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cdhmanning
wilber_xbox
i think they are too arrogant (due to their success and lack of competition) to ...
Intel's embedded chief has big expectations
Dylan McGrath
5/23/2011 12:01 AM EDT
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.
Next: The Wind River advantage
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.
Next: The Wind River advantage
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Les_Slater
5/23/2011 12:04 PM EDT
It's good to hear Intel is taking such a long term strategy to market.
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casner
5/23/2011 2:52 PM EDT
It would be, but they just EOLed the chip they convinced us to go with in 2009. I'm not convinced they can be trusted for the next design.
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FPGA_BRAD
5/23/2011 4:11 PM EDT
It is really rare for Intel to do that with the Embedded Roadmap parts. Did you choose a part from the Embedded group? If not, it isn't Intel's fault here.
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abraxalito
5/23/2011 11:24 PM EDT
Whose fault it is is totally beside the point. They lost a customer.
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cdhmanning
5/26/2011 9:56 PM EDT
No. They normally sell off or shut down the whole division.
What happened to 8080, 8051, 80251, USB parts, flash, XScale,...
Not to mention the companies they have bought, screwed up, then sold off like Dialogic.
Like many of these companies, Intel takes many of their strategic cues from Wall St. When it is fashionable to diversify, they buy into a new market. When it is fashionable to "focus on core competence" they sell off/kill parts of their business. Wehn it is fashionable to offshore they send fabs and development offshore...
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abraxalito
5/23/2011 11:19 PM EDT
Right, losing customer trust is death to a company. Intel does not realise this yet.
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wilber_xbox
5/31/2011 11:07 PM EDT
i think they are too arrogant (due to their success and lack of competition) to realize that.
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Wilton.Helm
5/23/2011 3:30 PM EDT
I started using Intel CPUs in embedded designs in the early '80s. While I still do a lot of embedded work with x86 CPUs, I stopped using Intel CPUs in the '80s also and haven't looked back.
Back then the 8088 ran 4.77 MHz and required special clocking and consumed lots of power. NEC made a compatible 10 MHz product that consumed less power and had simpler clocking. When AMD came along with the AM186 line at up to 50 MHz it totally blew Intel out of the water.
These are anecdotes, but they illustrate a point. Intel never was competitive in the embedded market, on performance, price or power consumption.
Their business plan wasn't compatible with the Embedded market, either. In the embedded world (except may be cell phones, etc) a chip has to be available for 10 to 20 years! They have focused on strategies that released new hardware every year and supported old stuff for only about three. A lot of embedded products don't get redesigned for 10 years and the manufacturer has to support existing products in the field for anouther 10 years. That's a model Intel has a difficult time adjusting to.
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daleste
5/24/2011 11:19 PM EDT
10 to 20 years is a long time in this industry. Chips from that long ago are hard to process today because the fabs keep moving forward with new processes and the old ones are discontinued. It is important to partition your system in a way that standard products can fill most of the sockets. Full custom can cause these kinds of issues. They may redesign it in the new process, but designers always like to make "improvements" when they do that.
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Les_Slater
5/23/2011 3:55 PM EDT
I started using Intel with their charge coupled shift registers. Don't know what became of that product line. Their early processors like 4004 and 8008 were pioneers. They were almost exclusively embedded. By the time they got to the 8085 the Z80 already took the world by storm. I did embedded design with 8085 and had trouble with clocking reliability. Intel suggested a kludge work around that worked better but not perfect. NEC designed their 8085 to work to the original 8085 clock spec, no kludge necessary. Intel went off the qualified list.
Over the years worked with their 8048, 8041, 80188 and so on. They were there first and I presume made money on those parts. The point is that they designed many parts that were good to design in. If they ended up with not the best performance, power, cost, reliability etc, it didn't really matter.
In recent years Intel has honed performance, including power to such an extent that they are class leading in particular architectures. They missed the boat by not taking ARM on at an early stage. At this point though I wouldn't dismiss Intel.
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cdhmanning
5/26/2011 9:58 PM EDT
Intel has a strong ARM offering with StrongARM (bought from digital) then XScale/PXA. They sold it to Marvell.
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LarryM99
5/23/2011 5:30 PM EDT
As far as I have seen Intel has run hot and cold over the embedded market. As stated above they had early interest, but when they acquired the StrongARM asset as part of their Compaq buyout they couldn't have cared less. At that point the PC was king. Now that that crown is becoming tarnished they are suddenly interested again. How long will that interest last this time?
Larry M.
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abraxalito
5/23/2011 11:17 PM EDT
"It's really about building an annuity business..". No, Steen its not, its about giving customers what they're asking for. This statement is just a sign of Intel laziness - they want to milk a cash cow rather then innovate.
