Chapter 1: Intel's Distracted Strategy

Intel's recent campaign against Apple’s M1 technology has raised eyebrows. Instead of concentrating on its own challenges, Intel seems preoccupied with discrediting Apple. The company resorted to launching attack advertisements featuring Justin Long, the actor who previously advocated for Apple’s products. If Intel genuinely considered the M1 to be a mere gimmick, they might have let the critics do the talking.

To illustrate Intel's apprehension, Pat Gelsinger, the new CEO, made curious remarks in an interview with Yahoo Finance, suggesting that Intel might even offer silicon foundry services for Apple’s supposedly mundane chips. This raises a question: Is Intel genuinely worried that Apple’s assertions about the M1 might hold some truth? Apple has been known to make bold claims:

• Exceptional CPU performance with minimal energy consumption.
• The fastest integrated graphics in a personal computer.
• Impressive performance with astonishing battery longevity.
• Small chip, monumental progress.

While some of these statements may be exaggerated, many users find that M1 systems outperform their Intel counterparts. Mark Ellis offers a balanced review of the M1, highlighting its strengths and weaknesses.

Chapter 2: The Real Competition

The M1, along with whatever Apple develops next, poses a threat, but is it the most significant one? Apple is not the only tech giant venturing into custom silicon design. Other major players are also recognizing that while Intel can enhance chip speed, it struggles with efficiency.

Take Amazon, for instance. In 2016, the company acquired Annapurna Labs, an Israeli chip designer known for creating custom chips based on ARM technology. As reported by The New York Times on December 1, 2020, just as Apple unveiled its silicon at WWDC 2020, Amazon launched cloud services that were 20% faster and cheaper due to their custom-designed silicon, Graviton.

SmugMug, a prominent photo-sharing platform, is an example of Amazon's capabilities.

SmugMug is trusted by millions worldwide for hosting photos and videos, serving both amateurs and professionals alike. Unlike Instagram, SmugMug is a premium service. Transitioning SmugMug's software from an Intel-based setup to an Amazon-based platform was a daunting task for operations managers. However, Shane Meyers, Principal Operations Engineer at SmugMug, noted:

> "It actually took us longer to upgrade to the newer version of the OS on Intel x86 than it took to adopt the new AWS Arm-based processors."

The migration brought about significant benefits for SmugMug, resulting in up to a 40% reduction in costs without compromising performance.

Moreover, Intel is not the only one stepping back from traditional architectures. Reports from Bloomberg on March 17, 2021, indicate that Google and Microsoft are also designing their chips.

What’s driving this trend? The fiercely competitive cloud services market is evolving. It’s no longer just about speed; power efficiency is now critical. By 2025, the cloud sector is projected to consume around 15% of global electricity, as reported by Bloomberg.

The absence of Intel chips in the mobile sector indicates its struggle to produce fast, energy-efficient chips at scale. Currently, 90% of mobile application processors are based on ARM technology, not Intel's offerings.

Intel’s focus on speed is evident in its marketing, boasting:

• 4.15x Higher Performance in LINPACK and LAMMPS
• 1.74x Better Performance in Server-Side Java and PHP/HHVM
• 2.25x Higher Performance in memory bandwidth applications

However, due to the rise of mobile computing, chip manufacturing is no longer solely Intel's domain. Companies like ARM provide licensing for chip technology, allowing firms such as Apple, Google, Amazon, and Microsoft to create chips that align with their strategic goals, with TSMC producing these proprietary designs at scale.

The strategic focus of cloud service providers is shifting towards sustainability, prioritizing reduced power consumption as part of their commitment to combating climate change.

Intel faces an additional challenge: as applications migrate to the cloud, user devices are becoming simpler. Google’s success with Chromebooks illustrates this trend. According to Ars Technica, ChromeOS has now surpassed MacOS as the second most popular operating system globally.

The real competitive threat lies not in Apple's M1 but in the broader shift towards cloud computing. In 2020, Intel's data center division generated $26.1 billion, while its client computing group brought in $40.1 billion (Anandtech). Both sectors face significant pressure from cloud advancements. MarketWatch estimates that Apple contributes only 2% to 4% of Intel’s revenue—around $3 billion.

What can Intel do in response? The company appears to struggle with the adaptability that Apple has mastered, which includes discarding outdated technologies without hesitation. Apple has successfully transitioned away from the 68000, PowerPC, and now Intel chips, with customers welcoming the move to M1. In contrast, Intel can't simply abandon its data center technology without risking customer dissatisfaction.

Is Intel too entrenched to fail? Before dismissing this notion, consider the downfall of Nokia and Blackberry, once dominant in the cell phone market but unable to adapt to shifting technologies. Their decline serves as a cautionary tale for Intel's future.