ENTERPRISE

Intel In Flux: Are We Heading To A Socket-Less Future? (Part 3)

1/27/2013 9:27:47 AM

Chief Executive, Paul Otellini took over from the previous boss of Intel, Craig Barrett, in 2005. Otellini has a very long track record with the company he joined way back in 1974, well before the PC revolution. Just a few short weeks ago, Otellini announced that after a mere 39 years’ service to Intel, he’d be retiring in May of 2013, sending the tech-industry into widespread chin scratching about who might replace him.

Paul Otellini, current CEO of Intel, who recently announced that after 39 years with the company that he’d like to retire

Paul Otellini, current CEO of Intel, who recently announced that after 39 years with the company that he’d like to retire

The first opportunity anyone got to question him as to the likely direction that Intel might take was at a Sanford Bernstein investor conference, when he was ostensibly there to talk about Mobile chip manufacturing. Currently Intel’s mobile silicon is fabricated for it by Samsung, (which, bizarrely, is also a competitor in the phone/tablet space), though the hint was that Intel would like to take this manufacturing in-house, reducing overheads, better utilising their facilities and taking business away from a major competitor.

Batting away a question about his successor, Otellini said, “It’s not up to me but I think that’s the most likely outcome. I’m very comfortable with the internal candidates and the track record of internal versus external in our industry shows pretty clearly you want to stay inside if you can.”

If that statement didn’t cause enough speculation, he then added that “even if you brought in Mr. or Ms. Perfect, that person is going to take whatever it is, two years to figure out the culture and the people and how systems work and stuff like that,”

The problem with that last statement is that it’s not certain that Intel has two years to work things out in the rapidly altering market, and whomever Intel blesses with the CEO mantle is going to have to hit the pavement running. That strongly suggests that that it will be an internal appointee, because an outsider could be the kiss of corporate death for the company

Final Thoughts

There is an something akin to an emotional connection most people have to the processor socket on a computer, because it was one of those things that made the PC what it is today - along with features like PCI slots, and memory modules. However, for a long time now, laptop makers have been designing systems where you can only upgrade the memory and the hard drive, while Apple has even declined to offer those opportunities on systems like its Mac Book Air.

 
For a long time now, laptop makers have been designing systems where you can only upgrade the memory and the hard drive

For a long time now, laptop makers have been designing systems where you can only upgrade the memory and the hard drive

We’re pretty sure it’s Apple’s success that’s driving these changes, as being the most profitable company in the world has an impact on all the other companies that would like that moniker too. As such, it’s dawning on Intel that giving people choices has a cost implication, makes systems marginally less reliable, and can also be a deterrent to them buying new computers. You can bet your life that, somewhere deep in the bowels of Intel’s accountancy department there’s a spreadsheet showing what it makes in processor upgrade sales, with some sort of projection as to how that feeds through into new system sales. We’d then go on to wager that the same chart hints at the idea that we’re at a tipping point where less people are upgrading their systems and sales of totally new systems are in a balance of sorts. That tipping point makes it conceivable that Intel could consider a form of commercial cannibalism, where Intel it eats one of its markets in order to ensure the profitable development of another one.

AMD represents a real wild-card, however. One which is showing no intention of leaving the socket behind, and could therefore become the go-to company for enthusiasts should Intel stop supporting the PC flexibility we’ve come to love. What’s more, with Apple managing to (to an extent, at least) turn the PC into a commodity, and Microsoft - with the introduction of Surface - trying to pull the same trick, the disappearance of the CPU socket could be just the tip of a much larger iceberg. Intel could well face the prospect of navigating around multiple new challenges that it has never experienced the like of before. In this light, it’s probably best to have a map - for it’s sake, it better be the right one, though.

Intel, as we’ve come to expect, is bullish about the future and how it will make the best Smartphone chips if we just give it a chance

Intel, as we’ve come to expect, is bullish about the future and how it will make the best Smartphone chips if we just give it a chance

That metaphor renders these socket shenanigans as examples of Intel is trying desperately to adapt to a future where the desktop CPU isn’t the most plentiful thing it makes, and no longer the hinge on which the entire company’s future depends. It’s looking increasingly like Paul Otellini has seen some sort of portentious writing on Intel’s wall, and decided to be the CEO that set the course for the continuing success of the company he’s served for so long, and not the one who left it adrift in uncharted waters.

Intel, as we’ve come to expect, is bullish about the future and how it will make the best Smartphone chips if we just give it a chance. A stance that totally ignores the fact that ARM has been designing these devices since 1983, and has acquired a vast amount of knowledge about making them more efficient in the years since.

I suspect Intel might be falling into the same trap as Microsoft by assuming that people want Windows on a phone, and that developers want good old x86 on a mobile device too. They don’t, and one suspects that the sooner that Intel wakes up to the fact that x86 is a horse it’s flogged beyond mortality, the quicker it can address its lack of a track record in this specific chip expertise area.

Early in 2013, Intel will release its final figures for Q4 2012, which under normal circumstances should include a lift from the Windows 8 launch. If that bump is missing in action, or worse shows that ARM based tablets are eating Intel’s lunch, then it won’t only be socketed processors that will be in the firing line.

 

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