The Intel Atom is aimed at Internet tablets, Mobile Internet Devices and Ultra-mobile PCs (or whatever the nom de jour is), but not at phones. I don’t think Intel has formally announced its return to the phone processor business yet, but Paul Otellini has been talking about it for a while now, so it seems overdue to make it official. That’s what the Financial Times did today with the headline “Intel to re-enter mobile market.” Otellini said the same thing to the New York Times on Sunday as well. Of course it has been expected ever since the first Atom announcement, and it may not really qualify as news, but here it is: “A second generation version of the chip, expected in late 2009, will be aimed at smart phones.”
As you know, the Atom is Intel’s prospective ARM-killer, but Intel will have some very heavy sledding to do to achieve this goal. The first obstacle is size and complexity. The Intel Architecture instruction set is much more complicated than the ARM, with decades of legacy dross gunking it up. The core proposition of IA for handsets is that IA is compatible with all the PC software and websites out there, so none of the legacy stuff can be left out. Intel has two factors working in its favor for this issue: first, a lot of the little-used functionality of IA can be implemented in microcode, which takes minimal die space. Second, Intel leads the world in process technology, and as it moves to the 32 nm and below nodes, vast numbers of transistors can be fitted into tiny chips. This shrinkage, and advances in power management technology, may enable the next generation of Atom to get into the same ballpark as ARM for battery life.
The second obstacle is incumbency. There are vastly more ARM processors out running in the world than there are Intel Architecture processors. The ARM is the processor used by effectively all phones and smart phones, and there are even more ARMs in other embedded applications. While Intel can point to a huge independent software developer community for IA, with a rich array of third party developer support, so can ARM for its architecture. And it’s not clear that the Atom will have a significant performance advantage over the ARM. ARM is not standing still on its architecture, delivering faster, lower power chips in step with Moore’s law just like Intel.
The incumbency issue also has a political aspect. Handset manufacturers are disinclined to hand Intel the kind of architectural franchise that it has in the PC world, so the Atom will have to have a compelling, essential advantage over the ARM in order to displace it in any but niche applications. Intel hopes that “the real Internet” is that advantage, but the iPhone has demonstrated that the real Internet can run very nicely on an ARM-based phone. In any case, within three years more smart phones will be shipping than PCs, and the other handset manufacturers will probably have caught up with Apple on the browser front, so it is possible that more Internet browsing will be being done with ARMs than IA chips.
The third obstacle is business model. To satisfy the stock market, Intel requires aggregate gross margins around 60%. This will be very tough to achieve in the mass-market for handset processors, because the margins on competing ARMs are much lower.