredibly impactful. One thing that will be with us for at least another 5 years is bandwidth limitation.
Carrier Excitement
Outside of Apple, the carriers are the gatekeepers. Consumers must go through them to get the wireless plans, the phones, and most importantly, the wireless subsidy. Apple's market entry strategy with AT&T on the iPhone was a strategic masterpiece in how to get into a market and change the rules over time. Apple drove so much consumer demand for iPhones that the carriers were begging Apple to carry the iPhone, the exact opposite of the previous decade.
Intel must get carriers excited in the new usage models, bring them a new stream of revenue they feel they are being cut out from, or lower their costs. Intel doesn't bring them revenue from content side but could I can imagine Intel enabling telcos to get a piece of classic retailer's PC action once "family plans" become a reality. While telco-distributed PCs weren't a big success in the past, this was due primarily from the absence of family data plans. I can also imagine Intel helping telcos lower the costs of their massive data centers with Xeon-based servers. Finally, if Intel could shift traffic on the already oversold "wire" by shifting processing done in the cloud and onto their SOCs, this would be very good in a bandwidth-constrained environment.
Competitive Handset Power
At CES, Intel showed some very impressive battery life figures for Medfield handsets:
• 6 hour HD video playback
• 5 hours 3G browsing
• 45 hour audio playback
• 8 hour 3G talk time
• 14 day standby
This was measured on Intel's own reference platform which is somewhat representative of how OEMs handsets will perform. What will be very telling will be how Medfield performs on a Tier 1 handset maker, Motorola when they launch in Q3 2012. There is no reason to think the Moto handset won't get as impressive battery life figures, but Intel could gain even more credibility by releasing those figures as available.
When Will We Know When/If Intel's Smartphone Effort is a Success?
Intel has slowly but surely made inroads into the smartphone market. Medfield is impressive but competing with and taking share from an incumbent with 99%+ market share is a daunting task. The easy answer to measure Intel progress is by market share alone but that's lazy. I believe that Intel smartphone efforts should first be measured by handset carrier alliances, the number of handset wins, the handset quality and the new end usage models their SOCs and software can enable. As these efforts lead to potential share gain does it make sense to start measuring and scrutinizing share.
smartphone solution. This came on the heels of a disappointing break-up between Intel and Nokia as well as a lack of previous traction with LG. While Intel has come farther than they have ever come before with one of their X86 SOCs, they still have a long way to go to claim smartphone victory. Of course Intel knows this and is working diligently and sparing no expense. The biggest challenge Intel faces is attacking a market where the incumbent, ARM ecosystem partners Qualcomm, NVIDIA, and Texas Instruments have almost 100% market share. To start gaining share in smartphones, Intel must demonstrate many things in the near future.
More Design Wins with Key Players
The Motorola announcement was impressive in that Moto has a respected name in smartphones, but they won't carry Intel that far alone. Lenovo is an even smaller player and while very successful in PCs, hasn't been able to secure a lot of smartphone market share even in their home country, China. Intel knows they need a few more partners to start chipping away at market share and I expect them to announce at least one at this year's Mobile World Congress.
One of the challenges is that many of the top players are already locked-in in one way or another, Intel has some negative history with, or has rapidly declining share. Apple already has their own A-Series SOC, Samsung has Exynos SOC, and Nokia rebuffed Intel last year and is clearly locked into ARM and Microsoft for the time being. RIM as a partner is a shaky proposition and HTC is an aggressive player but is recently dropping share. That leaves lower smartphone market share holders LG, Sony, Sharp, NEC and ZTE in the short term.
Longer term, I don't expect Apple or Samsung to get out of the SOC business because they have been successful with their own strategies. I cannot see Nokia or Microsoft motivated to drive a change or provide dual support for X86 until Windows 9. RIM is in a free-fall with no bottom in sight. Intel is forced to take the long-term approach as they are with Lenovo by developing smaller smartphone players to become larger ones. ZTE certainly is a good long term prospect as is Huawei. If Intel can leverage their PC franchise with them I could see them being successful.
