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Obscure British computer chip designer looks to take on Intel

Christopher Werth Feb 22, 2011

Obscure British computer chip designer looks to take on Intel

Christopher Werth Feb 22, 2011


Kai Ryssdal: Mobile is the name of the game in online access nowadays. Delivering the Internet on the move is the holy grail for advertisers and content providers.

It’s obviously big for device makers, too, and for the companies that make the guts of all those smartphones and tablets. Inside every one of those things is a computer chip, chips that can be different, it turns out, depending on whether they’re going in desktop computers or things that you can carry around with you.

And therein lies the business story. Christopher Werth reports.

Christopher Werth: No doubt you’ve heard this before:

Intel jingle

It’s the jingle at the end of every commercial for Intel, the company that dominates the computer chip industry. Its processors power over 90 percent of all the world’s personal computers. But so far it’s struggled to compete in the mobile side of the market against this British company.

Tudor Brown: Advanced RISC Machines. No, we don’t have a jingle yet.

If you didn’t catch that that’s Advanced RISC Machines, although as the company’s President Tudor Brown points out, these days it’s simply known as ARM.

Brown: Many people have never heard of us.

Which is surprising, because ARM chips are in over 85 percent of all mobile and smartphones. It also powers Apple’s iPad.

Brown: And that obviously has been a very fast-growing market.

ARM’s advantage over Intel is that its processors consume a lot less power, which is essential for tablets and mobile devices where battery life is everything.

Now, ARM chips could also be coming to a PC near you. For decades, Microsoft Windows has run almost exclusively on the Intel platform. But for the first time, the upcoming Windows 8 will operate on both Intel and ARM-designed chips.

Lee Simpson: In other words, that invites the chip makers for the mobile world to jump over the wall and start designing for PCs.

Lee Simpson is an analyst with the investment bank Jefferies. He says that shift means ARM now poses a significant threat to Intel, which he describes as a bully that uses its dominance to charge higher prices.

Simpson: The bully gets a punch in the nose at the playground, effectively, is probably the best way to think about it.

And the more ARM spars with Intel, Simpson says, the better.

Simpson: We stand to win here as consumers.

Competition between the companies could lower prices for computers. But Simpson is quick to point out that these are two very different contenders. While ARM simply designs its technology, and then licenses it off to other chip makers, Intel makes and sells its own products. Last year, Intel took in more than 10 times as much revenue as ARM. And it invests billions of dollars a year into research and development, or pumping iron, as Simpson might put it.

Simpson: Intel, if you like, is just a fully muscled beast.

And while ARM leads in lower power usage, Intel leads in faster processing speeds, essential for PCs. That said, Intel spokesman Bill Calder says the company is fully aware of the challenge ARM poses.

Bill Calder: We don’t take this lightly and we’re going to compete vigorously to defend our position in the traditional computing segments.

Intel is punching back. It’s testing a new chip for phones — trying to take on ARM in the mobile end of the market. And Intel has one other important advantage: name recognition.

Intel commercial: We are Intel, Sponsors of Tomorrow.

Vince Mitchell is an expert in marketing at the Cass Business School. He says for ARM to fully compete, it may need to adopt Intel’s style of branding that says this microchip is more than just a component.

Vince Mitchell: This component has a personality, and that personality is helping to benefit you and what you do in your life.

So it looks like ARM may have to finally come up with its own jingle after all.

In London, I’m Christopher Werth for Marketplace.

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