For all the talk about Intel struggling to take a bigger chunk of chip sales to the embedded market from ARM-based devices, the general manager of Intel's embedded unit says the company has grown its embedded business significantly in the past few years by taking market share—a trend he predicts will become more pronounced in the years to come.
Intel set a record in 2010 with $43.6 billion in sales. But 92 percent of that revenue came from chips for PCs and servers. Combined, Intel's Embedded and Communications, Digital Home and Ultra-Mobility groups accounted for only 4 percent of the company's 2010 sales, or about $1.74 billion.
But according to Ton Steenman, general manager of Intel's Embedded and Communications group and vice president of the Intel Architecture group, over the past 10 years, Intel's embedded business has grown at a compound annual growth rate of 18 percent—more than the overall market and faster than Intel's overall growth.
"We clearly have gained market share," Steenman said during a recent press briefing in San Francisco.
What's more, Steenman said that after growing revenue in embedded 35 percent in 2010 compared to 2009, the unit expects sales to grow about 25 percent per year over the next three to five years.
Why? Steenman said seeds planted in the form of design wins over the past few years are starting to bear fruit. Lead times on embedded products are longer than those in the PC and consumer electronics markets—upwards of 18 months to several years. But once the products finally hit the market, Steenman said, they hang around for five to 10 years, if not more. Thus, design wins scored by Intel late last decade are paying dividends now and should continue to do so for the foreseeable future, he added.
"It's really about building an annuity business," Steenman said. "When that business builds up, you've got that long tail of revenue. That's where we've seen a lot of our growth."
Over the past couple months, Steenman—who took over Intel's embedded group late last year and has been with the company since 1982—has been talking up Intel's work with the Addias shoe company to build a "virtual footwear" retail kiosk. He's also been touting Intel's work with a company called Respondesign to build a connected exercise gym in recent appearances, including at International Data Corp.'s Smart Technology World last month.
In these cases and others, Steenman said, Intel engineers worked with the customers to develop a concept from the ground up. He acknowledged that Intel must pick its spots in such collaborations, which involve engineers and other resources. He said the company allocates resources to such products not necessarily because of the volume of chips that that particular customer may buy, but instead chooses them because they may serve as examples for other companies that may develop similar products.
"It really helps us to make it clear how our technology can solve some of these problems," Steenman said.