A very interesting thought was recently brought up by Mark Hachman over at ReadWrite.com. Essentially, Mr. Hachman pointed out that now that Intel's (NASDAQ:INTC) Atom has been designed for leadership, thanks to the competition from the ARM (NASDAQ:ARMH) vendors as well as even Advanced Micro Devices' (NASDAQ:AMD) low power APUs, that the higher end "Core" products will be cannibalized by Intel's own Atom. While surely a more palatable alternative to the ARM vendors eating Intel's lunch, it does seem to be a legitimate concern. Are these concerns justified? Read on to find out.
Same Graphics? Not So Fast!
It's no secret that Intel has finally begun to invest quite heavily in integrated graphics. While pre-2010, integrated graphics were viewed as "good enough" solutions designed to be passable for every day tasks, starting with 2011's "Sandy Bridge", Intel finally started to take graphics seriously. "Sandy Bridge" was okay, but not really all that great on graphics. "Ivy Bridge" was much better - especially in low power scenarios - but still a ways away from being something that didn't have gamers cringe. With "Haswell", Intel not only adds some really slick embedded DRAM technology at the ultra high end, but it also beefs up the amount of sheer die space dedicated to graphics.
Anyway, so while both the "Baytrail" Atom platform and the upcoming "Haswell-ULT" Core for Ultrabooks/detachables sport the same basic graphics architecture, "Haswell" sports roughly 10x the graphics resources that the Atom does. This means that for any thin and light PC users also looking to play modern games at good framerates, the Atom just won't cut it.
Quad Core Marketing Problem? Not Too Big Of A Deal
This is actually something that I think will be a slight marketing problem for Intel in 2013 and beyond. While Intel's "Haswell" cores are beefy, and while the SoCs built around "Haswell" will be monsters compared to the Atom "Baytrail" platform, the fact is that the Core products will be dual core machines (plus two virtual cores). How can OEMs pitch the higher end Core devices when consumers will see "quad core performance!" with the cheaper Atom products?
However, I believe that consumers typically buy price-points and system features moreso than just processor core counts, and I think the brand "Core" will be pushed as the "premium" brand. So, while the $200-$300 "Baytrail" cheap convertibles will certainly eat into the Android/iPad market, I think that for users that would be buying higher end, this won't really make much of a dent. The system vendors will scale performance of the processor up with the features of the system. So, for example, your $200-$300 Atom convertible may have a touch screen, but it will probably only have 2GB of RAM and pretty anemic storage.
Want more storage, more RAM, a nicer screen, etc.? The system vendors will probably try to push "Core" processors along with the rest of the "premium" system. Further, consumers are definitely fully aware of the "good, better, best" strategy of the "Core i3/i5/i7", and those with money to spend are just going to buy the i7 because it's an i7. On top of that, many people purchase laptops as long term devices, which usually leads them to want to spend a little more if they perceive that it's going to last longer, which tends to keep mix fairly rich.
"Broadwell" Will Broadside "Silvermont"
About a year from the "Haswell" launch, Intel will launch "Broadwell", the 14nm "tick". According to Semiaccurate, this brings us a shrink of "Haswell" to 14nm but also brings us a brand new GPU architecture that should be both lower power than what is found in "Haswell" while at the same time bringing a 40% performance improvement. My guess is that if "Haswell" will be able to bring all-day battery life to 11-13 inch convertibles, "Broadwell" will be the first "Core" product for Ultrabooks to enable fanless designs. So, much higher graphics performance, higher performance/lower power CPU performance, and built on the latest 14nm process technology.
While "Silvermont" will do a good job holding off the ultra low power ARM stuff at bay, none of those processors is even in the same performance/watt league as what "Core" will be bringing to the high end of the PC market. Of course, "Airmont" on 14nm should bring with it a beefed up SoC with more graphics a bit after "Broadwell", but once again the "Core" parts will still have branding and a gargantuan performance lead.
It truly is Intel v.s. Intel, since "Core" is being driven down to new power consumption lows while "Atom" scales up, but I believe that fundamentally the people who traditionally paid for "premium" performance will continue to do so. It's the people who didn't need the expensive systems (i.e. people buying incremental devices, computers for children, etc.) that were shifting wallet share to Android/iOS devices, and it's those same people that I think this new souped up "Atom" will appeal to, which just means incremental volume for Intel and Microsoft - not cannibalization.
Of course, time will tell, but this is my bold prediction. If you disagree with me, please do so below in a civil fashion! :)
Disclosure: I am long INTC, AMD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I am short ARMH