Intel Not Ashamed Of Losses, Accepts This Is Needed To Get Into The Mobile Space

November 21, 2014 - Written By David Steele

We recently reported that Intel are to end subsidies for the Intel Atom processor after making a significant loss and at yesterday’s annual investor meeting, the Chief Executive Officeer, Brian Krzanich, said that he is not ashamed of the mobile unit’s losses. In his words, “It’s not that we’re proud of it, but we’re not ashamed of it, either,” in reference to the billions of dollars in losses his mobile and communications group has been seeing this year. To put this into perspective, Intel lost $3.1 billion on revenue of just $209 million in 2014. Brian said that Intel was late to the mobile business and that its products (and, importantly, strategy) were “fairly absent.” Essentially, Brian has acknowledged that the mobile market has barriers to entry and the company has to work extra hard to break in. Intel’s Chairman, Andy Bryant, had this to say on the matter: “We will not continue to accept a business with multi-billion dollar losses. But this is the price you pay to get back in and we will get back in.”

Where did things go wrong? I’m not so sure that things have gone wrong for Intel. They’re making progress in a very competitive marketplace. They’re on track to shift more than 40 million tablets this year and have established partnerships with Chinese companies including Rockchip, Asus and Lenovo. The move to merge the PC and mobile chip groups should improve profitability and also reflects the wider trends in the industry: mobile processors are approaching desktop processors in terms of performance, whereas desktop processors are approaching mobile processor power consumption levels. Combining their manufacturing expertise should allow Intel to concentrate their efforts by simplifying (streamlining) the communication process between the different parts of the group. It’s also true that many of Intel’s customers dip into both the desktop and mobile processor parts bin, too; this move should help them remain competitive.

What’s next for Intel? Some high profile device manufacturer wins would be good, without the benefit of subsidies. An incremental improvement on their chipsets is a given, perhaps something innovative. Maybe, just maybe, we can encourage Intel to work on encryption technologies to improve Android Lollipop’s disk encryption technology?