Intel's not frightened by ARM

Intel CEO Paul Otellini talked to a bunch of analysts at an investor meeting today.  And he revealed that over a million PCs ship every day and claimed that ARM poses no threat to Intel’s business.

He said that when Intel moved to 90 nanometre technology in 2003, and shipped the Pentium 4 with one core and 170 million transistors, it took 50 weeks to move to that process. He claimed that Intel took half the time with its 32 nanometre technology, and for multicore devices for chips that have over a billion transistors in them.

He said the advantagethere  is that Intel can get to market very fast and manage inventory and overhang. “The faster you can ramp the new stuff the less of a problem that is,” he said.

He said that Intel has shipped 3.3 billion processor cores in Q1 2010. By the end of this year that number will be closer to four billion cores. “The architecture which is the most popular on earth is getting more popular every day. We’re still the only architecture that offers backwards and forwards compatibility with software and with 14 million developers,” he said.

Atom and netbooks provide solid margins and the same is also true of handsets that leverage Intel’s architecture.

He claimed Intel isn’t just a PC chip company, it’s a “computing solutions provider” with software, services and silicon. Wind River had a RTOS useful for its embedded product, but it also had an engine to help customers implement silicon on handhelds. He said Twenty two percent of Intel employees work on software. “It’s a big and growing part of the company and it will grow as a percent of our headcount over the next few years,” he said.

He said that Intel has set itself up for very profitable growth over the next few years. He said Intel will be able to maximise its profits in the fast growing PC segments, extend its lead in servers and data centres, take ‘smart’ computing into new segments, and deliver software and services around its silicon.

otelliniHe said that the internet is still the driver – 18.8 trillion minutes were spent on the internet last year, he said. In China growth is 29 percent, India is over 23 percent, Brazil is up 14 percent year on year. China, which he described as “the mother of all markets”, has nearly 400 million users. “It is still the fundamental driver of growth for the foreseable future,” he said.

Most people use video on the internet and the internet gaming slice is tiny in terms of traffic. He said Intel considers video to be the driver for internet traffic, with overall traffic growing at 40 percent CAGR.

The desktop market, he said, is growing by 2.4 percent and in mature markets it’s on a decline. Laptop CAGR from 2010-2014 is expected to be 22 percent and Intel sees no reason for that to change. It may even grow. Netbooks, he said will grow north of 15 percent from 2010-2014.

Tablets, he said, like netbooks, are additive to the PC market. “They’re probably good for Intel long term and I don’t think they will take market share away from other devices,” he said.

The market for computers will grow 15-16 percent over the next few years. He said there are a million PCs shipped every day, and over the next four years that figure basically doubles.

“The PC is still a growth industry because we continue to make the devices more useful, more affordable for more people. It’s a Darwinian device. They change, they get better.”

Intel will maximise profits by expanding its user base worldwide.

Intel, he says, leads in integrated video across different platforms – the Atom 4100 is being selected for all Smart TV applications, “compared to ARM and others out there”. The Moorestown product is the only smartphone chipset capable of running 1080p video.  Intel will take the wi-di capability in the laptop and extend it into all products.

In servers, Intel is seeing good unit growth, net of virtualisation and server consolidation and including its view of the “cloud”. The cloud is still a fairly small fraction of Xeon. Nehalem is being marched across Intel product lines.

ARM, he said, isn’t a threat. If you look at Intel margins versus foundry margins, its are substantially higher. Other architectures obey the same law of physics. It’s very difficult to make money by licensing designs. “We’ve been there, done that.”