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

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.