> “The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do…At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn’t see it. It wasn’t one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought.”
This was an interesting time for embedded microprocessors. I was a big fan of DEC/Intel StrongARM and XScale, and the team I worked with preferred using them in designs.
I disagree that it was simply an economic choice, and I think anyone who worked in the ARM embedded industry around that time would also disagree. The move to sell off XScale was after years of neglect. The most obvious defects were the PXA250, which could only cache write-thru due to a bug (Wikipedia does not mention this), and the lack of USB2.0 high speed, despite it being a key feature of every competing SoC.
It was obvious to everyone in my industry that ARM was going to take off in a big way, and exponentially -- "microcontrollers" had grown up, and reasonable compute power could be put everywhere at home, and even carried around with you.
Intel, on the other hand, was seen by everyone I knew, to be more concerned with cannibalization of its low-end x86 market. Stealey and Atom were coming down the pipeline (Silicon Valley secrecy wasn't what it is today), and Intel was looking to make a play in the market. Except, Intel's designs were off the mark by orders of magnitude in power consumption, and could never fill that niche. Still, the word in the street was Intel had bad internal politics at play, and its ARM offerings had to go.
So yes, it's a great shame Intel missed that incredible opportunity at a pivotal moment. But no, it was not an economic decision.
I can remember how RISC chips were going to take over the world, Linux/RISC was going to be the greatest threat to Intel. 10/20 years later x86 is everywhere from the Macs to high end servers to lowliest tablets. The latest Atoms are actually very good.
ARM meanwhile dominates the lowest end, but no one really makes money out of it. I think Intel was wise to avoid.
> 10/20 years later x86 is everywhere from the Macs to high end servers to lowliest tablets. The latest Atoms are actually very good.
10/20 years later, ARM represents the vast majority of both volume and profit in home personal computing. x86 is only "winning" if you define a very small category to compare against ARM.
> ARM meanwhile dominates the lowest end, but no one really makes money out of it. I think Intel was wise to avoid.
Edit: Meanwhile the "PC" category became largely irrelevant. That's what Intel missed.
> Edit: Meanwhile the "PC" category became largely irrelevant. That's what Intel missed
That's a ridiculous claim. 2015 shipments of 288.7 million units (Gartner) may be down but they're still huge: that's 791,000 per day. And sales of Windows tablets and 2-in-1s are growing very rapidly.
Are tablet sales "largely irrelevant" because they're lower than PC sales (206.8 million, says IDC), and even if you include tablet PCs running Windows, declining even faster? https://www.idc.com/getdoc.jsp?containerId=prUS40990116
There are roughly 4x as many iOS, Android (and runners-up) sales and growing. The graphs continue to trend in that direction. IDC is infamous for continuing to make useless comparisons which show PC sales to be better than they are. Possibly (if cynically) it's because that's who still pays for the research.
PC sales, even as narrowly defined by IDC, are now a small minority of total personal computing volume and profit. This shouldn't be surprising to anyone
Regardless of people buying smartphones and owning multiple devices, PCs are still selling well. In fact, they are selling in greater volumes than in most previous years.
Smartphones also benefit from their high junkability factor. A decent PC now has a useful life of around 5 years, so sales should be half what they were when the average life was 2.5 years.
Smartphone sales will also halve when they last 3 years instead of 18 months.
> PC sales, even as narrowly defined by IDC
IDC's PC numbers are artificially depressed because it doesn't include tablets and 2-in-1s. So when Microsoft sells a Surface Pro 3, IDC doesn't count that as a PC.
If Intel was the leader of the ARM mobile gang, TSMC would have been denied a lot of money and maybe even couldn't compete with Intel, Quallcom wouldn't have so strong and posed a possible future threat to Intel, and maybe Apple would have been dependent on Intel(due to better process), enabling Intel to get decent margins, And Intel would have been in a better position to influence the Android market towards Atom or some close extension of the ARM.
> I disagree that it was simply an economic choice, and I think anyone who worked in the ARM embedded industry around that time would also disagree.
I agree. Anyone watching the PDA/smartphone market at the time could see that something big would come behind the corner and shake things up. Yes that was the time of the HP iPAQ and Dell Axim, but also dozens of HTC made phones under different brands and tens of millions Nokia smartphones, all powered by TI's OMAP and not Intel.
The original iPhone sold around 6 million units, at the time Nokia S60/S80 devices, Blackberries, UIQ and any other smartphones driven by ARM CPUs had sales of over 100 million.
So yes, Intel just missed a chance and didn't care.
Fantastic read, thank you. I too thought about what the iPhone SE means in regards to the (somewhat failed) launch and disappearance of the iPhone 5C. Targeting a lower price with higher-end materials certainly is a turn-around from their strategy a few years ago... I had never considered that the 5C was simply a decision based on manufacturing and supply chain issues, as the article states. Very interesting.
I love the iphone 5c. I love that it works great, its fast, it cost me $160 on craigslist, I can throw it across the room or drop it and it doesn't break, etc.
