Monday, 2 May 2016

Intel Drops Atom Microprocessor Business to Focus on Other Core Technology Products; No More Microsoft Surface Phone

Intel (NASDAQ: INTC) has recently announced that they are dropping their entire Atom microprocessors, which could negatively impact their smartphone business and spell doom for the Microsoft (NASDAQ: MSFT) Surface line too.

Intel Atom Processors, Image (c) Intel

The microprocessor giant has been late to the smartphone and mobile computing game. They tried to adjust as they entered the industry but they were already so far behind. Nevertheless, Intel has been successful in their desktop computer business as they provide powerful processors. Recently, the company has made that they are not a PC company anymore and they will go on to target a much wider range of businesses with regards to the connectedness of devices today.

Part of their plans was to drop their Atom line of microprocessors. It's a wasteful move seeing as they have already invested billions of dollars to the business and now they ultimately want to end it. Perhaps it could be the right decision to do after all. Intel said that they are focusing on a broader target and not just splitting their focus in parts of the tech industry.

The tech giant has also recently announced that they are planning to lay-off 12,000 people from their workforce. Intel did not say what positions or who they will be cutting off from the company. Intel said that their Broxton and Sofia chips, the codename for their Atom products, will have their resources diverted to other products that will prove to "deliver higher returns." It is not known whether which products they will be investing more in but it is clear that their Atom projects will be shut down.

Atom products have not been upgraded for quite some time now and it might just be a logical move for Intel. ASUS has used their Atom chipsets for the Zenfone 2 smartphones and rumors for the new Zenfone 3 line claim that the company is shifting to use Snapdragon chipsets from Qualcomm instead. Sofia is currently shipping and Broxton was delayed, according to PC World. They could be the last line of Atom products that Intel will be shipping.

Cherry Trail, the codename for the Atom X5 line of tablet chips, will also be phased out by Intel. The company will be replacing them with Celeron and Pentium chips dubbed as Apollo Lake. Intel is also aiming the Apollo Lake at hybrid tablet PCs which means that they are slowly abandoning the mobile smartphone and pure tablet business altogether. Companies such as HP and Dell are choosing the Skylake Core M processors instead of the Cherry Trail chips which could have already spelled the end of the line for the Atom X5.

The company has already confirmed that they have canceled Atom Broxton for the tablets and smartphones, according to Thurott. It would make sense if Cherry Trail comes next. Intel is also planning to shift to making 5G base network equipment, transmitters and receivers. 5G is not exactly here yet, but Intel plans to be part of the catalyst for the incoming change.

"Intel is accelerating its transformation from a PC company to one that powers the cloud and billions of smart, connected computing devices. We will intensify our investments to fuel the virtuous cycle of growth in the data center, IoT, memory and FPGA businesses, and to drive more profitable mobile and PC businesses," Intel said in a statement. Atom had several billions of dollars poured into its investment. Intel made a short, good run of the chips but they failed to overthrow ARM from being the market leader.

The slowdown of the smartphone market is also not a good addition to the mix. Since there is a decline in smartphone sales, it would also affect not only the smartphone manufacturers but also the part suppliers as well. Intel launched the last Atom chip for servers in 2013 which means that it was way overdue for an upgrade considering how fast technology's evolution can be. Their failure to give that upgrade may have been a reason for its demise to day.

Now, Intel is planning on taking on the 5G and the Internet of Things (IoT) market. They also aim to be a huge part of how every device can be connected through the Internet. This means that Intel could manufacture mobile modems and possibly new chips for other mobile devices as well such as drones, wearable tech and IoT products. Despite their claim that they are not PC company anymore, they would still be supporting PC products in their own way.

Atom's demise could also be the Microsoft Surface's demise as well. The Redmond-based company could still use an Intel chip but they could be out of support in few months-time considering that it will be discontinued. In addition, the decision from Intel could also kill any dreams of a Surface phone. Microsoft has already failed with their Windows Phones business and it might not gamble again considering that Intel has already dropped Atom chips.

Intel's plan for 5G seems to be interesting to say the least. The network standard is still under construction and development by network giants across the globe. It could take several more months and possibly years considering that 4G LTE isn't covered in several areas around the world yet. Even 2G and 3G connections are not finished taking over a hundred percent of the world. Still, Intel could make the transition faster with their equipment. The company hasn't revealed yet what they plan on exactly doing with 5G at the moment.

Another interesting bit is that Intel is embracing the IoT industry. It's an emerging market and Intel could be one of the largest companies to benefit from it and yet contribute at the same time. IoT products could finally be powered by Intel chipsets, or maybe Intel could also make their own products. The company will still be focusing on cloud processing tech, silicon phonics and Xeon server chips as well.

Intel has been making large decisions lately and the Atom discontinuation is just one of them. More products and plans from the company can be expected to be revealed over time.

by Lord Marin