Has Intel and its x86 architecture become irrelevant in the emerging world of IoT, as some have suggested, or is it a snoozing giant that has now awakened and is ready for a fight?
Intel recently announced it is buying Lantiq, a German-based fabless semiconductor supplier of broadband access chips (primarily DSL but also cable modem). Lantiq chips are used by a large number of broadband access OEMs. Lantiq was spun out of Infineon years ago and is now about to be reunited with its former parent, which is now owned by Intel.
What does this acquisition mean for Intel’s ambitions in the emerging Internet of Things (IoT) market? Intel now has nearly all the pieces to be a premier supplier of IoT silicon and associated servers. Broadband services will be required to make the IoT real, especially in the connected home. And integrating more capability into broadband access equipment, like the set-top box, is critical.
Intel already has 3G/4G wireless connectivity (Infineon) and is a leader in Wi-Fi capability embedded into its chips (way back since Centrino days), as well as offering wired Ethernet. With Lantiq it now adds the ability to leverage the broadband gateway that connects virtually all homes and many businesses, over both cable (DOCSIS) and wired telco networks (DSL). Coupled with an already healthy cable STB processor business, Intel is now able to connect nearly all of the servers and access points to the broadband networks necessary to actually power up the IoT. And as Intel adds this capability to its core processors for IoT (e.g., Edison, Quark) they become a powerful infrastructure play for connecting all manner of “things.”
The only substantial challenger to Intel is the ARM camp, and within that field, the only company with comparable coverage is Qualcomm. Indeed, Qualcomm represents a significant challenge long term and Intel has been reacting to that realization for some time. As the world leader in wireless modem shipments, Qualcomm has the cellular connectivity piece well in hand. However, it has recently seen its dominant position eroded. It is feeling emerging pressure from some of the Asian players (e.g., MediaTek), and Intel/Infineon has captured some big wins.
Qualcomm has maintained a commanding market share despite Intel buying Infineon to compete. And Qualcomm had its own reactive acquisitions; buying Atheros to make sure it had a viable Wi-Fi and Bluetooth offering to cover an area in which Intel had an early lead. But after Qualcomm and Intel, the level of competitors with the quantity of assets needed to be a market leader in the emerging field of IoT drops off quickly.
With Lantiq, Intel can offer more options to the broadband connectivity interfaces that will increasingly be needed to power up homes, business and services. And Intel has the wherewithal to integrate this connectivity into its compute engines. Clearly Qualcomm also has an array of compute engines it can offer to the market, but Intel has much more depth and breadth, since it can offer its x86 architecture for solutions where it performs better than ARM implementations. And yes, x86 is still relevant in this space despite ARM garnering many of the headlines.
So what does all this mean? I expect Intel to create silicon bundles that will allow the major players in broadband access equipment (e.g., Cisco, Arris/Motorola) to build more server-oriented devices and provide active gateways for the myriad of devices soon to be deployed in our lives. Further, this approach by Intel will enable a number of new and innovative personal and/or home servers to be tied directly to the broadband networks, allowing a significant increase in the ability to keep “things” connected. This will also create a new landing point for innovative applications and cloud-based services so critical to IoT reaching its potential. Finally, with Lantiq under its roof, Intel is now positioned to have a complete wireless and wired connectivity offering in one chip. However, as we have seen previously with Intel’s initial acquisition of Infineon, it could take several years before it gets there.
This capability, combined with Intel’s prowess in semiconductor process technology, will give it a competitive advantage over many of the smaller players (e.g., Chinese players like MediaTek, RockChip, etc.), that currently compete mainly on price. It will also allow Intel to maintain margins in the cutthroat competitive world of IoT, where most vendors have set their sights. Coupled with the potential strengths Intel brings in security (i.e., McAfee) and cloud/analytics, it could make Intel stand out from the pack. So, is Intel and x86 irrelevant in an IoT world as some have suggested? In a word, no.
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