There was a time when Intel dominated the world. That time passed and the company is one of the biggest examples of ‘The innovator’s dilemma’. They were too confident in themselves, as many others -Nokia, Blackberry- and they failed to see what the future was going to be.
Intel could have made a smart move, but again they didn’t probably even consider it, and now Softbank has done something that could be a really future saver: they’ve made a whopping buyout offer to acquire ARM for £24.3 billion (~$32 billion).
Apparently the reason is Softbank’s interest in IoT. I’d say that’s only a marketing trick to add some hype to the headlines. ARM dominates the world now thanks to their smartphone chip design business, and it will be interesting to see what this Japanese giant does with this kind of power.
In case somebody didn’t notice, it’s a good time to acquire British companies, ahem Brexit ahem.
Source: ARM legs it to SoftBank in $32 billion buyout
Vlad Savov writes about Intel and its smartphone strategy: Goodbye, Atom:
Late on Friday night, Intel snuck out the news that it’s bailing on the smartphone market. Despite being the world’s best known processor maker, Intel was only a bit player in the mobile space dominated by Qualcomm, Apple, and Samsung, and it finally chose to cut its losses and cancel its next planned chip, Broxton. This followed downbeat quarterly earnings, 12,000 job cuts, and a major restructuring at a company that’s had a very busy April. Intel is still one of the giants of the global tech industry, but it’s no longer as healthy and sprightly as it used to be.
I would say one of the biggest mistakes of Intel was XScale: giving up on ARM chips could be seen as logical back then, but it was also a little bit arrogant.
Intel had to fight from the top down and that bet never worked out. History has shown us that ARM and its bottom-up strategy has clearly had much more sense in the mobile space.
When Otellini confessed that he passed on that agreement with Apple and their future iPhone -knowing nothing about Apple’s product- it became clear that he was not considering the long term. The company was doing really good back then, so a risky move like that was out of the question.
The situation was exactly the opposite for Andy Grove back in the 80s: the memory business was a road to nowhere, so he had to risk everything, and he made the right decission with his bet on microprocessors. He was looking for a solution on both the short and the long term, and he was lucky. Otellini wasn’t, of course.
Sadly for Intel, this is another example of the innovator’s dilemma. Atom -ahh, those netbook times- won’t be missed. It’s wise to accept defeat.