This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

'Intel Inside' Needs Intel Outside

Stocks in this article: INTC AAPL ARMH DELL HPQ BRCM AMZN GOOG

NEW YORK ( TheStreet) - Intel (INTC) stock was hit hard Monday by a BloombergBusinessWeek report that Apple (AAPL) might use ARM-based chips (like those in the iPad) for future Macintoshes rather than Intel's x86 line.

As sageinvestors tweeted, "Concept of Apple not using Intel chips could be game changer."

Fact is, the game changed long ago. Intel just hasn't changed with it.

A decade ago, while working as a market analyst, I did some interviews that gave a hint of the problem. Intel was offering Chinese Original Equipment Manufacturers, or OEMs, chips and an "ecosystem" of software from which they could create products. Rivals like Broadcom (BRCM), by contrast, were offering chips, designs, and customers. With which company would you rather do business?

The late "Wintel" monopoly -- Microsoft Windows and Intel's x86 chipset -- was based on the idea that companies like Dell (DELL) and Hewlett-Packard (HPQ) would compete fiercely within a market defined by Microsoft's monopoly over operating system software and Intel's monopoly on chips with an instruction set that could run Windows, and was backward-compatible all the way to MS-DOS.

Neither company was prepared for what Apple did during the 2000s. More important, neither reacted to it. Intel was quite happy to get Apple's PC business, even as that became a smaller and smaller part of the whole account. The company did not adapt to the idea that OEMs might want to customize a basic design and separate that process from manufacturing, to gain more control over the final product and how it was used.

Intel's defenders continue to point out the technical superiority of the company's chips, compared with designs based on what ARM Holdings (ARMH) offers. But that's the point. ARM only sells designs. It doesn't make chips. By pushing its own designs, built in its own foundries, Intel lost the plot.

"Intel Inside" was a big name brand in the 1990s, as Intel got PC makers to mention the chipmaker in their ads by paying a portion of the cost. But Intel has a horrible record at making consumer products. Today it only makes things that go alongside a PC, like wireless display systems and expansion modules. It remains dependent on others to define and create its consumer markets.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,888.10 +83.30 0.47%
S&P 500 2,070.45 -0.20 -0.01%
NASDAQ 4,768.4630 +3.0830 0.06%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs