Will Apple Rescue Intel's Silverthorne?
Apple Goes Ultra Mobile
Just as Apple's early 90s PowerBook designs helped the company to deliver the Newton as a portable device, the company's current expertise in developing thin, fast, and battery savvy music players and mobile phones could be parlayed into the ultra mobile market to shake things up.
As described in Newton Rising: Is the Next iPhone Device a G3 MessagePad?, Apple's ability to deliver a wider range of ultra mobile devices based on the shared platform of the now established iPhone and iPod Touch enables the company to introduce new alternative form factors in unproven markets without risking massive upfront investment in a speculative venture. The foundation is already laid, and Apple's economies of scale, component pricing leverage, and proven ability to market and retail its products offer a lot of confidence in its plans for the future.
That's a huge reversal from just a year ago, when industry analysts felt comfortable in insisting that Apple could not successfully enter the smartphone market. At the same time, going ultra mobile would force the company to incur some risk of eating into its existing laptop sales. However, similar cannibalization fears didn't stop the company from discontinuing the hard drive based iPod Mini at the height of its popularity to release a Flash-based replacement in the Pod Nano.
The Writing is Not On the Tablet
There are several other reasons why an Apple alternative to Microsoft's UMPC might not match the success of the iPod or iPhone. First, the ultra mobile form factor hasn't proven itself as a viable market able to support a general purpose product. Apple has shied away from delivering highly customized products for different regions, markets, and users, preferring instead to deliver high volume products with broad appeal. The iPod and iPhone also capitalized upon rapidly growing market segments; there's currently nothing going on among UMPCs.
Price is still a concern as well. A tablet couldn't attract too much attention at $1000, and couldn't be very profitable at $500. Existing UMPC makers are all suffering from this problem, and many have a wide product lineup designed to offer devices at every price point in between. The result is that applications for the devices are unlikely to take full advantage of the higher-end models, while low end models are too slow and have frustrating limitations in the amount of storage they offer.
That same shattered platform/lowest common denominator problem has long plagued the variety of devices running Symbian, Windows Mobile, Palm OS, and mobile versions of Sun's Java or Adobe Flash Lite. In contrast, Apple sells one iPhone model, and the iPod Touch is only slightly different in its screen size and hardware features, meaning that developers can easily target a large combined platform without having to test compatibility with products from various vendors in hundreds of different configurations.
Apple also sells its mobile devices in the $300 to $400 price range, compared to the $600 to $1500 price range of UMPC devices. A consumer, entertainment-oriented iPod Slate (below) in the area of $600 could leverage Apple's iPod platform along with the patented central software distribution model involving iTunes and pattered after iPod games described in The New Apple Patent: WGA Evil or iPhone Knievel?, all without falling into the pit of indifference as other UMPC and Tablet PC vendors have. Whether the market would respond in volume sales still remains to be seen.
Every Rose Has Its Silverthorne
One significant barrier standing in the way of an idealistic ultra mobile partnership between Apple and Intel is that Silverthorne isn't a guaranteed success. While currently riding high on the desktop with the Core architecture, Intel has stumbled as often as it has delivered successful products, as noted in Paul Murphy's "Intel Macs Are Killing the Planet Myth". Just in the last decade:
- Intel's desktop Pentium 4 ended up a disappointment that AMD was able to run circles around, as noted in Inside Apple TV: A Brief History of Intel Processors.
- its IA-64 Itanium workstation processor was a disaster that AMD derailed with its own 64 bit architecture, which Intel was then forced to support. This was described in PE U: The Mac OS X Leopard Windows API Myth: EFI and Itanium.
- Intel's attempt to enter the mobile phone processor business with XScale was also a tremendous failure. After investing around $5 billion to acquire and develop a mobile processor business to rival mobile leader Texas Instruments, Intel was forced to back out of that arena completely. It sold the remains of its XScale PXA business boondoggle to Marvel for just $600 million last year. XScale is an implementation of the ARM architecture, originally based upon Digital's StrongARM designs.
Gadi Singer, the senior Intel engineering manager behind Silverthorne, also oversaw the catastrophic Itanium and XScale projects. In addition to problems in delivering technology as planned, Intel has also faced problems in selling good chip technologies in a very competitive market, as well as in trying to co-develop new products that consumers and businesses have any interest in buying. All three factors line up against Silverthrorne.
A partnership with Apple could give Intel the practical products and marketing push to sell the new chip in quantity, solving two issues out of three. As the WinTel domination of the PC industry has proven over the last fifteen years, volume sales can also make up for the problem of technical deficiencies by allowing the sales leaders to invest in catching up with the technology leaders.
The Silverthorne Road Map
Apple is most likely to use Silverthorne in a larger slate form factor iPod, an ultra mobile laptop, or in new devices along the lines of Apple TV. Silverthorne is a low power, x86 compatible chip slated for launch early next year. Intel plans to follow the Silverthorne/Menlow platform in 2009 with Moorestown.
The new Silverthorne chip offers major advances over Intel's first generation UMPC processors used in Microsoft's Origami products earlier this year: a smaller die size, significantly lower power requirements resulting in roughly double the battery life, faster core processing and memory pipelines, and options for embedding integrated 'system on a chip' features such as WiFi, WiMAX, GPS, Bluetooth, and video decoding features.
Apple's current iPod and iPhone relationships with Samsung combine ARM processors with a PowerVR MBX graphics core at a price Intel will be pinched to match in Silverthorne and the Menlow architecture, but Intel also has a lot to gain in getting its chips inside the hardware that is currently selling rather than just shipping new generations of processor designs as an engineering exercise.
Interestingly, while Intel's Microsoft-centric ultra mobile roadmaps (below) highlight support for graphics and video software proprietary to Windows, including Direct 3D and Windows Media/VC-1 decoding, Intel has also quietly licensed the PowerVR graphics technology from Imagination Technologies, the leading mobile graphics core among mobile devices and the architecture Apple uses in the iPhone. This spring, an Imagination Technologies Press Release announced, "Our partnership with Intel in the personal computing/UMPC segment is progressing well, with additional projects committed. We expect this to lead to product shipment towards the latter part of our 07/08 financial year."
If Intel were only planning Silverthorne to be used in a few hundred thousand UMPC devices running a tablet version of Microsoft Windows, licensing PowerVR wouldn't make much sense. It appears Intel is planning to rapidly expand its mobile business by partnering with the leader in mobile graphics and the leading maker of smartphone, internet, and entertainment devices. The entire existing UMPC market was estimated to be around a third of a million units this year, while Apple itself sold five times that many iPhones in just one quarter. It also sold a lot of iPods.
Could favorably competitive pricing from Intel persuade Apple to significantly redesign the iPhone within just a year in order to use an unproven processor architecture, rather than continuing to use the same, well known components shared by the vast majority of of smartphones, available from multiple suppliers at competitive prices? That remains to be seen.
Apple could also ride the white hot competition between the x86-compatible Silverthorne and ARM licensees such as Samsung by using both families of processors in its products, particularly given the company's unique ability to repeatedly bridge the processor compatibility chasm with its flexible operating system technology. Apple's ability to design, deliver, and sell products will certainly keep Intel's fingers crossed that the company picks its new chips for whatever it has up its sleeve.
As the article Ten Big Predictions for Apple in 2008 suggests, Apple appears to have plenty of surprises ready for 2008 that could easily make this year's explosive growth and expansion look dull by comparison.
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