At the beginning of the movie “2012,” there is scene where a huge wall of water rushes towards a monk standing on the top of a mountain, where he is ringing a bell.
Ring-a-ling, ring-a-ling, the bell tolls. Then the wave kills the monk. End scene.
Intel is the monk. Apple is the wave.
Intel makes a huge portion of its money off of selling processors to Apple. Apple buys millions of Intel semiconductors every year for its Mac line of products, making Intel increasingly dependent upon Apple. On top of this, Intel is selling fewer chips to Apple competitors, as they are having an incredibly hard time competing with the MacBook Air and iPad lineup on feature parity, let alone on price.
On a different front, Apple does not buy processors from Intel for its most popular hardware lines: the iPhone, iPod Touch and iPad product lines. This is partly because Intel doesn’t make chips that use less power, and partly because Apple has taken the design of chips for its iOS line in-house, and now produces its own ARM-based chips like the A4, A5, and A5X.
This puts Intel in the position of continually courting Apple for its potentially profitable iOS-related business, trying to help out Apple competitors so that it isn’t overly dependent on Apple and the MacBook Air line. Also, Intel has to maintain its very profitable relationship with Apple; while losing money in the mobile market, because Apple originally pushed non-Intel chips when the original iPhone and iPad came out.
Needless to say, this is a complicated relationship for everyone involved, and one which very clearly worries the executives at Intel. (Apple is, one assumes, decidedly less worried about this relationship).
The one solution that would solve this problem,
aside from detonating an EMP bomb over Cupertino, is to increase the competition for Apple in an Intel-dominated market. But as Google knows very well by now, that is easier said than done. Yes, it’s possible, but it requires going outside of your comfort zone and spending a boat load of cash in the process.
However, Intel wouldn’t be the all American company we know and love, if it didn’t take risks, and so it is now attempting to disrupt Apple’s stranglehold on the market, while at the same time keeping its biggest customer happy. It is doing this through huge subsidies to Apple’s legacy competitors, and through designing products for Apple’s iOS competitors.
First, Intel decided it would subsidize the cost of MacBook Air competitors through a special fund. This theoretically means that customers would stop switching to Apple and OS X, and would instead stay with Windows, keeping the customers firmly in the Intel ecosystem. While it does seem counter-intuitive to pay customers to buy your product, that’s only because it is counter-intuitive.
After seeing that this wasn’t having the spectacular turn-around effect on the marketplace that Intel and its partners had hoped, Intel announced this week that it would be turning its sights to the tablet market. Intel announced that it has designed a ruggedized education-focused tablet, looking to license the designs out to partners and work with them to bring it to market. Presumably these tablets will be running Android, which again would help Intel distance itself from Apple.
Finally, Intel is working on the Windows 8 front, with news coming out that the company is working with 10 desktop vendors to create Windows 8 tablets by the end of the year. It is clear that Intel is hoping to see a resurgence in the Wintel space (or any Intel space), and so it is betting big on the future of Windows 8.
This isn’t incredibly unusual, as Intel has always — to my recollection — supported Microsoft’s flagship operating system. What is unusual is that it is focusing so much on the tablet side of the OS, which is likely no coincidence, as Windows 8 will likely be the iPad’s biggest threat for the next year.
Going back to the original metaphor at the beginning of the post, Intel is the monk in the scene. It lived happily with the ocean at normal levels for a very long time, making a nice profit while Apple wasn’t the industry leader. Now, Apple has grown to an incredible size, and so Intel is making a last effort to survive the crushing wave of Apple’s mobile revolution by ringing a bell, asking for Android to flock to Intel.
The movie ends with the monk dying, but the real question is whether or not Intel can maintain Apple as a customer and at the same time lessen its dependence on Apple by supporting the competition.