I've been wondering what is the thing that will come along which Apple totally ignores and ends up dwarfing them. Who knows, but it seems like VR is a possibility. Imagine if someone ships a very immersive VR experience, that's going to be a lot more compelling than the 5" phone screen in your hand. And it doesn't seem to be a space Apple is paying any attention to, though of course they could just be doing things in secret.
VR by definition cannot impact everyday life the way smartphones or PCs did. It will forever be a novelty, imho.
The real threats for Apple, imho, are successful web companies expanding towards hardware. Apple does great HW and poor online services; someone doing great online services and great HW could hit them badly. Google got close already; Microsoft will try again once they complete their retooling; Amazon are unfocused but could fish a winner with some original thinking; Facebook/Dropbox/others might also challenge at some point. Luckily for Apple, hardware is very difficult to get right and get profitable.
Virtual and augmented reality seem like the endgame for what phones do for us now. Instead of a computer on every desk, or every pocket, it's one in every eye.
I'd rather follow a set of virtual arrows to my destination than have to keep checking my phone. This goes for a lot of tasks I use my phone for. Though the privacy concerns are more worrisome than mobile phones!
Vr and augmented are different things. Augmented has potential, but the heavy lifting will likely be done in smartphones for the time being, like it's happening with watches. The smartphone is the perfect "unit of computing" as it is; we will get better interfaces, but the mobile revolution has already happened. Augmented won't be as transformative as smartphones have been.
There's no inherent definition of VR that by its very nature means it can't be more impactful than the smartphone.
VR isn't going to be a novelty if people switch to experiencing life primarily in a virtual manner due to the vast expanse it will offer. That includes travel, art, gaming, social, shopping, media.
With today's technology? No. With the technology we'll have in 30 years? Yep. And particularly the technology that will gradually evolve over that time. It'll be far more impressive and useful than the smartphones we have today, in every regard.
If you had told someone in 2003 that billions of people would use their cell phones for so much today, and that people would practically be attached at the hip 24/7 to them, I don't think you'd have been believed - the notion that everyone would have their face buried in large glass screens for hours each day, socializing, shopping, etc.
Over the past 9 months there have been lots of rumblings about them hiring in the space. Tim Cook straight up acknowledged it in the last earnings call - saying he didn't believe it was a niche and there were really interesting use cases.
I don't think Apple has ever been as clear on a new product segment.
Apples downfall could be software, especially AI. Google/MS/Amazon or even Facebook all have incredible distributed software systems, lots of AI R&D etc. while Apples attempts are somewhat lackluster.
I don't think it will be there downfall, all of those companies have failed to make compelling mass market hardware and have shown no lack of willingness to write software for iOS. Whatever they do in AI that benefits the consumer, they will make sure it runs on iOS.
If Apple gets so far behind that they need to offer it to their customers, they will probably make it easier to integrate Amazon, Microsoft, or Facebook's offerings.
Google could probably sell a lot of Nexus phones if they really tried. They'd probably burn their bridges with the other Android vendors if they did this though so it would require a pretty significant strategic shift.
One thing i wonder about: iPhone sells on status, for example in china. Would people compromise on something as critical as screen size for status ? Can a small sized screen project status well, even if it's understandable socially that bigger is better ?
iPhone SE is at a full 30% premium price as compared to US. So a product priced at the magic price point of INR 27500 is instead at a prohibitive ~ INR 40000 which most consumers in India will balk at.
The SE will sell massive volumes in India if the pricing matches the one in US - but at the current point its very uncertain looking at Indian consumer landscape.
Your footnote is still missing the context. The iPhone 5c launched at Rs 41,000 back in 2013 too. While the SE is obviously a better value than the 5c was, it is still priced out of reach for most people and the impact will be marginal in international markets. More likely it will result in more of the Indian elite getting the SE, instead of the 6s, resulting in a lower ASP.
This was an interesting time for embedded microprocessors. I was a big fan of DEC/Intel StrongARM and XScale, and the team I worked with preferred using them in designs.
I disagree that it was simply an economic choice, and I think anyone who worked in the ARM embedded industry around that time would also disagree. The move to sell off XScale was after years of neglect. The most obvious defects were the PXA250, which could only cache write-thru due to a bug (Wikipedia does not mention this), and the lack of USB2.0 high speed, despite it being a key feature of every competing SoC.
It was obvious to everyone in my industry that ARM was going to take off in a big way, and exponentially -- "microcontrollers" had grown up, and reasonable compute power could be put everywhere at home, and even carried around with you.
Intel, on the other hand, was seen by everyone I knew, to be more concerned with cannibalization of its low-end x86 market. Stealey and Atom were coming down the pipeline (Silicon Valley secrecy wasn't what it is today), and Intel was looking to make a play in the market. Except, Intel's designs were off the mark by orders of magnitude in power consumption, and could never fill that niche. Still, the word in the street was Intel had bad internal politics at play, and its ARM offerings had to go.
So yes, it's a great shame Intel missed that incredible opportunity at a pivotal moment. But no, it was not an economic decision.