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Intel chips could have powered first iPhone, CEO Otellini says

post #1 of 40
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As Paul Otellini relinquishes the reins of chipmaker Intel, the outgoing chief executive reveals in an in-depth profile that he ultimately passed on a contract to build the silicon which powered Apple's original iPhone, a regretful decision given the handset's wild success.

Paul Otellini
Retiring Intel CEO Paul Otellini.


In an interview with The Atlantic, Otellini said Intel had the chance to be an integral part of Apple's iPhone project by manufacturing the processors that power the device, but the executive decided against moving forward with what would have been a winning bid. Otellini is retiring from his post today.

"We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it," he said.

Apple ended up using a Samsung-built ARM system-on-chip design for the first iPhone, and has subsequently relied on the architecture for its entire iOS device lineup. The Cupertino, Calif., company introduced its first in-house designed ARMv7 core with the A6 SoC used in the latest iPhone 5.

"The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do," the Intel chief said. "At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it. It wasn't one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought."

With Intel out of the game, Apple turned to supplier Samsung for its chipmaking needs. The Korean company's fabrication facilities are still used to churn out Apple's A-series processors, though the partnership may soon end as tensions between the two companies reach a breaking point.

Still, Samsung has greatly benefitted from the lucrative Apple contract for the past six years, an enviable position that could have been Intel's.

"The lesson I took away from that was, while we like to speak with data around here, so many times in my career I've ended up making decisions with my gut, and I should have followed my gut," Otellini said. "My gut told me to say yes."
post #2 of 40
At the end of the day I don't think Apple would have picked Intel because their chips used too much power when compared to ARM.

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post #3 of 40
Could have... would have... should have... but you didn't. Hindsight always provides a view with 20/20 vision.

If your gut said to do it, and you didn't, well then cry me a river. You failed as a decision-maker. That's what you get for looking at spreadsheets and numbers by pencil-pushers instead of seeing the bigger picture.

Now, Intel - under your watch - is slowly becoming irrelevant in a post-PC world, and you and your wasteful, inefficient PC-cronies contributed to it.

Have a nice day.
post #4 of 40
Quote:
Originally Posted by jd_in_sb View Post

At the end of the day I don't think Apple would have picked Intel because their chips used too much power when compared to ARM.

 

Nothing was said in the article that says this would've been an x86 chip -- it could've very well have still been an ARM chip, with Intel as the manufacturer.  We just don't know.

post #5 of 40
Quote:
Originally Posted by jd_in_sb View Post

At the end of the day I don't think Apple would have picked Intel because their chips used too much power when compared to ARM.

 

Really depends on when these talks took place. Intel sold its XScale (ARM processor) line to Marvell in June 2006. Maybe their decision was the result of balancing the $600m bid from Marvell against a potentially lossy business with Apple...

post #6 of 40
Quote:
Originally Posted by jd_in_sb View Post

At the end of the day I don't think Apple would have picked Intel because their chips used too much power when compared to ARM.

 

From the sounds of the article, Apple already had an ARM chip design in mind and were simply looking for a fab...  Intel definitely didn't have an x86 chip that could compete with ARM on battery life at that time.

post #7 of 40

What I find funny about this and there maybe more to this than costs. Intel makes bets all the time and do things thinking the costs will work out over time as they develop the market place. They piss away more money on these beat than most company. Why not bet on the Apple idea. It sound like the whole VZ thing all over, VZ was giving the opportunity and claims they walked away, in reality I think Apple never plan to do business with them since they were CDMA and the rest of the world was on GSM at the time.

 

You could see Apple not telling Intel the processor was for a phone, but with any stretch of the imagination they should have known it was some portable device and the ipod was going gang busters and it could have been the next SOC for ipod (which it was with extra features)

post #8 of 40
Paul would have benefited from some advice:

"Don't be trapped by dogma %u2013 which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And, most important, have the courage to follow your heart and intuition."
post #9 of 40

Apple will not make a video iPod. Nobody wants to watch video on an iPod.

 

Intel is evil.  Apple will never switch to Intel processors.

post #10 of 40
Quote:
Originally Posted by dreyfus2 View Post

Really depends on when these talks took place. Intel sold its XScale (ARM processor) line to Marvell in June 2006. Maybe their decision was the result of balancing the $600m bid from Marvell against a potentially lossy business with Apple...

 

That's true.  An XScale was THE hot smartphone processor at the time.  

post #11 of 40
Quote:
Originally Posted by sflocal View Post

Could have... would have... should have... but you didn't. Hindsight always provides a view with 20/20 vision.

If your gut said to do it, and you didn't, well then cry me a river. You failed as a decision-maker. That's what you get for looking at spreadsheets and numbers by pencil-pushers instead of seeing the bigger picture.

