How Intel screwed up its best friend, Apple

Intel’s CEO Paul Otellini welcomed Apple into its fold way back at a CES some time ago – he performed the interesting magical trick of both making Steve Jobs feel like he was really wanted, and at the same time making Michael Dell feel like he’d been dumped by the chip giant.

How could Intel get everything so wrong? Let’s look back a couple of years when the giant from Satan Clara thought that it could actually capture the phone market from ARM, from Marvell, and from every other player on the block.

Intel can be arrogant. It does have great power in the market. Just look what it’s done over the last 20 years – and I’d been watching Intel even before then. Even when it was a DRAM company and got chosen by IBM to produce an X86 thing that even the Intel executives then knew wasn’t really fit for purpose.

One very senior Intel executive vouchsafed to me that Intel’s process technology was such that within two years – we’re talking 2008 here folks – every phone, every smartphone, every tablet and everything would have an Intel Atom chip within it, whether it was a PID, a MID or a DID. We never understood where Intel was coming from on this.

After all, it had the Xscale chip as part of an agreement imposed on it by the US government, and at the first opportunity, rather than take this humble hack’s advice, it sold it to Marvell.

Marvell has subsequently made a fortune, a fortune that Intel could not make because it was blinkered.

So what went wrong? Apple was very happy to wave goodbye to Motorola, and get rid of that horrid legacy it was committed to. It came up with a fantastic idea for a phone, and Intel couldn’t help it on that front either.  Intel’s R&D had great ideas for pads and the rest, but Steve Jobs at one point must have got very frustrated with Paul Otellini.

We can imagine the conversation – and by the way – this is in my imagination.

“Hey Steve, how’s it going?”
“Paul, it’s going fine. I need a top chip for this tablet that I want to be my legacy after I croak.”
“So, Steve, how much you wanna pay?”
“Paul, you and I could make this thing together. I have the marketing skills and you have the process skills. Can’t we do this together, Paul?”
“Steve, I have to deliver shareholder value to my stockholders. How much do you want off the chips I will deliver to you when I want to?”
“Paul, I think I’ll talk to ARM and AMD. Is that OK with you?”

OK. So here’s another effort and it’s all in my Imagination, I’m just thinking, OK?

Jobs sends an internal memo to his British designer and copies it to other so-called senior executives.

“I’ve talked to Intel, and it’s a no-no, guys. They are going to throw us to the wolves because they seriously, seriously think that cellphone manufacturers are going to use its technology and it also believes it’s better than anyone else at everything else. I give up on those guys. Could you maybe talk to ARM’s Tudor and see what those guys can do for us? Don’t mention Pixar!”

All imagined, all imagined.