Can Intel keep up in mobile?

So Intel bought the wireless baseband unit of Infineon, which may go some way to explaining why Nokia sold their baseband business to Renesas. I guess Intel could have acquired Nokia's baseband business just as easily as Renesas, but Intel already has relations with Nokia on various fronts, and the one thing that Nokia's baseband didn't provide is relationships inside the hottest tech company on the planet - Apple. Additionally, if Nokia went into the relationship with Intel hoping it would sell it 3G technology as its part of the bargain, then they must have been sorely disappointed when Infineon went and put its baseband up for sale; Intel may have given Nokia the shove out of lust to go after Apple. Infineon's biggest customer for baseband is Apple, and the purchase now gives Intel a foot in the door of Apple's iPhone laboratories.

What would happen, though, if Apple chose to switch to Qualcomm, the undisputed heavyweight of baseband? The answer is quite clear - it would be another blow to Intel's stillborn mobile strategy. Sure, they can sell baseband now alongside the Atom processor, but if their atom mobile strategy falls short of expectations, then alongside the Mcafee purchase, it makes Intel look more like IBM - punching as hard as it can at multiple targets, trying to leave a bruise.

And of their mobile hardware and software? Atom may be going through a lengthy refurbishment inside their offices - see this LinkedIn profile - but will it be good enough? Intel are trying hard to make a dent with Meego but even that won't be a safe haven from ARM since Linaro appeared on the scene.

The first problem Intel may have is they may be trying to aim too low with their next atom, while ARM is very aggressively and deliberately moving up into Intel's coveted server space. ARM already have products that satisfy the niche the current atom is trying to enter better than atom ever can. Can Intel really tune their performance/power to the levels that ARM can, talking as they do to so many partners who use their products every day?

The real clincher is that Intel don't have the upper hand at a time when every ARM partner is going multi-core. 2011 will be the year of the multi-core smartphone, at a time when Intel can't even field a single single-core CPU into a single smartphone. Even if their next generation atom is multicore and manufactured on expensive 22nm silicon at the end of 2011, Intel will have to lose a significant amount of money that they won't be making if they were fabbing SSDs instead, by selling this atom at a knock down price to win customers.

Software may appear to be quite rosy on the surface of the intel architecture. They have Windows, Meego, a port of Android and various other flavours of Linux. Compare this to ARM, who have every mobile OS - some of which are private to particular companies, and will never be ported to Intel - along with Palm WebOS inside HP, the latest leading edge of Android, and Windows Phone 7. The one thing ARM lacks is "big" Windows. Surely a company of Microsoft's stature can port an OS to the ARM architecture? There is absolutely nothing technical stopping them from doing so. Windows is not like an open source OS, dogged by fragmentation. The source trees - for MS's sake - should be well managed, and there be enough expertise within the company to allow for a port to not only take place, but also for a fresh start to be made on a new platform if it so chooses, dumping all legacy code along the way that makes Intel's compatibility with the past not an advantage, but an albatross around their necks. It gives MS the chance to clean up a mature OS and make a clean break on a new architecture. If MS make this port happen - and there's every reason to believe they should be, then I'd be worried if I were Intel. The Nufront 2GHz ARM Cortex-A9 based laptop being shown in that link will be quite favourable up against a common everyday laptop.

Watching the wagons circling around Intel's server business must be equally worrying. Although it may appear that history is not on ARM's side, this may be a misconception and the opposite may be true. It is certain that intel may have a performance edge, but at what price?

Their competition in the server space with AMD is an old show that's been travelling through town for years, and people have seen it so many times that they are getting bored of it. The real disruptive innovation in the server room will be when they can take out the cooling equipment, and get just the right amount of performance to get the job done. Can intel and AMD duck low enough - quick enough - to avoid the punch coming at them from below?

So many companies are now entering the server market with experience of low power design that the inevitable step of evolution will be that the disruption will occur. But it won't just occur in power - it will also occur on price. Companies that rarely charge over $50 for a chip will now be glad to be selling chips into a new market at 4 times their traditional going rate, but still undercutting Intel by as much as 5 times. Imagine the impact on the bottom with every server sale lost to one of these new competitors? How long will it take before the investor community starts worrying about the effect this degradation in price will have on their investments?

People often say that the one thing that matters little in the equation of running a server farm is the cost of the CPU, in comparison to the cost of the electricity. That's all well and good from the server makers perspective, but that argument doesn't help Intel, who wants to maintain their high value margins. If someone can sell a product that Intel can't match on power that removes the largest expense in the data center, then where else can that leave Intel? The erosive effect on Intel of a lost server sale is much worse than the accretive effect in the balance sheets of their competitors.

Their purchase of Mcafee looks more and more like Intel is aligning itself with a new world where they need to diversify out of the microprocessor business. There doesn't seem to be much of a future in software based security for them either, though, if you look at a technology that is hiding secretly inside every single one of those high end smart phones - and the introduction of another technology demo by non other than the CEO of Google.

TrustZone is a security feature built into the hardware of every ARM CPU in every smartphone. It creates an unbreakable layer at the system level in the silicon where there are distinct secure and non-secure zones for peripherals, memory, even the architectural state inside the CPU. There is secure software that runs only in secure state, and manages accesses to the secure world. This is a little known technology outside of semiconductor circles, but one that ARM will surely be looking to tap as more payments are made through our mobile devices.

The volume of payments to be made through mobile devices are likely to skyrocket, thanks in no small part to Google's Android 2.3/3.0/gingerbread. In an interview, Google CEO Eric Schmidt announced that Gingerbread would have Near Field Communication (NFC) capabilities, allowing it to read and write information back and forth between terminals and other devices through the air.

The encryption and NFC blocks in the silicon that manage these transactions - and the keys that are used for encryption as well - will all be secured under ARM's TrustZone system security. Even the screen will be secure and the part of the OS that listens to the screen taps, e.g. turning them into numbers for a PIN - cannot be spied by malicious software, because only trusted software is inserted and can operate in the secure zone from the point of manufacture onwards.

Intel's Mcafee brand is a hackneyed dinosaur of yesteryear, where such refined security technology never existed, necessitating a brute force fix in software. When security is built into the silicon, this becomes unnecessary and it is up to the silicon provider to secure the system, not the OS.

TechnoBlogOCrat is written by an insider in the technology industry. It locates the most novel uses for technology, and follows the latest major stories.