Will Intel MDF Stop ARM Again?
Can ARM really get into 50% of all mobile computers by 2015?
This is what ARM co-founder and President, Tudor Brown, has been saying.
Brown says ARM is in about ten per cent of mobile computers currently and should ne in 15% by the end of this year as tablets grow their share of the overall mobile computer market.
The catalyst for ARM’s increased market share is Windows 8 being ported to ARM.
ARM’s aspirations for mobile computing are reminiscent of its aspirations for ARM-based net books. Many analysts were talking about 70%+ market shares for ARM in netbooks by 2011.
It didn’t happen. The aspirations were dashed by Intel’s grip on the PC industry which, according to the US FTC, led Intel to offer financial incentives to computer makers not to use rivals’ chips.
The incentives, the notorious Intel MDF, were also investigated by the US SEC last year insofar as they related to Intel’s relationship with Dell.
The SEC reported in July 2010 that in every quarter between 2002 and 2006, Dell would have missed its numbers if it had not been for money paid by Intel.
Intel paid the money to obtain exclusivity in the supply of processors to Dell.
In Q1 2007. Intel payments represented 76% of Dell’s operating income.
In 2006 Intel money represented 38% of Dell’s operating profit.
In Q4 2004 Intel paid $25 million to meet a forecasted shortfall in Dell’s numbers.
Another quarter required a $70 million top-up from Intel; and another quarter needed a $125 million Intel injection.
An ‘Opteron Fund’ of $275 million was set up to keep Dell an exclusively Intel house.
When, in May 2006, Dell introduced AMD-based products Intel stopped its payments and Dell profits fell 36% that quarter.
Small wonder that, in August 2010, Chairman of the FTC, Jon Leibowitz concluded: “We believe Intel stepped well over the line of aggressive competition on the merits, and engaged in unfair, deceptive and anti-competitive conduct. The sum total of all this anti-competitive conduct unfairly prevented companies from competing, bolstered Intel’s monopoly, and harmed consumers by stunting innovation, diminishing quality, and keeping prices higher than they would otherwise be.”
Since the FTC judgment, Intel has been operating under a Consent Decree that obliges it to desist from such conduct.
Whether ARM meets its aspirations of a 50% market share in mobile personal computing by 2015 probably depends on how efficiently the Consent Decree is being policed, and how far the distorting market effects of MDF have been removed.
Maybe, this time, things will be different.