Now, Intel - under your watch - is slowly becoming irrelevant in a post-PC world, and you and your wasteful, inefficient PC-cronies contributed to it.

Have a nice day.

 

I think you're missing the point.

 

People have stated recently they doubt Intel would fab processors for Apple. But clearly they were thinking of becoming a partner with Apple way back before the first iPhone came out. Intel is now in a great position with some of the best fabs around. Who better to help Apple dump Samsung than the world's most advanced chip maker?

 

I don't think it's about crying over past mistakes. I think it's about showing they're willing to work with Apple in the future. Everyone assumes TSMC will be making Apple's future processors. Do we know this for sure? Can we really rule out Intel, who obviously sees PC market share declining while mobile is taking off?

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post #12 of 40
Quote:
Originally Posted by SmileyDude View Post

 

Nothing was said in the article that says this would've been an x86 chip -- it could've very well have still been an ARM chip, with Intel as the manufacturer.  We just don't know.


Good point. I hadn't thought of that.

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post #13 of 40
Quote:
Originally Posted by EricTheHalfBee View Post

 

I think you're missing the point.

 

People have stated recently they doubt Intel would fab processors for Apple. But clearly they were thinking of becoming a partner with Apple way back before the first iPhone came out. Intel is now in a great position with some of the best fabs around. Who better to help Apple dump Samsung than the world's most advanced chip maker?

 

I don't think it's about crying over past mistakes. I think it's about showing they're willing to work with Apple in the future. Everyone assumes TSMC will be making Apple's future processors. Do we know this for sure? Can we really rule out Intel, who obviously sees PC market share declining while mobile is taking off?


Being just a fab for Apple designs is not necessarily a bright future for Intel. Big money is made when you own the most popular architecture. But it would be great if Apple dumped Samsung for Intel.

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post #14 of 40
Quote:
Originally Posted by EricTheHalfBee View Post

 

I think you're missing the point.

 

People have stated recently they doubt Intel would fab processors for Apple. But clearly they were thinking of becoming a partner with Apple way back before the first iPhone came out. Intel is now in a great position with some of the best fabs around. Who better to help Apple dump Samsung than the world's most advanced chip maker?

 

I don't think it's about crying over past mistakes. I think it's about showing they're willing to work with Apple in the future. Everyone assumes TSMC will be making Apple's future processors. Do we know this for sure? Can we really rule out Intel, who obviously sees PC market share declining while mobile is taking off?


Good point. Intel is the better supplier because they will stick to their core business of making chips instead of competing directly with their client like Samsung does. They also need the business in view of declining PC sales across the board.

post #15 of 40
Quote:
Originally Posted by jd_in_sb View Post

At the end of the day I don't think Apple would have picked Intel because their chips used too much power when compared to ARM.

Um, they mean being the mfg of Apple's ARM chips is how I'm reading it.  Apple does the design and Intel would mfg it FOR Apple instead of having to go to Samsung.  

post #16 of 40
Quote:
Originally Posted by SmileyDude View Post

 

Nothing was said in the article that says this would've been an x86 chip -- it could've very well have still been an ARM chip, with Intel as the manufacturer.  We just don't know.

From what the article says, it was that Apple approached Intel to do what Apple ended up going to Samsung for.  MFG ARM CHIPS.

post #17 of 40
Quote:
Originally Posted by EricTheHalfBee View Post

 

I think you're missing the point.

 

People have stated recently they doubt Intel would fab processors for Apple. But clearly they were thinking of becoming a partner with Apple way back before the first iPhone came out. Intel is now in a great position with some of the best fabs around. Who better to help Apple dump Samsung than the world's most advanced chip maker?

 

I don't think it's about crying over past mistakes. I think it's about showing they're willing to work with Apple in the future. Everyone assumes TSMC will be making Apple's future processors. Do we know this for sure? Can we really rule out Intel, who obviously sees PC market share declining while mobile is taking off?

TSMC is already on tap to make the next gen Apple ARM chips.   Intel MIGHT be brought in to do it, but Apple's gone to TSMC for the A7's.

post #18 of 40
That's interesting. Someone needs to invent a time machine so we can go back and kick Otellini in the balls and change the trajectory of iOS hardware.

Would they be using smaller processes by now, i.e. more powerful, cooler chips? Intel has the fab thing down pat.

On the other hand, the way it turned out, Apple has more control and maybe more innovations will bear fruit from Intel's seemingly screwy decision.
post #19 of 40
Quote:
Originally Posted by drblank View Post

TSMC is already on tap to make the next gen Apple ARM chips.   Intel MIGHT be brought in to do it, but Apple's gone to TSMC for the A7's.
That's the rumor, but has anyone actually confirmed TSMC is contracted to fab chips for Apple?

