"why Intel will be a dominant force in the smartphone and tablet spaces going forward..."
The general investing public has been essentially brainwashed to hate Intel (INTC) these days. While the first half of 2012 was filled with analyst praise for its growing revenues, clearly defined mobile strategy (first given at the analyst day in May 2011), and fabrication advantage, the second half has not been so kind.
Media pundits, who were calling the stock a "screaming buy" earlier this year, are now vehemently spreading fear, uncertainty, and doubt. For example, CNBC's Jim Cramer, on a recent edition of his popular show "Mad Money," had this to say about Intel:
It has a good yield but no products being used by mobile products. I'm saying don't buy.
I believe that this statement - likely to be taken to heart by a good majority of the investment public - is misleading. In fact, not only is this misleading, it's patently false, as Intel's latest Atom Z2760 tablet chip will be featured in no less than 20 very thin and light tablet design wins. Further, the company's Atom Z2460 is already powering smartphones that offer better performance and battery life characteristics than many of its ARM (ARMH) based competitors.
In fact, over the last several months - especially after last month's Intel Developer Forum - Intel's mobile strategy has become quite clear. In this article, I hope to explain just how clever its mobile strategy really is, and why it will be a dominant force in the smartphone and tablet spaces going forward.
Attacking From Above - Core
Intel has been relentless over the last few years about pursuing power efficiency on its notebook, desktop, and server chips. Each iteration of its processors has focused on improving performance in an incredibly power efficient manner. In fact, the "rule of thumb" for Intel's micro-processor design teams is that a feature can only be added if, for every 1% increase in power consumption, the design gains a 2% increase in performance.
To this end, we have seen lower power chips with higher performance in each generation. A combination of clever circuit design, strong micro-architectural decisions, tighter platform integration, sensible instruction set extensions, and process technology leadership has allowed Intel to fit significantly greater performance within ever-decreasing power envelopes. In fact, as demonstrated at the Intel Developer Forum this September, an 8W "Haswell" will provide the same performance as a 17W "Ivy Bridge" - even built on the same transistor technology (22nm tri-gate).
So, with the firm's upcoming "Haswell" able to fit into an 8W thermal design power, the implication here is quite clear: Intel intends to use its high-end "Core" processors in thin and light tablet and convertible form factors within a generation or two (14nm + further integration should whack the TDP down even more). The "Core" product line will be the high end, high performing, and high margin offerings for everything from tablets to high end desktops.
Attacking From Below - Current Atom Manages To Compete
Now, the more interesting part of the Intel mobile equation is the "Atom" line of systems-on-chip. While the high end "Core" line will be very power efficient for their performance levels going forward, the "Atom" has traditionally been the company's "low power, low end" solution.
Unfortunately, the emphasis here has been on "low end." Since introducing the first "Atom" processor in 2008, the core has not fundamentally changed, while the higher end cores have been getting refinement after refinement under the "tick-tock" strategy. As a result, the competition (ARM Holdings and its various licensees) was able to produce very competitive designs on the performance/watt front by employing more modern micro-architectural techniques such as out-of-order execution.
In tests, Intel's current "Medfield" and "Clover Trail" system-on-chip designs are actually still quite a bit ahead of the shipping ARM-based designs today such as the Nvidia (NVDA) Tegra 3, the Qualcomm (QCOM) Snapdragon S4, and even the custom designed Apple (AAPL) "Swift" (performance data here). It even does so while being quite power efficient. In fact, according to the aforementioned Anandtech review of the iPhone 5,
At least based on this data, it looks like Intel is the closest to offering a real competitor to Apple's own platform from a power efficiency standpoint. [...] I can't stress enough that the x86 power myth has been busted at this point.