Two weeks ago, we reported that Intel is on its way to lay off 12,000 employees. In its official press release, Intel has noted that the massive lay offs were meant to “accelerate Intel’s transition to a company that powers the cloud and billions of smart, connected computing devices.”
Now it appears that smartphones are not a part of the company’s future plans, as it recently announced that it is cancelling production of two new Atom processors that were initially earmarked for 2016.
End of an era for smartphones with Intel Inside
The company’s series of Atom processors were designed for smartphones, tablets and low-end 2-in-1 computers. While the processors’ performance was relatively low, they offered low power consumption and an attractive price tag compared to other chip producers.
These days, devices with Atom chips codenamed Cherry Trail are still being marketed, while another two projects were planned for 2016: Project SoFIA – A processor designed in collaboration with the two Chinese chip manufacturers Spreadtrum and Rockchip; And Broxton, designed to be the base for Goldmont, the company’s next smartphone specific chipset, designed in 14 Nano millimeter architecture.
However, we will still see Intel Inside tablets, as the company is continuing to produce the Core i and Core M series, for example.
Late last week, HP announced the first Chromebook laptop series, which will be based on Intel’s Core M processors. This latest move by Intel effectively opens the door for other chip manufacturers such as AMD and other chipmakers that are based on ARM chips to get in the field of cheap processors for low-end laptops.
Commentary: The writing was on the chip
The meaning behind the cancellation of the two future projects is very clear: Intel is throwing up their hands in defeat and exiting the smartphone and tablet markets. It’s important to note that beside Asus, whose Zenfone series is Atom processor based and Dell, which produces Atom based tablets, the announcement will not have a major impact on smartphone manufacturers around the world.
Most manufacturers rely on Qualcomm for the high-end market production, MediaTek for the low end, or they produce their own processors as in Samsung or Huawei’s case.
That being said, Brian Krzanich’s move was both brave and inevitable. It was a brave move since it is never easy for a company to admit failure and get out of an entire segment of operations, and inevitable since Intel has pursued over the past decade after companies who were much leaner and efficient mobile market providers, such as Qualcomm, the big competitor from California.
Krzanich had already realized that the company’s narrow margins on mobile processors are just not worth the investment and started planning Intel’s strategy to transition its focus to the Cloud, Data Centers, 5G mobile services and IoT.
Intel’s Response: “Intel is accelerating its transition into a company that powers the cloud and billions of smart, connected devices. We will increase our investments in order to grow in the Data Centers, IoT, Memory and processing fields in order to make our mobile and PC business be more profitable.”
“Our connectivity strategy includes a bigger investment in connected and wireless technologies, in order to connect all things, devices and people to the cloud. To initiate the communications infrastructure behind it, we had to rethink some of our project to adjust to our current strategy.“