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post #20 of 40
The spilled milk Ontellini is crying over isn't the lost opportunity for the first iPhone batch, but to get intel chips into the ground floor of the 2nd smartphone revolution. Had intel powered those chips, they would probably have had an easier "in" to the subsequent post-PC revolution (iPad, AppleTV), and perhaps leverage that to get contracts from other device makers. They wouldn't be on the outside looking in.

It's hard to imagine an intel x86 chip in an iPhone, and I don't think the chips out in the 2005-2006 time were very efficient compared to ARM, so I wonder if it was some other processor family intel had in its bin...

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post #21 of 40
Quote:
Originally Posted by jd_in_sb View Post

At the end of the day I don't think Apple would have picked Intel because their chips used too much power when compared to ARM.

They wanted to use ARM, it was just using Intel to mfg the chip for them.  There were lots of ARM designs floating around.   it didn't say that they wanted a specific INTEL chip, just a chip Apple was interested.  That's how I read it.

post #22 of 40
A 'regrettable' decision by a 'regretful' ex-CEO. Unless abstract things like decisions and ideas now have feelings and sentiments.
post #23 of 40

Quote:
Originally Posted by drblank View Post

They wanted to use ARM, it was just using Intel to mfg the chip for them.  There were lots of ARM designs floating around.   it didn't say that they wanted a specific INTEL chip, just a chip Apple was interested.  That's how I read it.

 

Back then it would've been normal to pick a stock part (Apple wasn't designing ARM SoCs yet), and that's exactly what his comment said:

 

"there was a chip that they were interested in, that they wanted to pay a certain price for "

 

Knowing smartphone history (and having our memory jogged by dreyfus2), it seems totally clear that Apple wanted an Intel XScale CPU, which used the ARMv5 architecture.

 

By 2005/2006, the XScale was the CPU in many of the better smartphones.  RIM, Dell, Palm, Motorola, custom devices... everyone used it...  customers wanted it.

post #24 of 40

Wouldn't have looked very good with the giant "intel inside" sticker on the phone.

post #25 of 40
from what I read a few times, it was about Atom chips.
post #26 of 40
Yeah, if we wanted 1 day battery life.
post #27 of 40
... after having po'd Apple big time with 'Intel's Ultrabook initiative'...? 1smile.gif
post #28 of 40
The calendar 4Q2012 the entire PC market was estimated to be less than 90 million units, that includes Macs and PCs using AMD chips.

The iOS device market including iPads, iPhones, iPod Touches , and AppleTVs sold around 80 million units.

Lets assume for arguements sake that AMD chips were in 10 million of those 90 million PCs sold. So lets call call all Intel based PCs 80 million and all iOS units 80 million.

Intel could have doubled the number of chips they sold, excluding non traditional PCs.

Granted the prices and margins would be lower, but not to far from ATOM processor.

Regardless, Intel left 80 million chips to be manufactured and sold by Samsung in just one quarter.

If and when Apple moves away from Samsung, to another foundry, then Samsung has excess capacity to build ARM chips for other customers. Since the new customers won't be buying in the quanties that Apple demanded, Samsung can raise their prices. Think 6-10 companies splitting that 80 million chips that Apple once ordered. Samsung's new profits can be put back into r&d, and production efficiencies.

If Windows RT ever matures and takes off on ARM, Samsung could catch up to Intel in the market.

Samsung's support of Chromebooks is all about selling more Samsung ARM chips.

Samsung's strategy in this is quite clever here, putting effort into the platforms that use more of their parts, Chromebooks and Windows RT, where they supply the RAM, NAND, and the most expensive part, the processor. Although on Windows RT, the OS may cost more than the processor. Hence, Samsung the biggest supporter of Chrombooks.

Asus or Acer, or whichever derided Windows RT publicly is pissed that they have to compete with Samsung, an ARM chip producer, who also produces their own internal components.

Anyway rant over
post #29 of 40
Quote:
Originally Posted by jbcaro View Post

Wouldn't have looked very good with the giant "intel inside" sticker on the phone.