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abraxalito
5/23/2011 11:26 PM EDT
ooops, sorry for the poor spelling (we need editing facilities!). Should have written 'Steenman' and 'than'.
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agk
5/24/2011 1:48 AM EDT
There is a lot in embedded market rigt from few cents to ten's of $.A wide product range with supply available for about 10 years is the need for the embedded market place. Intel is focusing only to narrow range of applicatons in this market. To have a highly sucessful story Intel needs to have a wider coverage wrto applications and price.
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Cristi.C
5/24/2011 6:44 AM EDT
To all deniers, Intel is for good in the embedded market. And the reason is pure financial. The world of PC as a standalone equipment is shrinking or remain constant at best. You will buy a multicore tablet or a gaming console. Buying a massive PC to cover as many application as possible in the house: multimedia player/recorder, gaming, office, net, is no longer cool nor effective.
Previous comments just don't realize that in 4 years, since 2007, Intel arrive to 1.7 B$. That is huge. Growing like that and in a matter of 2-3 years, they will eat Freescale's lunch. The big ones like TI or analog players NXP or smaller niche players like Cavium will survive (unless bought).
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dylan.mcgrath
5/24/2011 11:35 AM EDT
Just for clarity, $1.7 billion revenue in 2010 was not just for the embedded group. That was the combination of revenue generated by the embedded/comms group, the digital home group and the ultra-mobility group. Intel, as far as I can tell, does not publicly split them out finer than that.
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cdhmanning
6/1/2011 12:26 AM EDT
Sure there are all these things, but how many will use Intel parts?
Why use Intel parts in a multicore tablet, multimedia player or such?
Intel has tried to play in embedded space and has pulled out many times. It seems they are committed to only selling high-margin parts. Most embedded parts are not high margin.
Intel have a problem: Their investors expect growth to sustain high stock prices. Intel pretty much own PCs and servers, so they need to break into other markets to continue to grow. Unfortunately for them embedded is a low-margin game and you have to work a hell of a lot harder to get the same returns.
This is something Intel just does not know how to do, which is why they pulled out of embedded before.
Intel's "It's really about building an annuity business.." comment shows that they are used to being top of the pile and getting business come to them. That attitude is just not going to work in the embedded market.
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Les_Slater
5/24/2011 8:37 AM EDT
I agree with most of what Cristi. C above says. One also has to consider their process and other technological strengths. Intel has no choice but to bring their technical and financial weight to bear on markets that will be growing rather than those stagnating. Embedded is a rather easy target. They do have some time.
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Charles.Desassure
5/24/2011 8:53 AM EDT
Wow! Intel's embedded business has a compound annual growth rate of 18 percent…Wow! With that kind of news, Intel should continue down this path.
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Les_Slater
5/24/2011 11:41 AM EDT
dylan, my guess is that Intel is talking about a pretty small base when referring to all their nice growth statistics. This does not however imply that this growth is meaningless. From the article it seems that Intel is taking a long term perspective here and is being patient.
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dylan.mcgrath
5/24/2011 12:50 PM EDT
@Les_Slater- No doubt. Steenman acknowledged that the embedded business is growing faster than Intel's core businesses, in part because it's growing from a much slower base. But I fully agree with you. It's small potatoes in comparison to Intel's massive PC MPU business, but it's certainly not meaningless.
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Les_Slater
5/24/2011 1:02 PM EDT
dylan, I find it impressive that Intel is not targeting immediate revenue growth but looking strategically at a longer term. Intel is one of the few companies in this industry that can afford to do that.
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awneil
5/24/2011 7:41 PM EDT
They still seem to be thinking of "embedded" only in terms of "embedded PC"
That is really a rather thin slice of the market.
The big volumes are at the microcontroller end of the market: even though Intel has disowned the 8051, it remains a very widespread architecture.
And whatever happened to the 8096, 80196, etc?
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abraxalito
5/25/2011 7:24 PM EDT
... or 80960, or StrongARM or PXA. Let's face it, Intel's heart has never been in embedded. I guess because its not lucrative enough.
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JMUNN
5/26/2011 4:11 PM EDT
I have personally seen Intel drop/sell-off the embedded communications market too many times (3-4 times) to trust them again unless they offered a very significant advantage and no disadvantages especially cost. Let's not forget the Network Processor "sell-off" along with the other embedded processor lines.
They ALWAYS say they are in it for the long run and then burn you 3 years latter.
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km90
5/27/2011 8:16 PM EDT
with steenman now at the helm you can rest assured the embedded ship will hit the rocks...first class idiot driving....
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Sheetal.Pandey
5/28/2011 3:21 PM EDT
yes Intel is not very strong in embedded market. May be they are working on right strategy.
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