Mobile processors to drive Intel's CPU business - analyst

One third of all computers sold today are notebooks. Notebooks are also the segment that keeps the PC business growing at a healthy rate. It's just the tip of the iceberg analysts believe: The trend towards mobile computing is expected to accelerate and quickly grow Intel's mobile processor business - from notebook CPUs down to cellphone processors.

Not too long ago, the computer industry and especially Intel had a tough time selling its concept of ever increasing Gigahertz. At three Gigahertz and more, 500 MHz more or less just wasn't convincing for the average user anymore. But Intel and also AMD have found new killer applications for their processors - to a certain degree dual-core technology - and mainly power consumption. What has been criticized for years by the media, including Tom's Hardware Guide, recently turned out to be the winning strategy to sell processors in the foreseeable time.

And it's going to be very successful strategy, at least according to Jim McGregor, principal analyst at In-Stat. He estimates Intel's processor sales are at 153 million processors for 2005 and believes the company will sell 241 million in 2009. "Key trends will be shifts to dual-core processors for PCs, and multi-core processors for servers, to increase performance while maintaining or decreasing chip power consumption," McGregor said. "They finally realized that performance per watt matters."

Looking at Intel's processor roadmap until 2008, which was described in detail by Tom's Hardware Guide in a recent article, it is clear that Intel is fiercely going after this trend - with the core of every future processor generation being a mobile processor: "Merom" will bring the core of Intel's next generation 65 nm processor architecture and deliver derivates for the desktop ("Conroe") and servers ("Woodcrest"). In 2008, "Penryn" will be the 45 nm mobile CPU generation that also will offer several desktop and server flavors.

In this respect, McGregor's expectation of growing mobile processor sales may even be understated. It does not take much to see that Intel's mobile processor design group will be responsible for almost all of Intel's processor revenues in the 2007-2009 timeframe and likely well beyond that.

The challenge for Intel will be mainly in areas where the company has not a dominating presence - PDA and cellphone processors. For the past five years, Intel's ARM-based XScale processors have been integrated in PDAs such as the Toshiba e740, the iPaq-series, the HP Jornada and the Dell Axim. In the cellphone space, Intel is virtually absent, if Palm's Treo smartphones are left out of consideration, but it recently struck smartphone a deal with Research in Motion to power a next gen Blackberry device through its Hermon platform and Monahans mobile processor, which will exceed 1 GHz in clock speed. However, industry sources recently indicated that Intel may be working on x86 and gradually replace the ARM cores it currently uses. Intel declined to comment on such a move, but sources told TG Daily that there is a "strong possibility" Intel would take cellphone chips down the x86 path, as "ARM is getting old" and the licensing agreement between Intel and ARM will be running out.

McGregor could not say if future versions of Intel's x86 mobile processors will replace the ARM and XScale processors, but mentioned that a more aggressive stance in the mobile arena would make sense for the company. Cellphone processors have lower profit margins, but enormous production volumes. "We are talking about potentially billions in sales, versus millions. It's an order of magnitude bigger," said McGregor. Consumers constantly upgrade their cellular phones, PDAs and other electronic gear. On the other hand desktops and laptops are upgraded less frequently. "This high turnover is what makes the consumer side so attractive for chip companies," he said.

McGregor believes that Intel may be having a tough time convincing mobile electronics makers to accept miniature x86 chips and says, "It sorta like putting a square peg into a round hole." Other mobile chip makers like Texas Instruments and Qualcomm have concentrated on processors that have dedicated video and sound circuitry, while Intel is counting on multiple general purpose cores." He explained that this specialized approach is optimized for low power, but says, "there are very little standards and there is not a very efficient model for interacting together." This means that your notebook, cellular phone and PDA are still very separate entities and are hard to synchronize.

Mobile phone functions are split between essential voice communication and multimedia functions such as video and music. Specialized chips, similar to the graphics card in a PC, take care of decoding and playing of the media, while other chips handle the voice communications.

The advantage of an x86 approach is that the software designer can still program on the x86 instruction set. "It will be easier to scale applications down from the desktop side." In addition, Intel's manufacturing capabilities and their upcoming 45 nanometer processors, give the company chip "real-estate" to pop down multiple cores in the same amount of space as a single specialized chip from the competition. In the end, it's not an elegant technical solution, but more of a brute-force method of powering mobile devices.

Intel does not reveal much about its future processor plans for cellphone platforms. Spokeswoman Amy Martin mentioned that the commpany "sees x86 in emerging categories of small, ultra-mobile PCs." However, at this time XScale "offers scalability across a range of phones, PDAs and consumer electronics," she said."