Intel Will Soar Above ARM Holdings With New Microarchitecture
In 2006, Intel (INTC) threw in the towel on its NetBurst family of processors. Fraught with energy consumption and heat problems, the ill-fated microarchitecture opened the door to renewed competition from rival Advanced Micro Devices (AMD). To quell this threat, Intel created the tick-tock model, which coalesced into a full-scale microchip war. The breakneck pace of die shrinks and new microarchitecture releases bled Advanced Micro dry.
Intel may finally face a true test to its monolithic business model. ARM Holdings is a small, flexible firm with potent partners. An agreement with Microsoft (MSFT) will bring Windows 8 compatibility to ARM Holdings' architecture. The latest operating system will find widespread adoption in smartphones and tablets. By contrast, strong sales of Windows 7 will likely limit Windows 8's penetration into the PC market. The next generation of Windows-based smartphones and tablets promises to be a windfall for ARM Holdings, while PC sales will likely remain flat.
On the flip side, ARM Holdings has just $45 million in cash yet intends to take down Intel, a firm that repeatedly outspends the competition to stay on top. Earlier this year, CEO Warren East stated that ARM Holdings is targeting 40% of the mobile PC market by 2014, a lofty goal to say the least.
Yes, Warren East is predicting his company will double Advanced Micro's current market share in just three years.
Excuse me if I sound skeptical, but tech companies have a tendency of promising more than they can deliver. Intel is prepared to outspend and undercut ARM Holdings at every turn, just like it did with Advanced Micro. Furthermore, Intel controls the PC market with its ubiquitous x86 architecture and widely deployed interfaces such as USB, SATA, and PCI-Express.
ARMH is fabless. Essentially they are at the mercy of fabs that can produce designs. INTC is on the cutting edge of fabrication and is working on 14NM nodes for mobile that will absolutely crush anything ARMH can offer. I would not bet against INTC. They have the cash and distro in place to outperform over the long run.