Imitation is a sign of admiration. However, if imitation is driven by self preservation, then admiration can turn into ruthless competition with the objective of annihilation.
Lately, the object of much admiration is Apple Inc. (AAPL). When evaluating Apple vis-a-vis its competitors, its products are often compared to other manufacturers of electronic consumer products such as Dell (DELL), Hewlett Packard (HPQ) and Samsung; or in the case of operating software, Apple is weighed against the likes of Microsoft (MSFT). It is only logical that such companies would be viewed as Apple's competitors, as we ourselves recently outlined in the article published on 3/12/2012, "Apple ate HP's and Dell's lunch - is dinner next?"
Recently, there are signs that a most unusual competitor may be gearing up to take shots at Apple: Intel Corporation (INTC). Intel is known to be a manufacturer of processors. Although Apple has some engagement in the field, Apple's chips are not expected to rival Intel's, as outlined in Anton Shilov's article: "Apple's chips will not rival Intel's, even inside MacBooks - Analysts."
However, Intel is feeling the heat as Apple products utilizing Apple's ARM based A4/A5 processors, such as the iPad, are eating into the traditional laptop market served by Intel's clients such as Dell and Hewlett Packard. Some have speculated as far as one year ago that this would happen, as Charlie Demerjian wrote on 5/5/2011, "Apple dumps Intel from laptop lines."
Intel is responding aggressively. Its Ivy Bridge micro-architecture chips coupled with the upcoming release of Windows 8 later this year are expected to provide a boost to the Ultrabook market. This will be followed with the energy usage enhanced Haswell chip to follow in 2013.
Naturally, it is not unusual for Intel to release new generation chips. However, Intel has gone as far as trademarking the word "Ultrabook." In our opinion, this is clearly an effort to counter the "iPad" stigma. This is no longer about chips. This is about end products. As Apple is encroaching on Intel's processor business, it seems Intel is attempting to encroach on Apple's end products. It is actually reported by EE Times that the Ultrabook market is expected to grow from 1 million units shipped in 2011 to 136.5 million units in 2015. With expectations for Ultrabooks to capture as much as 42% of the notebook market by 2015, we still believe that the iPad tablet will hold its ground, as illustrated in our article published on 3/5/2012, "the art of tablet war."
Most recently, Intel is attempting to expand its reach out of the processor business, into television and content programming, as it was recently announced by The Wall Street Journal, "the new cable guy: Intel." Intel's effort to provide Internet television, through its own set-top box, is a clear shot at Apple set-top box TV, which generated 1.4 million unit sales during the most recent quarter. Although such a number may be minimal when compared to Apple's sales in other products for the quarter, such as the iPhone (37 million units), iPad (15.4 million units), iPod (15.4 million units), Mac (5.2 million units), retail ($6.1 billion in revenue) and iTunes ($2 billion in revenue), it is still quite an improvement over 2011 where sales for the entire year were 2.8 million units.
Despite such efforts by Intel to provide direct competition for Apple's products, Intel still lacks two key ingredients: It does not have Apple's complete ecosystem; and more importantly, it does not share Apple's status (see our article published 3/8/2012 "what Apple and Starbucks share: luxury, status and premium pricing" ). Intel has branded itself as "Intel Inside". Having branded itself in such a manner, quite effectively if we may add, it would be quite a challenge for Intel to overcome its clients' perception and develop a status for its "outside." In the eyes of Intel's customers, Intel is sexy inside. In the eyes of Apple's customers, Apple is sexy. Period.
Although Intel will still do very well within its current domain, we do not believe that Apple investors need to fear Intel's latest encroachments. It is possible that Intel would not mind Apple's annihilation, for whatever client business it loses from Apple, it will more than offset it elsewhere. However, it is more likely that Intel's latest encroachments will simply prevent Intel's own annihilation in an Apple dominated age.