Will mobile innovation be the undoing of Microsoft, perhaps Intel? (Part 2 of 2)

by mcampbell on July 26, 2012

“Analysts have been trimming their expectations for Intel recently, as PC sales continue to stagnate…In emerging markets like China, PC sales are still growing, but in the U.S., consumers are shifting their money toward smartphones and tablets.

Intel hopes to be a player in chips for non-PC devices as well, but its prospects there are uncertain.” (Anonymous, 2012)


ARM is the current kingpin of processors used in mobile devices. Moore’s law, in its modern form, predicts that processor power doubles every eighteen months in respect to cost and size. Although this bodes well for Intel’s movement into ever more powerful spheres of computing, it also predicts that ARM’s capabilities will begin to approach levels of processing power that will enable it to devour the lower strata of Intel’s market. Again, this is a classic characteristic of the Innovator’s Dilemma; the established firm moves into higher and more profitable markets, while their traditional mainstay markets are eroded by newer firms utilizing disruptive technologies, in this case mobile devices.

Intel’s mobile processor, the Atom chip, has not been successful to date. It is often viewed and utilized as a weakling x86 chip, not a true solution for the mobile processor market. Even if Intel is able to market a chip that is competitive with, even superior to, ARM’s offerings, will Intel be able to maintain profitability without completely re-inventing its value chain? I do not believe it.

Intel still rules the PC market; however, that market is growing stagnant. If Intel wishes to maintain its profits, it will need to increase its presence in the server market. Indeed, its strength in this segment is growing. Even so, ARM is starting to move into the lower strata of this market touting economy of space, power consumption, and cost as their competitive advantages.


When faced with disruptive innovations, fight or flight, nowhere is safe.


References Cited:

Rigby, B. (2012) Microsoft posts quarterly loss but beats Wall Street. Reuters, Available online: http://www.reuters.com/article/2012/07/19/us-microsoft-earnings-idUSBRE86I1DP20120719 Accessed July, 2012.

Anonymous. (2012) Earnings Preview: Intel reports 2Q amid slowdown. Associated Press, Available online: http://www.msnbc.msn.com/id/48201572/ns/business-us_business/t/earnings-preview-intel-reports-q-amid-slowdown/#.UA7rZJKUN-Q Accessed July, 2012.


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