 

I'm just curious - did Apple ever have 'Intel Inside' stickers on any of their Macs? I bought my iMac in 2009, but I have a Mini from 2006/2007. None of them have the sticker.

post #30 of 40
Had Intel fabricated an ARM chip for Apple's iDevices I suspect another alternative universe may have come about. Instead of Samsung being where it is now Microsoft might well be riding high in the mobile arena. I have little doubt Intel would taken all they learned from Apple and would have colluded with their long time cohorts in Redmond and we'd have seen Wintel iDevice rip offs. As to what OS they'd have run, therein lies another interesting array of possible alternative universes.
Edited by digitalclips - 5/17/13 at 5:20am
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post #31 of 40
Quote:
Originally Posted by digitalclips View Post

Had Intel fabricated an ARM chip for Apple's iDevices I suspect another alternative universe may have come about. Instead of Samsung being where it is now Microsoft might well be riding high in the mobile arena. I have little doubt Intel would taken all they learned from Apple and would have colluded with their long time cohorts in Redmond and we'd have seen Wintel iDevice rip offs. As to what OS they'd have run, therein lies another interesting array of possible alternative universes.

 

Interesting thought, but I think its basis is flawed. 

 

Selling chips to Apple didn't give insider info about the iPhone's shape, OS, etc.  At most, it might've foretold a few basic specs (display size, CPU speed).

 

Everything else that's really important was available the moment the phone was shown off.   In other words, Intel and Microsoft (and Samsung and everyone else) had everything they needed to know about the iPhone in January 2007.

post #32 of 40
Quote:
Originally Posted by BestKeptSecret View Post

 

I'm just curious - did Apple ever have 'Intel Inside' stickers on any of their Macs? I bought my iMac in 2009, but I have a Mini from 2006/2007. None of them have the sticker.

 

Nope, never had it.  Apple's always avoided making internal hardware details front-and-center like that.  And the Mac clones were all made in the PowerPC era.

 
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post #33 of 40
Quote:
Originally Posted by KDarling View Post

Interesting thought, but I think its basis is flawed. 

Selling chips to Apple didn't give insider info about the iPhone's shape, OS, etc.  At most, it might've foretold a few basic specs (display size, CPU speed).


Everything else that's really important was available the moment the phone was shown off.   In other words, Intel and Microsoft (and Samsung and everyone else) had everything they needed to know about the iPhone in January 2007.

In one of those alternative time lines Sammy didn't get to make all this money and Microsoft got a leg up. I'm pretty sure just as Intel decided, even late in the day, copying the MacBook Air was a good idea, copying an iPhone and iPad with whatever OS MS managed to pull off (perhaps MS buying WebOS in this universe) was worth it too, even if a year or two behind. After all PC plus Windows followed well behind Mac. DTP was well into it's success story when Aldus ported PageMaker to the PC for example.

It is a purely a scifi theory, I admit, and is as much guess work as your appraisal of the theory is. Hindsight is great but hard to do in the parallel universe. 1wink.gif Having, like you, been closely involved in this industry since the late 1970's I often play 'what if' in such a manner. It's fun to speculate.
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post #34 of 40
Quote:
Originally Posted by auxio View Post

 

Nope, never had it.  Apple's always avoided making internal hardware details front-and-center like that.  And the Mac clones were all made in the PowerPC era.

 

True, but for some odd reason they did have PowerPC logos on the cases of the early Power Macs.  That went away under Jobs with the introduction of the iMac and B&W G3.

post #35 of 40

Shouldn't have bet against the Steve. Even Microsoft got it's start developing software for Apple computers.

post #36 of 40

Steve Jobs as Qui-Gon Jinn (making a subtle hand gesture): "You'll give us the unit price we want."

 

Paul Otellini as Watto: "Mind tricks don't work on me.  Only money.  No money, no parts, no deal."

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post #37 of 40
Quote:
Originally Posted by SockRolid View Post

Steve Jobs as Qui-Gon Jinn (making a subtle hand gesture): "You'll give us the unit price we want."

Paul Otellini as Watto: "Mind tricks don't work on me.  Only money.  No money, no parts, no deal."

I deleted that movie from my personal holocron. To end the pain 1smile.gif

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post #38 of 40
Quote:
Originally Posted by KDarling View Post

Everything else that's really important was available the moment the phone was shown off.   In other words, Intel and Microsoft (and Samsung and everyone else) had everything they needed to know about the iPhone in January 2007.

"Ultraphone, inspired by intel."

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post #39 of 40
Quote:
Originally Posted by sflocal View Post

"Could have... would have... should have"  "Hindsight always provides a view with 20/20 vision"

"cry me a river"  "seeing the bigger picture"

"under your watch"  "a post-PC world"

 

Think you could work a few more cliches in there ...?

post #40 of 40
Quote:
Originally Posted by AppleInsider View Post

"The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do," the Intel chief said. "At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it. It wasn't one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought.""

Samsung seems to be making lots of money selling chips to Apple. So what's the lesson?

1. Intel can't forecast worth a darn
or
2. Intel can't make chips as cheaply as Samsung can.

Either way, Intel screwed up.
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