There’s An Intel Inside Your Computer – But For How Much Longer?

“Intel Inside” has been almost a given since PCs boomed in the mid-1990s. However, Intel’s position as the dominant computer processor manufacturer has never looked more shaky.

With an increasingly reliance on ARM-based smartphones and tablets, Apple and Google both reportedly ramping up production of their own processors, and AMD fighting Intel harder than ever before in its traditional PC and server strongholds, the once dominant chipmaker is starting to look increasingly vulnerable. Is Intel in serious trouble?

Google and Apple go it alone

With threats emerging on several fronts, the last thing Intel executives would have wanted to read this week was news of another tech giant reportedly getting into the processor business. Google has made “significant progress” towards developing its own processors, which could feature in the company’s Pixel smartphones as early as next year, according to a report from Axios.

While Intel’s chiefs won’t lose any sleep over Google’s mobile plans – Intel has failed multiple times to make any headway in the smartphone processor business – it’s the news that those chips could end up powering Chromebooks that would have made for uncomfortable reading in Cupertino.

ARM-based processors are already found in low-end Chromebooks, but it’s the premium end of the Chromebook market – including Google’s own Pixelbook models – where Intel currently dominates.

The worry for Intel will be that Google’s own “Washington” processors will do for Chromebooks what Apple’s A-series of ARM-based processors have done for high-end iPads, proving powerful enough to cope with demanding workloads.

 “The ARM architecture devices in the past have always been limited in terms of performance,” said Alan Priestley, VP Analyst at Gartner, citing Microsoft’s ill-fated Windows RT devices as an example. “The work Apple has done on A-series devices [mean that] for certain workloads, they can be an effective alternative to an Intel CPU.”

Apple is a particularly interesting case in point here, as the performance of devices such as the iPad Pro – powered by Apple’s own processors – have nudged ever closer to that of its low-end Intel-based laptops, such as the MacBook Air. Indeed, in certain benchmarks, an iPad Pro from 2018 has been shown to outperform the Intel-based MacBook Air that Apple launched just last month.

With Apple also introducing more laptop-like features into the iPad Pro range, such as improved multitasking and support for mice/trackpads, it’s looking increasingly likely that Apple could use a version of the ARM-based iPadOS to power devices such as the MacBook Air, cutting Intel out of Apple’s bestselling consumer laptop range.

The big question is whether Apple’s – or any ARM processor – can cope with the workloads typically thrown at more expensive laptops. “What’s unclear at the moment is what will happen when some of these ARM processors will start to run multi-windowed operating systems,” said Priestley.

Priestley says even high-end ARM devices such as the iPad Pro are a “very different proposition” to a Windows PC or Mac where you “have dozens of windows open and you’re expecting everything to still run in the background”.

The other crumb of comfort for Intel is that Apple and (presumably) Google won’t sell their processors on the open market, leaving Intel and AMD to slug it out for business amongst traditional laptop makers such as Dell, HP and Lenovo. But even here, there’s no room for complacency. “The interesting thing will be what happens if Qualcomm can wind the performance of its Snapdragon processors up to the equivalent of what Apple have got and beyond, and whether that then becomes a viable alternative for a Windows-based solution,” said Priestley.

Server showdown

Intel might well give a gallic shrug to greater competition in the consumer market, because it’s been gradually shifting the emphasis of its business in recent years. Where once sales of PC and laptop processors accounted for the bulk of its revenue, now more than half comes from powering servers, the computers that keep massive data centers running.

However, even here Intel is facing renewed competition from AMD. Its long-term rival has enjoyed a performance advantage in desktop computers for the past couple of years, as Intel struggles to move its production to the 10nm process. Now, AMD has added more processors to its second-generation of 7nm Epyc CPUs, which are outperforming Intel’s processors in that lucrative server market too, earning custom from big enterprise players such as Dell, HP and VMware. AMD’s share price spiked earlier this week on the news of the big customer wins.

“AMD is going to gain market share,” said Alan Priestley, although he predicts the impact will be more long-term than immediate gains.

“The server market has a huge amount of inertia,” he said. “Just having a new CPU that outperforms someone else’s CPU doesn’t mean you will immediately get the business. You can only get the business at the point when IT organizations go to spend their money, when they do new rollouts. That limits AMD’s ability to penetrate. It’s been a slow ramp.”

However, as AMD picks up more business from server manufacturers, Intel could start to feel the pinch further down the line – even if it manages to catch up on performance when its 10nm factories eventually get up to speed. “The longer Intel is disadvantaged in this market, the longer that situation persists, the more chance AMD has to get design wins. And once it’s won design wins, they keep design wins because inertia goes the other way and it becomes harder for Intel to displace them.”

The deep financial recession that’s coming our way could also work in AMD’s favor, with the ability to both outperform and undercut the traditionally premium-priced Intel processors. “As we go through this year, as budgets become constrained, it may be that AMD gains share because they have a more cost-effective solution,” said Priestley.

On the other hand, stripped-down IT departments “may not have the time to validate new solutions” and decide to stick with Intel. “It’s going to interesting to see how that one plays out,” said Priestley.