If you like what you read consider a donation

Tuesday, December 21, 2010

Truth always lags last, limping along on the ARM of time......

The title of this post comes to us from Baltasar Gracian (1601-1658AD) a Spanish philosopher and writer, who employed a style known as conceptism. Conceptism is a writing technique that can use artificially complex ideas, puns, subtle associations and unusual comparisons. I chose it because I liked the quote since it contains the word ARM in and this piece does sort of employ some elements of conceptism. Ok that might be a little stretch dear reader, but it is called poetic license.

So, where do I want to go today??? You may have surmised dear reader that my opening line is referring to the tag line from Microsoft’s (NASDAQ : MSFT) ad campaign. A couple days ago I penned a piece discussing Intel Corp. (NASDAQ : INTC) and toady the stock dropped again even though it is oversold on the daily chart and this occurred on only about 60% of its average daily volume indicating that it was not being all out dumped.

What was the reason for the afterhours decline in Intel? I am sure you will be shocked to find out that a “Fast Money” CNBC correspondent, Jon Fortt, who is supposed to focus on technology essentially bad mouthed Intel due to a related story about Microsoft and ARM chips.  Fortt actually called the news “a nightmare for rival Intel”. He also said that it would be couple of years before the Microsoft for ARM product comes to light but it would intensify the battle within the software and technology sector.

I am absolutely stunned by this report even having any impact at all for a variety of reasons. First, It would appear to me that since ARM chips already have a strong position in both the Tablet and Smartphone arena that they are the ones that are vulnerable not Intel. The tablet and smart phone space is a new arena for Intel and they are in the position of carving out market share not losing it.

The second problem with this Fortt’s logic is that the Windows 8 OS (operating system) which is supposed to be ARM compatible is not going to be even available for a minimum of 2 years as it is scheduled to release in 2012 or later.

Third, the Win-Tel OS has been dominant for years and the software already is fully compatible with Intel chips . It would take far less to scale the windows 8 OS down to an Intel Atom chip or another new Intel based chip then to create an operating system for a new and different architecture.

Fourth, the fact that Intel is already going to have its chips appear in some 35 tablets indicates that Intel is poised to make inroads on ARM sooner rather than later.

Fifth, the windows version for Windows phones already operates on ARM processors which utilizes screen touch capabilities but that is at least a year away from being converted to tablet compatibility, once again giving Apple’s (NASDAQ :APPL) IPAD and tablets like Samsung’s Galaxy crucial time to muscle in to ARM’s territory not the reverse.

Sixth, with the popularity of the Google’s (NASDAQ : GOOG) Android OS on smart phones it is little wonder that they have ported it to run on Intel chip sets. Additionally, Intel will debut its Atom chips hosted inside a variety of smart phones and tablets at the CES (Consumer Electronics Show), which is a large electronics industry show, on January 6th, 2011. Although the chips will be appearing in tablets and netbooks first and in smart phones towards the second half of 2011.

While it is true that Intel faces challenges breaking in to the smart phone market I believe the tablet market has much lower barriers of entry for Intel. Moreover, the next generation of Atom processor (AKA Medfield) is addressing the prior problems of power consumption and is also reducing its footprint making it on par with ARM while providing higher performance.

I should also point out that at this point Intel has moved well beyond just making processors for PCs as their business; they are into everything from wireless to flash memory and more. Basically if it uses a computer chip or memory there could be Intel inside. My point is that the market is acting as if the Microsoft/ARM cooperation is a death blow for Intel while in essence it is only a minor kerfuffle in the grand scheme of things.  The smart phone market is more mature but still growing while the tablet market is essentially in its infancy. I believe the tablet market will continue to grow and just like PCs there will be room for multiple players of which Intel will grab a good percentage. While the tablet market is exciting and sexy one has to remember that Intel is much bigger than just this one segment; Intel also is constantly looking for and expanding into new areas which are accretive to their bottom line.

It appears to me that Fortt either does not understand what he is reporting on or he has an interest in ARM, Microsoft or both. It looks increasingly like the IPAD is stealing from the low end laptop market which does affect Intel (more so for AMD), but most of Intel’s profits and margins are made in the higher end chips and servers.  Conversely it looks to me like Microsoft is the one that has the problem here and is losing operating system share to Apple. This deal with ARM smells more like desperation on Microsoft’s part than Intel’s. Instead Intel appears to be marching down the path of breaking in to the areas that are currently Apple and ARM strongholds.

Given the timing of the availability of the new Windows OS that would run on ARM and what real manufacturers in this dimension of reality are planning for tablets and smart phones,  I cannot fathom how one could jump to the conclusion that a potential entrant of a Windows OS that would run on ARM chips to the tablet space in 2 years is a threat now to Intel. Two years is an eternity in a tech cycle and in that same timeframe Intel should be able to be a very significant player in the tablet and smart phone arena.

It is amazing to me that the ARM Microsoft agreement makes news and moves Intel Stock, but something like a collaboration of tech companies to solve the burgeoning problem of wireless traffic is barely even noticed. The more smart phones and tablets that all utilize wireless the bigger the traffic jam becomes. The fact that Intel, Cisco and Verizon are collaborating to remove the log jam makes no news even though these companies will all be beneficiaries and standard bearers once they implement the solutions. What good would an ARM based smart phone be if the wireless bandwidth is clogged.

I just have to wonder what color is the sky in Fortt’s world?

Disclosure: Long Intel

1 comment:

incorporation said...

found your site on del.icio.us today and really liked it.. i bookmarked it and will be back to check it out some more later

Post a Comment