Intel to mask billion-dollar mobile losses with new financial reporting structure
With its troubled mobile chip unit hemorrhaging cash -- thanks in part to Apple's domination of the smartphone and tablet markets -- Intel this week announced that it would no longer report mobile earnings as a separate line item, instead choosing to lump them in with its money-minting PC business.
Intel's Mobile and Communications Group will be financially merged with the PC Client Group under the banner of a new Client Computing group, which will encompass "platforms designed for the notebook, 2 in 1 systems, the desktop, tablets, and smartphones; mobile communication components; as well as wireless and wired connectivity products."
The chip giant's mobile division has lost more than $7 billion since 2012, while the PC business has pulled in over $27 billion in the same span.
Word of the move -- which will have the effect of hiding Intel's staggering mobile losses behind the PC group's strong sales -- first surfaced late last year, but was not officially confirmed until now. The new structure will take effect beginning with Intel's Q1 2015 earnings, which are due next week.
Still a force to be reckoned with in data centers and on the desktop, Intel was nevertheless late to the mobile party and has found itself outclassed by ARM-based chips. Apple and Samsung, which together account for the majority of smartphones and tablets sold each year, each depend largely upon their own in-house silicon.
Intel is believed to have scored a small win by securing a contract to supply baseband chips for the so-called "iPhone 7," but that would be more of a moral victory than a financial one.
Apple's A-series chips have become so performant that many industry watchers expect to the company to eventually release an A-powered MacBook, which could bite into Intel's finances even more deeply. Such a shift is already underway in the enterprise, with many companies exploring and deploying ARM-based servers to lower capital expenses and conserve energy.
Intel's Mobile and Communications Group will be financially merged with the PC Client Group under the banner of a new Client Computing group, which will encompass "platforms designed for the notebook, 2 in 1 systems, the desktop, tablets, and smartphones; mobile communication components; as well as wireless and wired connectivity products."
The chip giant's mobile division has lost more than $7 billion since 2012, while the PC business has pulled in over $27 billion in the same span.
Word of the move -- which will have the effect of hiding Intel's staggering mobile losses behind the PC group's strong sales -- first surfaced late last year, but was not officially confirmed until now. The new structure will take effect beginning with Intel's Q1 2015 earnings, which are due next week.
Still a force to be reckoned with in data centers and on the desktop, Intel was nevertheless late to the mobile party and has found itself outclassed by ARM-based chips. Apple and Samsung, which together account for the majority of smartphones and tablets sold each year, each depend largely upon their own in-house silicon.
Intel is believed to have scored a small win by securing a contract to supply baseband chips for the so-called "iPhone 7," but that would be more of a moral victory than a financial one.
Apple's A-series chips have become so performant that many industry watchers expect to the company to eventually release an A-powered MacBook, which could bite into Intel's finances even more deeply. Such a shift is already underway in the enterprise, with many companies exploring and deploying ARM-based servers to lower capital expenses and conserve energy.
Comments
"Performant" is not recognized as a legitimate English word by Websters, or Merriam-Webster.
Even if you use other references to justify, its use here seems forced.
"Performant" is not recognized as a legitimate English word by Websters, or Merriam-Webster.
This isn't the New York Times. It's a tech blog using a word that is used sometimes in tech/software/engineering vernacular.
Well the new Macbook uses an Atom and it's arguably a PC, so maybe such a reorganisation does make sense.
No, it doesn't use an Atom. It uses a Core-M. Why make blatantly false claims?
Core M =\= Atom.
who cares.
Apple is doing the same thing with the Watch, hiding it in Other.
IMO, the less info Wall Street has to manipulate the better. If I was Apple I would just release the bare minimum. Forget about unit sales. All Wall Street does is manipulate that information.
Case in point. iPad unit sales. Apple destroys Revenue, Profit expectations. Destroys Mac sales, destroys software sales, and crushes iPhone sales. Yet Wall Street manipulators bring up iPad units. That kind of BS is ridiculous.
If I was in charge I would just give Wall Street Revenue, expenses, Profits. Then I would release unit sales when I want. No one else releases unit sales except for Apple.
Why give Wall Street any information at all. Take Apple private and be done with it?
$ for what? for spreading intel culture AND saving intel ecosystem. Intel has lots of $, np to lose money where it is currently with marketing problem. Not to mention top dog Qualcomm Snapdragon arm is not close to intel in power efficiency. Snapdragon 810 using 14 watts vs intel z3580 using 2.5 watts.
And don't shy yourself even mentioning intel i7 15 watts exists there. Yes, totally snapdragon use less power, but at the same time, it is less power efficient with regards to performance.
Nvidia not anymore thinking of mobile like was before.
Samsung making its own chips and no longer buys from Qualcomm.
And Apple. Apple's ARM is more like an intel chip........ I hope soon we will see Macbook air with apple a9x......
Thanks!
You represent a very small portion of the actual market.
