This is generally how dominant companies die. ExxonMobile doesn't die because someone built a better oil company. They die when someone builds a better battery.
How is today's chip industry compared with yesterday's chip industry as dramatic of a shift as going from oil to batteries? That seems like a much more significant leap than x86 to ARM. What am I missing?
Exxon can make batteries and Intel can make things like ARM chips. But they aren't really because they aren't good at it.
From the outside, looking in, it seems like the two leaps are on massively different scales which I feel is important when talking about things that will kill a large corporation.
I guess my key question is what makes ARM so much different than x86 that it invalidates Intel's existing knowledge? Batteries have a completely different product life cycle than oil. For one, batteries don't burn away and they recharge. This creates completely different business models. Is there some major difference between ARM chips and x86 chips that I am missing?
1) Binary compatibility doesn't matter nearly as much as it used to. This was everything in the 80's, 90's and still important into the early 00's. It's why people were willing to pay top dollar for Intel CPUs for decades. First it was to run DOS apps like Lotus 1-2-3, WordPerfect and then it was to run Windows apps including Microsoft Office which were the primary thing most people had PCs for back then. Most mainstream computing users (business and personal) would be hard pressed to come up with a specific need that requires x86. Thanks to the web, Linux, Apple, mobile, etc. x86 is just another architecture that can be used, not the architecture it once was.
2) Competing products are anywhere from a fraction to an order of magnitude less expensive than Intel's offerings. Unless you absolutely need maximum performance, cheap and good enough is where the majority of the market is.
Look at what Intel has been banking on first with their failed attempt in mobile and now with their failed attempt at IoT: they thought that because they had 1 (the thing that doesn't matter much anymore) that they could disregard 2 (the thing that does). Intel sure looks like it's having a Kodak moment: the market that exists today is much smaller in terms of $/CPU or $/perf or $/watt but Intel refuses to do what it needs to adapt.
CEO/CFO of Intel looked at the balance sheet every Quarters and make decision if they should continue to invest in ARM SOC (A few years back before they sold that div to Marvell.)
x86 has 50% + margin, #1 market position.
ARM is #4,5, 6 in market position behind TI, Qualcomm, Freescale and lossing $$$ every quarters.
One need to investment huge amount of $$$ continuously fundamentally at IP for GSM, LTE, Mobile OS Team, SOC team and there were almost zero chance to catch up with #1 #2 players of the time -- Qualcomm, TI, 8-10 years ago.
1. CPUs are diminishing in importance. They aren't the bottleneck for most applications. Whatever the new hot tech is, it's probably limited by GPU, RAM, or storage. ARM doesn't have to be better than Intel, they just have to be good enough and more ubiquitous. The top of the market will go GPU and the bottom will go ARM, and the middle will be an ever shrinking x86 market share. The few places that will need heavy CPU resources will be the same people who can apply pressure to Intel's margins.
2. Intel can't force ARM chips out of the market, because they aren't playing the same game as AMD. The licensing business model of ARM has allowed them to separate Intel from their traditional allies while also pooling the efforts of Intel's competitors.
3. The next generation will know ARM. The hobby chips that Intel is discontinuing now means that they are handing over the next generation of 'learners' to ARM. ARM based training/learning boards are proliferating fast. Right now "everyone knows/runs X86", but that will change.
The process of chip making will look very similar in the future, but the brand of the CPU will matter less every year. Intel's not "dead in five years", but Intel will definitely cross the point of no return in that timeframe. Shifting a big company's focus is more difficult than growing another company who already has the right focus.
Back to the analogy: Batteries wouldn't invalidate oil. There are a multitude of other areas where petrochemicals are used. Batteries would shift the market enough to make it difficult for exxonmobil to follow.
I would argue that there has been, specifically that Moore's law isn't working as it once did, so the competition is catching up. It's becoming a commodity space now that smaller process sizes are hard, and gains from that are paltry.
For example on the mobile space, for the applications fully written in Java, .NET, Swift[1], JavaScript, how the CPU looks like doesn't matter at all.
[1] - When using LLVM bitcode as deployment target, although it is leaky.
And I just want to mention to the parent, Intel were never painted "dead" in the K6 era. Because K6 didn't actually beat Intel. It was the Athlon and Athlon 64. And even in that Era Intel wasn't dead by any means. AMD had at best 30% of market shares, and everyone knew Intel could continue to play the pricing discount game for as long as they wanted.
Right now the PC industry is shrinking. As a matter of fact it is shrinking faster then expected contrary to what numbers you may have read, that is because one specific segment, the PC Gaming Industry is booming, and especially in SEA region. That is why you see "lots" of Gaming Laptop appear, when I would have wanted the same 10 - 15 years ago they simply wont there. And this segment has help the numbers to look not as bad as it is.
Microsoft and Apple are fully aware of how Chromebook is taking places in Education. And Microsoft knows if this continues, there may be a generation of people who dont know Windows, and what could be even worst, they dont use Office, especially Excel! Any Windows Netbook or Notebook are unable to complete with Chromebook on priceing because of Intel. Unless Microsoft and AMD get a deal that uses a Cut down Xbox chip to a price point, Microsoft is forced to go with ARM to complete with Chromebook.
I think Intel is well positioned in the server market. Their biggest threat isn't ARM but AMD, which lower their margin.
Assuming we dont see a killer App on PC that requires a huge jump of CPU performance. The next generation of AMD APU will likely make a killing in the consumer market. AMD Vega GPU along side with Zen. And then Next year you get Zen 2 + Vega on 7nm.
Intel should have open up their Fab. At least they should have worked with Apple, ensuring 300M of these SoC dont goes to Samsung or TSMC. But since they have been straggling to make this decision, TSMC and Apple is now pretty much lined up all the way to 2019 which is the TSMC 7nm+.
With the current CEO i dont have much faith in Intel. I really wish it was Patrick Gelsinger who had became the CEO.
let's not forget the "don't build with AMD chips or else" game which they got sued over, though too late to matter