No - you aren't missing anything. Apple is a vertically integrated company now and they are never going back.
Intel also has little shot of competing with Apple on a talent perspective. They won here, but I suspect Apple has a plan B for who they are going to poach to replace Wilcox, and that person is probably better.
Apple was a member of the PowerPC group, AIM (Apple, IBM, Motorola), before it became apparent Intel was leaps ahead. Prior to the Pentium M68k and PowerPC were well ahead of Intel.
Apple had an entire line of really good wifi routers before shutting it down. A line of servers and storage they also abandoned.
You can never really guess what Apple's plans are because they don't work like traditional business. They have little loyalty to their own products and will absolutely go with an outside supplier if they determine they can do it better.
Apple is a vertically integrated company now and they are never going back
The integration is delivering dividends. Apple has shown itself to be nimble. If Intel brings a better chip to the table, I wouldn't be surprised if they changed tack once again.
Also remember that in this context Intel is the vertically integrated company. Apple is using TSMC's fabs.
Right now that's a liability for the vertically integrated company because TSMC is ahead of Intel. Maybe it'll stay that way, maybe it won't. If Intel should retake the lead, Apple's choices will be to have a slower / less efficient processor or switch back to Intel.
Even then they might not do it. Just being competitive isn't enough when they'd have to go back to paying Intel's margins. But if Intel pulls it off, it doesn't leave Apple with a lot of great choices.
Power efficiency is not something that Intel has ever led the industry in, regardless of process node.
Have people forgotten why Apple switched from PowerPC to Intel to begin with?
Even selling mobile SOCs at a loss didn't allow them to break into the handheld mobile device market.
They're not selling at a loss. They're not selling at all. They spent money to develop something nobody wanted. The bulk of the "handheld mobile device market" is low performance low power low cost processors.
Intel showed up with a medium performance medium power medium cost processor, which nobody asked for. It wasn't cheap enough for the low end and it wasn't fast enough for the high end.
They might have actually made money by charging less for it. That's what the low end of the market cares about, and if they were competitive with ARM on price and better on performance, that could have succeeded. But Intel didn't want the ARM vendors' margins, so what they got instead is nothing.
Where the M1 sits is a different market. "Core i7, but with a process advantage instead of a disadvantage, so more power efficient" would win there pretty easily. See also Ryzen.
Have people forgotten why Apple switched from PowerPC to Intel to begin with?
We aren't talking about being more power efficient than IBM's desktop workstation architecture of the 90's. We're talking about having better power efficiency than ARM.
Intel has never been anywhere near that, regardless of process node.
They're not selling at a loss.
Now that they have abandoned their attempt to enter the handheld mobile device market? Sure.
However, to attempt to break into that market, Intel intentionally sold their chips at a very large loss for quite some time.
Intel is subsidizing its chips — practically giving them away to partners — and recording the transactions as "contra revenue." Intel is shipping its mobile processors and offering refunds or rebates to the vendor for using them. If devices with the processors don't sell, Intel gives its partner, say Lenovo or Dell, a refund.
We aren't talking about being more power efficient than IBM's desktop workstation architecture of the 90's.
What we're talking about is the thing that Apple puts in laptops. And there is a reason they switched to Intel and not ARM at the time when they did.
We're talking about having better power efficiency than ARM.
There are two classes of ARM processors you could be talking about.
One is the kind they put in low end Android phones. These have excellent performance per watt because they prioritize efficiency over performance. They are thereby slower.
The other is processors with performance competitive to Intel Core processors. The only ARM processor in this class is Apple's, and it has a process advantage.
However, to attempt to break into that market, Intel intentionally sold their chips at a very large loss for quite some time.
This is confusing two things.
One is how much it costs to manufacture a chip vs. how much you sell it for. The other is the net profit or loss of the business unit, including the R&D cost of developing the microarchitecture.
Intel's problem with Atom isn't the performance per watt, it's the price/performance. It's too slow for how expensive it is. It's not that much faster than much cheaper ARM processors, so nobody wants it for that price. What they were asking was so excessive that even after heavily discounting it, it was still too expensive. The only place it really got used was netbooks running Windows where being x86 was the thing that made it worth the premium. So they never reached the volumes needed to recover the R&D.
To compete with low performance ARM processors in the low end of the market, you have to compete on price. Intel doesn't want to do that, but nothing else will work there, because that market is highly price sensitive.
In the high end mobile market, i.e. workstation-class laptops, Intel had the best performance per watt up until the point that they lost their process advantage. Before then no ARM processors in that market had better efficiency because no ARM processors in that market existed.
From a margin induced COGS perspective, Intel would be vendor silicon and the M1.* aren’t. This matters a lot.
A lot of the swing of the pendulum in tech to de-vertical is still was collateral damage from the core competencies excuse in the 90s MBA era to basically chop companies up and make the financials artificially better for a time.
From a margin induced COGS perspective, Intel would be vendor silicon and the M1.* aren’t. This matters a lot.
This matters a lot when the vendor lacks competition and therefore has high margins. In a commodity market it's a liability.
If five independent vendors each pay money to develop a processor, you get to pick the best one to use. If four independent vendors and you each pay money to develop a processor and yours isn't the best one, oops.
A lot of the swing of the pendulum in tech to de-vertical is still was collateral damage from the core competencies excuse in the 90s MBA era to basically chop companies up and make the financials artificially better for a time.
It's quite the opposite. Companies that do one thing and do it well result in more stability. If one of them screws up and falls behind, they fail, but that's as it should be, and the damage is limited to that vertical.
Now look at Intel. Their processor designs are fine, their process technology is behind, so they're losing. The same thing happened to AMD -- Global Foundries fell behind -- but because they de-integrated, they could switch to TSMC. Not doing this sooner nearly destroyed the company. Now that they have they're back in the game.
