ARM co-founder: "Intel has the wrong business model"

By on November 21, 2010, 5:22 PM
Intel's processors power over 80 percent of PCs around the world. Chips based on micro-architecture developed by ARM are in 95 percent of mobile phones and in more than one-quarter of all electronic devices. ARM acknowledges that Intel's business model may work in the world of PCs, but the company believes it will never apply to mobile computing. As a result, vendors of ARM-based chips will leave Intel behind, and the company's microprocessor business is doomed.

"The reason why ARM is going to kill the microprocessor is not because Intel will not eventually produce an Atom [Intel's low-power microprocessor] that might be as good as an ARM, but because Intel has the wrong business model," Dr. Hermann Hauser, co-founder of ARM, told The Wall Street Journal. "People in the mobile phone architecture do not buy microprocessors. So if you sell microprocessors you have the wrong model. They license them. So it's not Intel vs. ARM, it is Intel vs. every single semiconductor company in the world."

Hauser, who is still a shareholder in ARM but is not on the board of directors, also said the value of chips which ARM collects a royalty on has, for the first time, overtaken Intel's microprocessor revenue this year. He points to the last few decades for examples where one or two companies dominated each wave of computing only to be replaced by new companies ("the people that dominate the PC market are Intel and Microsoft," he said).

Intel's recent purchase of the Infineon was an attempt to reposition the company towards producing baseband processors, a key component of the mobile phone. Whether Intel can pull off the metamorphosis in order to stay relevant remains to be seen.





User Comments: 21

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Regenweald said:

I agree. I have yet to see ARM being investigated for unfair or anti-competitive business practices. Intel's business model puts them in a position where they have to often scheme and coerce to control market share, ARM controls the market based solely on product merit: "this is our IP, license it if you can afford it and use it" It is also much more convenient and flexible to manufacturers rather than being locked in to whatever processor architecture and sales model is best for Intel profits.

gobbybobby said:

Hmm I don't like Intel. I sticking with AMD.

KG363 KG363 said:

I had no idea ARM surpassed intel in processor revenue

princeton princeton said:

kg363 said:

I had no idea ARM surpassed intel in processor revenue

Neither did I.

1 person liked this | dividebyzero dividebyzero, trainee n00b, said:

From the article:

the value of chips which ARM collects a royalty on has, for the first time, overtaken Intel's microprocessor revenue this year

Take into account that ARM licenses are available to Qualcomm (Snapdragon), Texas Instruments (OMAP), nvidia (Tegra), Apple, Conexant, Toshiba, Fujitsu, Broadcom, Samsung (Orion), Freescale, NXP (ex-Philips), ATi Hollywood (Wii), Nintendo, Motorola, Canon, LG, Benq, Nokia, Sony-Ericsson, and of course Intel and Infineon (now Intel also) along with just about every external hard drive and a god knows how many other vendors it's not overly surprising.

I however wouldn't confuse revenue with company market value. Intel is still the 800lb gorilla to ARM's Capuchin.

Guest said:

The value of chips containing ARM IP exceeds Intel Chips in valuation .. that's a far cry from ARM being equal in revenue, considering that their take is probably about 10% of the selling cost. They are right in some ways, but Intel could create a similar product AND keep their existing High end stuff ( with unheard of profit margins of 50%, equalled by Microsoft only ).

I'm sure there must be some competitors brewing in the East also.

gwailo247, TechSpot Chancellor, said:

In that case let's compare the value of all the PCs that have Intel chips installed in them.

1 person liked this | captaincranky captaincranky, TechSpot Addict, said:

Wow, with what Intel has accomplished with the wrong (?) business model, just think how scary they'd be with the right business model......Skynet maybe?

LinkedKube LinkedKube, TechSpot Project Baby, said:

this is the third skynet comment I've seen tonight. I'm playing troll police for once!!!!

captaincranky captaincranky, TechSpot Addict, said:

I think it just goes to show had badly the "Terminator" movies have exacerbated our fear of big government.

That said, with a "good" business model, just think how many senators and congressmen Intel would be able to afford.

Guest said:

@ Guest ( with unheard of profit margins of 50%, equalled by Microsoft only ).

ha ha, did you mean 500% because 50% is nothing.

How much do you think are production costs of i7 or xeon cpu, with all development and reserch. I bet they are not more than $70 per cpu. Than they sell it for $500 or $1000. Intel sucks, I just hope someone comes up and produces better staff and start selling it at lower prices.

Guest said:

I can see why Intel are trying to squeeze into this market, It's good revenue but pricing in the mobile PC market I believe is very different from the desktop space, I think they'll struggle to make headway against the incumbents.

bioflex said:

i thought they said mobile processor revenue?..

Kibaruk Kibaruk, TechSpot Paladin, said:

Atom are most certain cheap, really cheap.

I dont see why they couldn't get into that market but, as ARM says they do have a wrong bussiness model since they wont enter a market where they will compete as a brand.

Ask yourself this question... Would you buy a different phone just because it is powered by intel?

Guest said:

> Kibaruk: "Ask yourself this question... Would you buy a different phone just because it is powered by intel?"

Immediatley !

I would purchase a "Samsung Tab with an x86 Processor" at 9:00am, were can I get one !

I hope AMD's APU goes into a puny Netbook (with built-in Cellular), it is my next Phone.

TeamworkGuy2 said:

@Kibaruk

No, I would buy a phone based on its price and features.

This is an interesting comment from ARM at Intel. ARM does have a valid point, it will be interesting to see where Intel goes in the mobile market, as their only main (mobile) product is the Atom series which only exists in notebooks and netbooks.

Guest said:

I don't think ARM understands the crushing power a sleeping giant has it may not be wise to poke them while sleeping.

AMD felt it and is still recovering!

Guest said:

News Flash: Competitor claims to be better than competition.

mosu said:

I'm sorry to admit but I won't buy an Intel inside phone, nor Nokia but I would gladly buy an AMD inside phone.

Guest said:

Make that 1%...

Guest said:

To the value of all devices with ARM chips in them?

I am afraid, the latter must be greater by several times.

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