ARM Disrupting Intel with its Business Model

This seems to me a case of mis-attribution of success.<p>The article says "Intel’s dominance in the global microprocessor market is being threatened by the rapid rise of ARM Holdings.".<p>ARM Holdings might be "rising rapidly" today but it was founded in 1990. They've been doing ARM processors with the exact same business model for the past 20 years.<p>The reason they're successful today is simply because they have superior technology in an area (power consumption) that is important for a quickly growing mobile markets.<p>Arguably ARM was a better architecture than x86 from the beginning but it didn't matter: after Windows/x86 got majority of the market share, the switching cost for a different processor were too big and Intel was doing a good job driving x86 in ways that mattered for that market (performance).<p>Only when a completely new market emerged (for PDAs, iPods and cell-phones) that was free from requirement to support legacy code, ARM found it's place because it delivered one thing much better than Intel with their existing line of x86 processors: power consumption was dramatically lower. It also happens that this was a core requirement for mobile devices.<p>We can't go back in time and see how ARM Holdings would hold up if they were doing their own manufacturing as well, but in my opinion the business model has a minor impact on their current success.<p>The most important thing is that they have a product that is superior to competition.

This analysis is pretty superficial.<p>Yes, ARM is ahead on low-power devices, and yes Intel can (and probably will) catch up, especially as ARM moves towards more powerful processors (dual core, etc). This article did acknowledge that at least, which most seem to miss.<p>It does go into a few of the advantages of the licencing model ("this model enables OEMs to customize integrated chips that conform to different form factors", etc), but it didn't discuss the disadvantages this model brings.<p>For example, Intel has a pretty significant lead in building chip foundries. AMD hasn't been able to compete successfully at the high end because of that, and the ARM licencing model doesn't generate the profits needed to go head-to-head with Intel in foundry and high end research.<p>This is a real problem for ARM. To quote Ars:<p><i>First, there's simply no way that any ARM CPU vendor, NVIDIA included, will even approach Intel's desktop and server x86 parts in terms of raw performance any time in the next five years, and probably not in this decade. Intel will retain its process leadership, and Xeon will retain the CPU performance crown. Per-thread performance is a very, very hard problem to solve, and Intel is the hands-down leader here. The ARM enthusiasm on this front among pundits and analysts is way overblown—you don't just sprinkle magic out-of-order pixie dust on a mobile phone CPU core and turn it into a Core i3, i5, or Xeon competitor. People who expect to see a classic processor performance shoot-out in which some multicore ARM chip spanks a Xeon are going to be disappointed for the foreseeable future.<p>It's also the case that as ARM moves up the performance ladder, it will necessarily start to drop in terms of power efficiency. Again, there is no magic pixie dust here, and the impact of the ISA alone on power consumption in processors that draw many tens of watts is negligible. A multicore ARM chip and a multicore Xeon chip that give similar performance on compute-intensive workloads will have similar power profiles; to believe otherwise is to believe in magical little ARM performance elves.</i><p><a href="http://arstechnica.com/business/news/2011/02/nvidia-30-and-the-riscification-of-x86.ars" rel="nofollow">http://arstechnica.com/business/news/2011/02/nvidia-30-and-t...</a> (read this whole article - it's very good).<p>That leaves the low-to-midrange to ARM. As has already been noted, Intel is quickly becoming power-competitive there, and is very, very good at producing chips cheaply.<p>I'm not saying ARM isn't an important competitor, but I am saying the whole "ARM will eat Intel from below" narrative is naive. It's going to be a fierce competition, and it's not at all clear that ARM's business model really is an advantage at all.<p>Meanwhile, Intel can hedge it's bets and play at the licencing game, too. For example, they have experimented with licencing Atom manufacture to TSMC (the same ARM foundry mentioned in the article): <a href="http://www.pcworld.com/article/160496/intel_opens_up_the_atom_processor_to_tsmc.html" rel="nofollow">http://www.pcworld.com/article/160496/intel_opens_up_the_ato...</a>

Might also be interesting to add that Intel had a very nice ARM platform (XScale) which was sold to Marvell. They had the full ARM license deal, not just the ability to put ARM cores on a micro like everyone else in the world.<p>So I would argue that Intel has a pretty good understanding of ARM strengths and their business model, they just think that they can go the distance and come up with something competitive. Even given the fantastic growth of ARM, Intel is about 100 times bigger so it's probably more useful to compare Intel to the processor manufacturers that use ARMs in mobile platforms.

I think the key point here is that Intel is one company while ARM is many. All feed each other improving competing designs, proving technologies and exploring their markets in ways a single company could not do with volumes that dwarf (and have been consistently dwarfing) the PC market.<p>As humongous as it is, Intel simply can't compete against the combined power of ARM plus its myriad of licensees. Eventually, from the diversity of the ARM ecosystem would emerge a competitor for Intel's (and AMD's) x86 lineup. Once set in motion, it was a matter of time.

Nice article. To add, I think the problem is with intel's strategy and their technology than the cost.<p>Intel expected notebooks to be more dominant and their roadmap showed. As soon as Kindle started taking off with ebooks, Apple realized they could do better than Kindle with iPad.<p>By selling xscale unit to Marvell, Intel did a mistake.<p>Total OEM cost for netbook was in the range of 10-20 vs just the processor in ipad is claimed to be $30 (after everyone taking their cut. Everyone includes ARM-Samsung-Packaging compnies)

This is just a small point, but the article says that Intel will "close the energy efficiency gap with ARM" in 2011-2012 with the release of the latest Atom processor. What it overlooks is the fact that it won't be competing with <i>current</i> ARM chips. Nvidia and Samsung and TI aren't going to just sit there waiting for Intel to catch up; they'll be improving their designs and moving to smaller fabrication, just like Intel is doing.

Real disruption won't come until ARM create (edit: design) a real general purpose, mainstream 64-bit processor.

it is absolutely not clear that separation of "general architecture designer", "specific chip design customizer" and "foundry" is a winning business model. In my view Intel has been successful because they've owned all three pieces and thus have ripped the benefits from, sorry for the profanity, the synergy.<p>Intel don't have competitive product in that specific market that ARM is so successful. Once/if it gets it, will see then. I'm not saying that it will win - it can go in any direction, but we'll be really able to compare Apples to Apples then.