Intel scores in Chromebooks, squeezed in Surface

Microsoft may use Snapdragon for ARM-based Surface, enhancing Qualcomm's post-PC position, but Intel leaps ahead in Chrome

By Caroline Gabriel

It's fair to assume that Intel will never seriously weaken Qualcomm's chipset dominance in the conventional handset, unless it pulls off a much-speculated deal to provide modems for a future iPhone. Its somewhat safer bet for mobile growth rests on large-screened mobile or 'post-PC' devices such as tablets and cloudbooks, where the competitive playing field is more level especially if Intel can turn its power in the traditional PC ecosystem to advantage. This week illustrates the ups and downs of its battle - on the same day that shiny new Chromebooks appeared, sporting the latest Intel processors and throwing down the gauntlet to ARM, reports surfaced that Qualcomm had found its way into the Microsoft Surface tablet.

Microsoft is said to be introducing a smaller version of the Surface tablet, powered by Qualcomm's Snapdragon system-on-chip. This is not a direct blow to Intel - there are separate implementations of Surface for x86 and ARM architectures, with different Windows 8 variants - but any progress by Qualcomm within Microsoft, and tablets in general, is worrying for the chip giant. Intel will have been pleased by the poor response to initial ARM-based Windows RT devices, clinging to the hope that Windows tablets would remain firmly x86-based, especially with the significant advances in the architecture's power efficiency. A smaller, cheaper, slicker Surface could redress that balance, and in that scenario, Intel would rather see Nvidia - the incumbent provider of processors for the Surface RT - get the win, rather than its bête noire, Qualcomm.

Sources told Bloomberg that Microsoft would unveil the new Surface on May 20 at a New York event where it is also expected to detail some of its plans for the recently acquired Nokia devices. Although Microsoft CEO Satya Nadella seems less interested in hardware than his predecessor, Steve Ballmer, he has made "mobile first, cloud first" the mantra for his leadership and, for now at least, he is stuck with Ballmer's belief that an integrated hardware/software platform was essential for mobile success.

Turning to Qualcomm would be no surprise - the two companies have worked closely together for years and the chip designer was one of the few influential supporters of Windows Mobile in its dark days. But it would be an important win for Qualcomm, which has struggled to repeat its smartphone success in tablets. Nvidia put tablets at the heart of its mobile strategy, pushing high end credentials in graphics and multicore processing, and focusing on a sector where its lack of a fully integrated modem was less significant. Now that Nvidia has integrated the modem technology it acquired with Icera, and Qualcomm has beefed up Snapdragon, the two are in more equal combat for the rather squeezed tablet space between the iPad (which uses Apple's own processors, and Qualcomm modems in the cellular models) and the low cost Android models, which increasingly use chips from Chinese vendors.

The squeeze in high end tablets created by the iPad's dominance is a challenge for Intel too, and it has been busily extending the variety of large-screened mobile gadgets it supports - from its Ultrabook platform for superslim notebooks to a newer focus on Google's Chromebook architecture. This stripped-down cloudbook approach is powered by Google's Chrome OS, a stripped-down browser-based system which holds most data and services in the cloud. After a slow start, Chromebooks are becoming mainstream and are available from many PC makers which, like Intel, see them as a good bridge from their traditional offerings to the mobile world. As in Android, Intel has formed an increasingly close partnership with Google, and the latter seeks to showcase its platform by developing the most cutting edge Chromebook implementation itself.

Last year that took the form of the Chromebook Pixel, the first with a touchscreen and significantly increased functionality, and this week, the companies have unveiled a new generation running on Intel's new Bay Trail chips. This architecture, which greatly increases power efficiency, will enable Chromebooks to "grow up", said Intel. This is an important hedge against the tablet remaining an ARM-based form factor - apart from the x86-based Surfaces, which look unlikely to worry the iPad, Intel has been slow to get into Android tablets, but in Chromebooks, it starts in pole position, and ARM-based chip providers are the challengers. Early ARM-based Chromebooks received poor reviews for functionality though Samsung went a long way to address those criticisms when it launched its Chromebook 2 model earlier this year.

Google just wants its Linux/browser OS to run on as many devices as possible, in order to drive its web services and revenues. But with Intel responding to the enhancement of the ARM Chromebook proposition convincingly with Bay Trail, Google was giving it clear support.

There are four current Chromebooks running Intel processors, and the firm says that figure will rise to 20 this year. The new models will run its Haswell chips, based on the Bay Trail architecture, and will ship from well-established Intel partners such as Lenovo, Acer, Dell, Toshiba and Asus. This line-up of vendors may highlight the desperation of the PC vendors to find a 'next big thing' which they, not the phonemakers, control, but it also indicates that Chromebooks are getting sufficient scale to become a challenge to Windows PCs and post-PC devices.

Intel's challenge, like that of some OEMs, will be to avoid cannibalizing growth products like Ultrabooks with lower priced Chromebooks. So far, the figures are not sufficient to make that a real fear. According to IDC, about 2.5m Chromebooks shipped last year, less than 1% of the PC market, with schools being their most successful market.

However, Google is prepared to play a long game, relying on a slow but steady conversion of users to cloud-based, rather than localized, processing and storage. And Intel, too, is investing in almost anything which has a chance of being significant in the post-PC landscape, hence its deepening alliance with Google, which is starting to resemble the old 'Wintel' partnership. Intel, it was revealed, is the second biggest contributor to the open source Chrome OS after Google itself.

Intel VP Navin Shenoy told the launch event that supporting Chrome is part of a broader strategy to get the firm's chips into "anything that computes", regardless of operating system or form factor. "We will embrace multiple operating systems," Shenoy said. "We want our processors to work best with any operating system in the market."

He pointed to heritage in this market - the first prototype Chrome OS device, the CR-48, ran on Intel silicon - and also to advantages over ARM, including 64-bit support. Google was focusing on the increasingly overlap with Android - key Android functions are gradually being transferred to Chrome, the latest being support for offline video viewing, starting with Google Play movies and TV. Google's VP of Chromebook product management, Caesar Sengupta, would not comment on persistent rumors that a Chrome OS tablet is on the cards, but he did sum up the way all players feel about the nascent post-PC space, concluding: "The world is in a state of great flux right now."

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