News & Analysis
Comment
IqbalSingh.Josan
Intel has been doing the right moves with acquisition of McAfee and now Infineon ...
help.fulguy
Are you kidding me? Are there any Guarantees in life? How about Business? This ...
Analysis: Intel's wireless move no guarantee of success
Peter Clarke
8/29/2010 1:15 PM EDT
Repeatedly leaked in advance and therefore fully expected, Intel and Infineon have agreed that the world's largest chip company should acquire the wireless business unit of Infineon for about $1.4 billion in cash.
As a result Intel becomes a supplier of wireless transceivers to numerous cell phone makers and into Apple's highly successful iPhone and iPad products. And Infineon becomes 30 percent smaller than it was, arguing that this allows it to focus on automotive and industrial applications.
My view is that this deal that gives a Intel a $1.4 billion ticket to bet on itself in the convergence of communications and personal computing – but no guarantee of success. And it gives Infineon a cash booster but is perilous for the company – as one executive's restructuring can be another's deconstruction by a thousand cuts.
Turning to Intel: the key piece of evidence is that the company has shown itself poor at competing in any other major sector except PCs.
Or, put another way, Intel's heavy-handed dominance of the systems companies in the PC sector in the 1980s and 1990s, helped make up the minds of a lot of communications OEMs not to deal with Intel. This is Intel's second major tilt at the communications market place but there is not clear reason why the company should be any more successful this time around.
Readers may remember that Intel launched itself at the handset market in the middle part of the decade using an applications processor based on an ARM architectural license. Intel found getting traction with customers outside the U.S. difficult and ended up selling the business to Marvell Technology Group Ltd. in 2006 (see Marvell buys Intel's handheld processor unit for $600 million).
|
|
|
|
|
Silicon_Smith
8/30/2010 10:13 AM EDT
Very well put. Provides the right perspective, and correctly mentions that there is no guarantee for Intel. It is now playing a catch up game, and it does not know which way to run. It does have a direction now, but it will not be able to compete with people who have the bearings!
Sign in to Reply
me
8/30/2010 10:36 AM EDT
Strategic musings aside, have you notices that Intel has not been able to develop a new line of business since they got out of DRAM?
Being a in monopoly, Intel people cannot function in a competitive market environment. Further more, buying a new business that is less profitable than the microprocessor will always lead to internal resource allocation problems. Unless the profit can look good compared to microprocessor in 2 years, they will be thrown out as usual.
Sign in to Reply
peter.clarke
8/31/2010 11:56 AM EDT
I think you touch on a very important point. But maybe this time around Intel management truly believes wireless is strategic?
Sign in to Reply
daleste
8/30/2010 10:58 AM EDT
It is interesting seeing a company try to diversify. Their dominance in one market does not mean sucess in another. No matter what other market they try to expand in, it will always take second fiddle to the PC processor market. If they don't allow another part of the company to have enough priority to grow, it will wither and die.
Sign in to Reply
chanj
8/30/2010 12:20 PM EDT
There are so many giants that fail to diversify from the dominated market. Although, over the last 20+ years, we have experienced success story from various companies which include Nokia and Apple. There are indeed a lot to learn and adopt from the current team to the new market. I agree with Daleste that "If they don't allow another part of the company to have enough priority to grow, it will wither and die." What else is necessary to make the transition to be successful?
Sign in to Reply
eewiz
8/30/2010 3:46 PM EDT
@ daleste & chanj
I would say Intel's acquisition is more on the lines of saving their core CPU business from ARM's attack rather than diversification. Wireless chipset business is highly competitive in itself & profit margins are low compared to Intel's CPU business.
Sign in to Reply
lifewingmate
8/31/2010 3:03 AM EDT
eewiz, thank you for your particular insight on our colleagues' comments. This transaction is a small stepping stone for both organizations.
Sign in to Reply
Warren
8/30/2010 4:14 PM EDT
The reported purchase of content in a segment that is certainly thriving and growing is, and will be, an interesting study for both companies involved. I suppose the impact of the decision, upon both parties, will take quite some time to play out.
Sign in to Reply
goafrit
8/31/2010 8:08 PM EDT
In ten years, Intel will be history in all these news acquisitions. They will be out competed. If you take their market bully, Intel loses bite. I hope this works for them. Buying McAfee and Infineon division does not guarantee success when they have not moved stocks for ages despite dominating the chip market.
Sign in to Reply
help.fulguy
9/1/2010 12:17 PM EDT
Are you kidding me? Are there any Guarantees in life? How about Business? This is the dumbest point I have ever seen on EETimes
Sign in to Reply
IqbalSingh.Josan
9/3/2010 12:30 PM EDT
Intel has been doing the right moves with acquisition of McAfee and now Infineon wireless BU. It seems Intel management has realised, where the future growth lies for the company. Wireless communication and network security are going to be the integral part of any hand held device or any embedded system and SoC, as the world moves towards a proliferation of these devices with connectivity to the cloud.
Well, it is going to be very competitive market and success is not guranteed for any one, because it is entirely new playing field. It will certainly do good for Intel, or rather for any chip vendor, to learn from past experiences so that success can be assured in the new playing field.
Regards. Visit us at uspurtek.com
Sign in to Reply