As much as Intel has struggled in the data center for the past five years, they have managed to hold onto share in PCs. These products do.
Why it matters: Five years ago there were only two companies that made CPUs, today there are a dozen. Most of the new entrants went after the big, profitable data center market, but now competitors are coming for PCs. Nvidia and AMD are reportedly preparing Arm-based CPUs for PCs. With Microsoft opening up the market for Arm laptop CPUs, this spells bad news for Qualcomm today, and potentially bad news for Intel over the very long term.
As much as Intel has struggled in the data center for the past five years, they have managed to hold onto share in PCs. These products do not offer as rich margins as data center CPUs, but they are significant volume and go a long way to keeping Intel’s fabs utilized, and thus viable.
Editor’s Note:
Guest author Jonathan Goldberg is the founder of D2D Advisory, a multi-functional consulting firm. Jonathan has developed growth strategies and alliances for companies in the mobile, networking, gaming, and software industries.
Intel has held onto its PC share largely due to two factors: the Intel brand and «channel control.» Consumers do not care about, or are even much aware of, semiconductor production processes or instruction set architectures, but they do know the Intel brand, the result of the company’s multi-decade advertising spending.
Selecting a PC CPU, for most consumers, is a maze of impenetrable specs, and so even if the latest AMD CPU was better on paper than the competing Intel CPU, Intel could still win out. Secondly, consumers are not buying from Intel, they are buying from one of the PC brands – HP, Dell, Asus, Lenovo, etc. Those companies are tightly coupled to Intel, in no small part due to the marketing payments they receive from Intel which make up the bulk of their PC profitability. Those companies are loathe to move too far away from Intel for fear of losing out on those subsidies.
In fact, the only company to enter the PC CPU market in recent years is Qualcomm. Qualcomm has been working for almost a decade to prise open a share of the market with its Arm-based CPUs. This took a lot of work, porting Windows to Arm was never going to be easy, and the relationship between Qualcomm and Microsoft has been strained as a result. That said, Qualcomm now seems to have a fairly competitive CPU.
We have written a bit about Qualcomm’s efforts here, and the summary is that it is unlikely Qualcomm can win meaningful share in this market any time soon, unless on-device AI support soon becomes very important to consumers.