They should swallow their pride and strike a deal to fab all of Apple's CPUs.
They could have had that Biz back in 2007 but blew it... maybe someday Apple can buy them.
If not Apple should at least buy Micron and Intel's SSD product group; it deserves a better steward.
I think they would if they could. But not very easy to find $700 billion in capital. Not realistic at this point.
As a shareholder I would 100% agree to convert my shares to private common stock.
Dell seems to be doing better after they went private.
Many people can't just convert to private (if their shares are in an IRA or 401K, for instance). It would take a hell of a lot more than the current market cap of $700 billion. Many people that are in AAPL today (me, for instance) are in there because we believe it is going much higher. I would not part with my AAPL shares for less than a 30% premium, and I would wager that enough people are like me that the shareholders would vote down any buyout that doesn't place the market value at almost a trillion, perhaps even more.
I remember working doing an Itanium port almost 13 years ago. Intel was hemorrhaging money because they bet Itanium vs. the AMD64. It took them almost 5 years to turn around their ship then and scrap the Itanium and pour resources into the 'low end CPUs' back then. My prediction is that the same will happen with the mobile CPUs.
Intel has been trying to turn their mobile ship around for 5 years (first Atom was late 2009). They will keep trying (and may succeed) but they are fighting against some different forces now compared to the AMD64 era:
– Itanium was a costly misstep, but jumping back to x86 wasn't that hard – they still had x86 design teams and could use some of the same tricks the AMD did (e.g. putting the memory controller on chip)
– ARM has a large entrenched codebase (both iOS, Android, and a huge number of embedded systems), so Intel will have to make chips that are not just 'better' but better enough to justify porting codes over.
– Intel's manufacturing advantages (while still big) aren't as much of a factor as in the mid-2000s – being a process node ahead is still better, but not as much of a factor due to diminishing returns at smaller feature sizes
– Intel only had to fight AMD to win back its server market. Intel could afford much bigger design teams than AMD. To 'win' mobile it will need to beat ARM, Apple, AMD, Samsung, Broadcom, and several other companies who are all designing custom ARM cores or chips.
Intel may still be able to break in to mobile in a big way, but I think it will be a much harder nut to crack.
On the other hand, Intel is still making money from laptop/desktop and making nice margins on their server lines. ARM will have an uphill battle to break into those areas – particularly server. Intel could completely fail at mobile but still make tons of cash in the server business.
Well the new Macbook uses an Atom and it's arguably a PC, so maybe such a reorganisation does make sense.
The Macbook uses the Core-M (dual core @ 1.1Ghz -> 2.4Ghz - middle of the line).
Microsoft Surface 3 uses the Atom x7 (quad core - highest in the line).
Atom x7 is a notch below the Core-M and has a performance of around 40% that of the Core-M for single core performance; and around 80% for multi-core performance.
NOT the same processor.
Most people don't use close to the power of CPUs in today's class machines and with sufficient memory and fast SSD can the Core-M can handle 90% of the peoples workloads. Even the Atom x7 is sufficient if given >= 4GB memory and a fast SSD for many applications.
who cares.
Apple is doing the same thing with the Watch, hiding it in Other.
IMO, the less info Wall Street has to manipulate the better. If I was Apple I would just release the bare minimum. Forget about unit sales. All Wall Street does is manipulate that information.
Case in point. iPad unit sales. Apple destroys Revenue, Profit expectations. Destroys Mac sales, destroys software sales, and crushes iPhone sales. Yet Wall Street manipulators bring up iPad units. That kind of BS is ridiculous.
If I was in charge I would just give Wall Street Revenue, expenses, Profits. Then I would release unit sales when I want. No one else releases unit sales except for Apple.
Apple hides the information from their competitors.
Intel hides the information from their shareholders.
What's the difference? How can one do one without doing the other?
Intel x86 compatibility is a must. Otherwise, Windows is the only alternative. Hopefully Apple will not repeat older mistakes. And now Intel should make lower TDP microprocessors to compete with ARM.
Rather it should be able to compile x86 instructions. Under the covers it is running a completely different architecture which have been rev:ed many times.
– Intel only had to fight AMD to win back its server market. Intel could afford much bigger design teams than AMD. To 'win' mobile it will need to beat ARM, Apple, AMD, Samsung, Broadcom, and several other companies who are all designing custom ARM cores or chips.
On the other hand, Intel is still making money from laptop/desktop and making nice margins on their server lines. ARM will have an uphill battle to break into those areas – particularly server. Intel could completely fail at mobile but still make tons of cash in the server business.
Back then it wasn't only AMD, it was PPC, SPARC etc. I would suspect however that they are smart enough to see that the key to making big profits is selling a lot of chips. And as things are going more and more people are using ARM based devices to run their transactions. To large share for Intel not to look at that segment anyways.
They are clearly doing that, but the problem is when they succeed they are ruined.
The reason is that to compete the price per chip must be ultra low and that will make profit margins almost nonexistent.