Blog Post

Is Intel Ready to Break Microsoft's Heart?

google-chrome-netbookIntel (s intc) has “been working with Google” (s goog) on the search giant’s planned Chrome OS, according to a report today in The Inquirer, which goes on to herald the end of the Wintel (Intel PCs running the Windows OS) hegemony. My feeling is that such a proclamation may be a little premature given that Chrome won’t be shipping on consumer netbooks for another year, but I’ve emailed Intel to ask about its involvement anyhow. The degree to which Intel is involved would indicate just how badly Microsoft is bungling this whole netbooks thing, despite the fact that most consumers really, really want their netbooks with Windows rather than Linux.

So what has Microsoft done to help such consumers embrace portable computing? It hasn’t ported the coming Windows 7 to ARM-based chips, which are expected to be in the next generation of netbooks (the really awesome Nvidia (s nvda) Tegra chips are tied to Windows CE — bleh). Microsoft’s pricing for Windows 7 will add at least $50 to the cost to a cheap netbook (Microsoft makes a less robust edition that sells for less). Meanwhile, plenty of other vendors are throwing netbook OSes into the ring while Microsoft dithers.

In other Chrome-related news, Eric Schmidt, Google’s CEO, apparently wasn’t keen on building an OS, according to the Financial Times. But now he gets it. “We benefit…when [consumers] put more of their life online,” he reportedly told a group of media types at a Sun Valley confab last night. “They do more searches, click on more ads. It’s a very straight-forward strategic initiative.” Google, it basically makes the gargantuan universe of the Internet relevant to you. All for the price of a few ads.

21 Responses to “Is Intel Ready to Break Microsoft's Heart?”

  1. Wintel won’t have a big problem until cellphones get the ability to act as standalone computers – basically an HDMI or DisplayPort jack and a Bluetooth mouse/keyboard. As soon as the iPhone can browse the web on a 24″ LCD monitor and play 720p video on an HDTV, it’s a long slow slide to the end of the PC for large segments of the market.

    Moore’s Law means that cellphones 10 years from now will have the power of today’s Macbook Pro. For anybody not doing professional media editing, scientific computing, etc., that seems like more than enough.

  2. If Intel does not break Microsoft’s heart, then Intel’s heart will be broken someday. Time has come…

    I think the growth strategy for Intel is smaller form factor x86. But there is margin crunch. To offset that they need software revenues. Look at QCOM market cap vs INTC market cap – $73B vs $93B – who works harder and has higher capex on core technologies. Somebody has to fund that.

    With 32nm intel is going to breakaway not just on lithographic nodes – but perhaps on leakage and other characteristics that are critical for low powered devices. But that won’t be enough. They will need to offset the margin compression with software revenues and IP like model (where QCOM has been successful). This is a culttral change for the company – but one they have to do.

    WindRiver acquisition portends that aspect for embedded systems. Why give $50 to Microsoft for Netbooks. Netbook can truly cause a new platform to emerge as you outlined in the other post particularly with a carrier channel and backend infrastructure. I think increasingly the chip sale will be bundled with other margin contributing IP (be it software or other IP) to offset. The right number is perhaps $10 of software than can be bundled with a netbook – what is that software look like and who is going to get it? No Microsoft. Not Google. Intel??

  3. Anonymous

    Microsoft not porting Windows software to ARM processors is an advantage to Intel as it sells only X86 processors. In fact, it is a disadvantage for MS and not Intel. My guess is that Intel does not want to be left out of the market if Chrome OS succeeds. Remember that Intel is a big supporter of Moblin.

  4. Venkatesh

    Google’s track record in packaged software is not great. Picasa, Chrome …is that all they got ? And customer service is not forte of Google. Dealing with different OEM’s and delivering to their needs, requires a different mind set. When everything that you give out is free, people don’t care if the product sucks a bit. But when you are dropping $200 on a netbook and the OS sucks, you will hear from the customers. They don’t’ care if the OS is free, they are paying for the device.

    Dell offers Ubuntu as an alternative to Windows. That didn’t go any where.

  5. Why is this relevant? Everyone is working with Google on Chrome OS. Partnerships in this industry around OSes are usually broad affairs involving many companies. It is only the relationship between Intel and Microsoft on desktop windows that is such a closed affair, and now microsoft is a victim of putting all of its eggs in one basket.

    This is about as interesting as watching a kettle boil, the Intel/Nokia deal or watching grass grow….

  6. Doug Mohney

    So what’s Microsoft going to do, blow up Windows and start from scratch?

    Buy Presto and incorporate that technology as an alternative/faster boot system?

    See, there ain’t no easy answer here, and some of this is going to end up being generational; little kiddies getting (cheaper) netbooks running Google Linux or (too many of the) alternatives, not growing up with Microsoft until they hit the workforce and then the Big Bang comes…

  7. So how does not porting windows to ARM help break up Wintel!
    ARM will not be the dominant chip in netbooks, if Intel has something to do with it. In fact, do some research on current and planned shipments of ARM netbooks before blogging.