Intel Corporation (NASDAQ:INTC)’s outgoing CEO Paul Otellini took the company to greater heights, but he missed one of the biggest opportunities. Intel Corporation entirely avoided the smartphone revolution and played no role in it. Why did a company that dominates the PC market act dumb while ARM processors started dominating the hottest tech devices like smartphones and tablets?
Paul Otellini says it more technically. His excuse is that Intel Corporation (NASDAQ:INTC)’s x86 architecture couldn’t match the performance of ARM processors in power consumption. In fact, the company developed a new architecture only recently that could beat ARM processors on this parameter. But leading British newspaper Guardian said that the actual reason Intel Corporation (NASDAQ:INTC) missed the bus was because it is a prisoner of Wall Street expectations, so it didn’t want to compromise on high profit margins.
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In 2006, Intel Corp. sold its ARM business to Marvell because ARM processors had a much lower profit margin. Just to give you a figure, the licensees of ARM Holdings plc (NASDAQ:ARMH) shipped 2.6 billion chips in the first three months of this year.
Steve Jobs Had Asked Intel To….
This is Otellini’s biggest revelation that surprised everyone. He told that Apple Inc. (NASDAQ:AAPL) co-founder Steve Jobs had asked Intel Corporation (NASDAQ:INTC) to build the iPhone microprocessor immediately after the chip maker started supplying microprocessors for the Mac. That must have been around 2005 when Apple Inc. (NASDAQ:AAPL) was developing the iPhone. The device was launched in January 2007.
Otellini regrets missing the opportunity by saying that the world would have been entirely different if he had said yes to Steve Jobs. Apple Inc. (NASDAQ:AAPL) has sold over 500 million iPhone’s. But why did Otellini reject Jobs’ offer? Paul Otellini said that the price Apple was willing to pay was below Intel Corporation (NASDAQ:INTC)’s forecasted cost. And their forecasted cost turned out to be one of the biggest blunders the company ever made. It cost Intel Corporation (NASDAQ:INTC) a $100 billion opportunity.
Now, Intel Corporation (NASDAQ:INTC)’s newly appointed CEO Brian Krzanich has vowed to rapidly expand the company’s business in the mobile industry. The Guardian says that now Intel has a much bigger challenge of competing with the established ARM players. So, the chip maker will be forced to accept low margins that it proudly avoided in 2006.
Intel Corporation (NASDAQ:INTC) shares were up 0.17 percent to $24.08 at 12:06 PM EDT.