Intel was tried to expand beyond PCs into smart phones and tablets

Intel is an American multinational semiconductor chip maker corporation. It is the world's largest semiconductor chip maker, based on revenue. Intel makes motherboard chips, network interface controllers and integrated circuits, flash memory, graphic chips, embedded processors and other devices related to communications and computing. Intel combines advanced chip design capability with a leading-edge manufacturing capability. So Intel was primarily to engineers and technologists.
In the tar pit of a stalling personal computer market, Intel (INTC) is headed for a colossal clash as it scrambles after many failures to get its chips into the fast growing smart phone and tablet markets. On one front, the storied Santa Clara giant must take on a host of competitors who dominate the mobile device business, just as it claims to finally be getting its brainy microprocessors into those gadgets as well as a laptop-tablet hybrid dubbed the ultra book.
On a second front, it must fight off those same competitors, who are now taking dead aim at Intel's 80 percent share of the PC chip market because of Microsoft's recent decision to let their chips run on Windows, the PC software formerly designed solely for Intel chips.
It will likely take a couple of years for Intel to develop sufficiently advanced chips to aggressively push into mobile gadgets and for its competitors to make chips suitable for PCs, said Shane Rau, at market research firm IDC. But then, he added, the industry could be in for a war.
"2013, 2014 is going to be a pivotal period for this mutual invasion of each others' spaces,".
As the world's top chipmaker and Silicon Valley's third-biggest company, Intel has survived challenges to its business before. In the 1980s, when Japanese companies took control of the memory chip market, it switched from making memory chips to microprocessors, the brains in personal computers. And despite speculation in the mid 1990s that embarrassing revelations about a bug in an Intel microprocessor might cause it to lose market share, Intel today dominates PC microprocessor sales and has recently posted a succession of record earnings.
Intel insists plenty of people -- particularly in China, India and Brazil -- remain eager to buy desktop and laptop computers. But while sales of smart phones and tablets are booming, industry research firms contend PC sales are slowing. And even Palo Alto-based Hewlett-Packard (HPQ), the world's biggest maker of personal computers, is considering spinning off that product line.
Although Intel has tried to expand beyond PCs into smart phones and tablets for years, it has had little luck, largely because its power-hungry chips greatly shorten the battery life of small gadgets.
Concluding that the chipmaker's efforts to get into the mobile device market have been marked by "failure, haplessness and cluelessness," a PC Magazine columnist recently declared "Intel is starting to look like a dinosaur."
The vast majority of chips used in smart phones and tablets are made by such companies as Apple (AAPL), Qualcomm and Samsung, using technology from British firm ARM. Meanwhile, the ARM camp is poised for the first time to enter the PC market because their chips will be able to run on PCs equipped with Microsoft's latest operating system, Windows 8. Because of their unprecedented access to Windows, the ARM chipmakers' share of the PC microprocessor market could zoom from zero to 15 percent by 2015, IDC has estimated.
So far, Intel and ARM executives are being cautious about predicting the outcome of their competition. While declining to speculate on how much of the PC business its chip designs might grab, Simon Segar’s, who heads ARM's U.S. operations, downplayed Intel's push into smart phones and tablets.
"It would be foolish to believe that ARM would maintain a near 100 percent penetration rate for eternity" in those devices, he said. "But it's not the kind of thing we're fixated on," he added, noting that ARM-based chips are likely to remain competitive in part because they are constantly being upgraded. Stephen Smith, Intel's director of net book and tablet development, voiced similar confidence about his company's prospects for branching out of PCs. Noting that Intel is designing chips that will dramatically reduce their power consumption in smart phones and tablets, he said, "we're persistent and we're investing for success."
Some analysts remain skeptical of Intel. They say ARM's lead in small mobile devices -- particularly smart phones -- will be hard to overcome. Moreover, they complain that early versions of the Intel-powered ultra book -- which have been compared to Apple's Mac Book Air -- are overpriced at around $1,000 and lack some features offered by tablets.
But other industry observers say that by 2013 ultra books should sell for $600 or less, while also boasting touch screens, quicker speed, slimmer designs and security software that Intel is building into its chips as a result of its $7.7 billion purchase of McAfee last year. Among those impressed are analysts at investment bank FBR Capital Markets.
"In short," they advised their clients in a recent note, "we believe Intel will push ultra books to eventually become the mainstream notebook of choice for PC makers by 2016."
"This is very much a transition period for Intel," added David Kantar, an analyst with Real World Technologies, which tracks computer trends. While it remains to be seen how well the chip Goliath will fare, "it's just really exciting to watch the evolution of the industry, to see the mobile and the PC collide."