Relevant, Differentiated, and Demonstrable Usage Models
In fighting any incumbent, the new entrant must provide something well above and beyond what the incumbent offers to incent a change in behavior. I am assuming that Intel won't lead in low price or lowest development cost, so they must offer handset makers or the carriers a way to make more money or get consumers to demand an Intel-based smartphone. Regardless of which variable Intel wants to push, they must devise relevant, differentiated and demonstrable usage models that ARM cannot.
By relevant I mean that it must be fixing a known pain point or creating a real "wow" feature consumers never asked for, but is so cool it cannot be passed up. One pain point example is battery life. Battery life is simply not good enough on smartphones when used many times daily. If this weren't true, car chargers and battery backs wouldn't be so popular. Wireless display is useful and cool but not differentiated in that Apple can enable this via AirPlay. Demonstrable means that it must be demonstrated at the store, an ad, or on-line on a web site. If something isn't demonstrable then it may as well not exist.
I would like to see Intel invest heavily in modularity, or the ability to best turn the smartphone into a PC through wireless display and wireless input. Yes, this is dangerous short-term in that if Intel does a great job at it then they could eat into their PC processor franchise. But, this is the innovator's dilemma, and a leader must sacrifice something today to get something tomorrow. I could envision an Intel-based emerging region smartphone that enables PC functionality. ARM cannot offer this well today but will be able to in the future with their A15 and beyond-based silicon. Intel should jump on the modularity opportunity while it lasts.
One other opportunity here is for Intel to leverage their end-to-end experience from the X86-based Intel smartphone to the X86-based data center. If Intel can demonstrate something incredible in the end-to-end experience with something like security or a super-fast virtualized desktop, this could be incredibly impactful. One thing that will be with us for at least another 5 years is bandwidth limitation.
Carrier Excitement
Outside of Apple, the carriers are the gatekeepers. Consumers must go through them to get the wireless plans, the phones, and most importantly, the wireless subsidy. Apple's market entry strategy with AT&T on the iPhone was a strategic masterpiece in how to get into a market and change the rules over time. Apple drove so much consumer demand for iPhones that the carriers were begging Apple to carry the iPhone, the exact opposite of the previous decade.
Intel must get carriers excited in the new usage models, bring them a new stream of revenue they feel they are being cut out from, or lower their costs. Intel doesn't bring them revenue from content side but could I can imagine Intel enabling telcos to get a piece of classic retailer's PC action once "family plans" become a reality. While telco-distributed PCs weren't a big success in the past, this was due primarily from the absence of family data plans. I can also imagine Intel helping telcos lower the costs of their massive data centers with Xeon-based servers. Finally, if Intel could shift traffic on the already oversold "wire" by shifting processing done in the cloud and onto their SOCs, this would be very good in a bandwidth-constrained environment.
Competitive Handset Power
At CES, Intel showed some very impressive battery life figures for Medfield handsets:
• 6 hour HD video playback
• 5 hours 3G browsing
• 45 hour audio playback
• 8 hour 3G talk time
• 14 day standby
This was measured on Intel's own reference platform which is somewhat representative of how OEMs handsets will perform. What will be very telling will be how Medfield performs on a Tier 1 handset maker, Motorola when they launch in Q3 2012. There is no reason to think the Moto handset won't get as impressive battery life figures, but Intel could gain even more credibility by releasing those figures as available.
When Will We Know When/If Intel's Smartphone Effort is a Success?
Intel has slowly but surely made inroads into the smartphone market. Medfield is impressive but competing with and taking share from an incumbent with 99%+ market share is a daunting task. The easy answer to measure Intel progress is by market share alone but that's lazy. I believe that Intel smartphone efforts should first be measured by handset carrier alliances, the number of handset wins, the handset quality and the new end usage models their SOCs and software can enable. As these efforts lead to potential share gain does it make sense to start measuring and scrutinizing share.
Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights) in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.
