Intel’s Platformisation

The Economist writes about the change of guard at Intel as Paul Otellini’ takes over:

Rather than just selling processing chips to PC-makers, Intel intends to offer them entire platformsbundles consisting of a processor, its ancillary chips and networking components, and the software needed to tie them all together. By doing this, Intel hopes to sell more components, thereby taking a larger cut of the selling price of each PC. It also hopes to boost demand by devising specific platforms for several promising new markets, such as home entertainment, mobile devices and health care.

This strategy, it hopes, will also enable Intel to outflank its rivals, which specialise in particular kinds of chips, such as processors (as in the case of AMD) or networking (Broadcom). PC-makers, goes the theory, would rather buy a single integrated package from Intel than assemble components from several other suppliers.

While Intel has a good chance of getting the platform model to work in desktop PCs, breaking into new markets may prove much harder. Intel has yet to make any headway in the mobile-phone market; indeed, merging its laptop and mobile businesses into a single mobility division means that continuing losses in communications chips are helpfully obscured by the bumper profits from Centrino. Its prowess in processors is unquestioned, but Intel is still to prove itself when it comes to radio chips. It must do so if it is to realise its high hopes for new markets such as smartphones and wireless broadband (Intel is the main cheerleader for WiMax, a new wireless broadband technology). They don’t have a significant technological advantage over the incumbents in the cell-phone business, says Kevin Krewell of Microprocessor Report, an industry journal. Until they come up with something truly unique, they’re just going to be a me-too player.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.