The problem with vertical integration is that it requires all of your business units to be the best in the market. Because if any one of them falls behind, it pulls down the whole chain.
People like to ignore that when they're winning, but the result is that when you lose, you lose big.
Comments
Am i the only one who lacks the fantasy that this could become true?
No and I'm sure Pat knows this too, I think the reason Gelsinger said that is in the 2nd part: "creating a better chip than Apple can make."
That's more a message to Intel and their customers than to Apple.
No - you aren't missing anything. Apple is a vertically integrated company now and they are never going back.
Intel also has little shot of competing with Apple on a talent perspective. They won here, but I suspect Apple has a plan B for who they are going to poach to replace Wilcox, and that person is probably better.
Apple was a member of the PowerPC group, AIM (Apple, IBM, Motorola), before it became apparent Intel was leaps ahead. Prior to the Pentium M68k and PowerPC were well ahead of Intel.
Apple had an entire line of really good wifi routers before shutting it down. A line of servers and storage they also abandoned.
You can never really guess what Apple's plans are because they don't work like traditional business. They have little loyalty to their own products and will absolutely go with an outside supplier if they determine they can do it better.
The integration is delivering dividends. Apple has shown itself to be nimble. If Intel brings a better chip to the table, I wouldn't be surprised if they changed tack once again.
Also remember that in this context Intel is the vertically integrated company. Apple is using TSMC's fabs.
Right now that's a liability for the vertically integrated company because TSMC is ahead of Intel. Maybe it'll stay that way, maybe it won't. If Intel should retake the lead, Apple's choices will be to have a slower / less efficient processor or switch back to Intel.
Even then they might not do it. Just being competitive isn't enough when they'd have to go back to paying Intel's margins. But if Intel pulls it off, it doesn't leave Apple with a lot of great choices.
Power efficiency is not something that Intel has ever led the industry in, regardless of process node.
Even selling mobile SOCs at a loss didn't allow them to break into the handheld mobile device market.
https://www.extremetech.com/extreme/186367-intels-mobile-div...
Have people forgotten why Apple switched from PowerPC to Intel to begin with?
They're not selling at a loss. They're not selling at all. They spent money to develop something nobody wanted. The bulk of the "handheld mobile device market" is low performance low power low cost processors.
Intel showed up with a medium performance medium power medium cost processor, which nobody asked for. It wasn't cheap enough for the low end and it wasn't fast enough for the high end.
They might have actually made money by charging less for it. That's what the low end of the market cares about, and if they were competitive with ARM on price and better on performance, that could have succeeded. But Intel didn't want the ARM vendors' margins, so what they got instead is nothing.
Where the M1 sits is a different market. "Core i7, but with a process advantage instead of a disadvantage, so more power efficient" would win there pretty easily. See also Ryzen.
We aren't talking about being more power efficient than IBM's desktop workstation architecture of the 90's. We're talking about having better power efficiency than ARM.
Intel has never been anywhere near that, regardless of process node.
Now that they have abandoned their attempt to enter the handheld mobile device market? Sure.
However, to attempt to break into that market, Intel intentionally sold their chips at a very large loss for quite some time.
https://www.zdnet.com/article/intel-to-hit-40-million-mobile...
What we're talking about is the thing that Apple puts in laptops. And there is a reason they switched to Intel and not ARM at the time when they did.
There are two classes of ARM processors you could be talking about.
One is the kind they put in low end Android phones. These have excellent performance per watt because they prioritize efficiency over performance. They are thereby slower.
The other is processors with performance competitive to Intel Core processors. The only ARM processor in this class is Apple's, and it has a process advantage.
This is confusing two things.
One is how much it costs to manufacture a chip vs. how much you sell it for. The other is the net profit or loss of the business unit, including the R&D cost of developing the microarchitecture.
Intel's problem with Atom isn't the performance per watt, it's the price/performance. It's too slow for how expensive it is. It's not that much faster than much cheaper ARM processors, so nobody wants it for that price. What they were asking was so excessive that even after heavily discounting it, it was still too expensive. The only place it really got used was netbooks running Windows where being x86 was the thing that made it worth the premium. So they never reached the volumes needed to recover the R&D.
To compete with low performance ARM processors in the low end of the market, you have to compete on price. Intel doesn't want to do that, but nothing else will work there, because that market is highly price sensitive.
In the high end mobile market, i.e. workstation-class laptops, Intel had the best performance per watt up until the point that they lost their process advantage. Before then no ARM processors in that market had better efficiency because no ARM processors in that market existed.
From a margin induced COGS perspective, Intel would be vendor silicon and the M1.* aren’t. This matters a lot.
A lot of the swing of the pendulum in tech to de-vertical is still was collateral damage from the core competencies excuse in the 90s MBA era to basically chop companies up and make the financials artificially better for a time.
This matters a lot when the vendor lacks competition and therefore has high margins. In a commodity market it's a liability.
If five independent vendors each pay money to develop a processor, you get to pick the best one to use. If four independent vendors and you each pay money to develop a processor and yours isn't the best one, oops.
It's quite the opposite. Companies that do one thing and do it well result in more stability. If one of them screws up and falls behind, they fail, but that's as it should be, and the damage is limited to that vertical.
Now look at Intel. Their processor designs are fine, their process technology is behind, so they're losing. The same thing happened to AMD -- Global Foundries fell behind -- but because they de-integrated, they could switch to TSMC. Not doing this sooner nearly destroyed the company. Now that they have they're back in the game.
The problem with vertical integration is that it requires all of your business units to be the best in the market. Because if any one of them falls behind, it pulls down the whole chain.
People like to ignore that when they're winning, but the result is that when you lose, you lose big.
there's no chance.