> Thirdly, the success of an Apple phone would not have been hard to predict. In 2006 Apple sold nearly 40 million iPods.
I don't like how this whole article is framed as how obvious it was that Intel made a huge mistake. Hindsight is 20/20, there was no such data available.
It was not predictable that the iPhone would be a success, especially not to a degree of Intel sacrificing every profit calculation in mere "hope" of huge volume later.
The numbers were there for the iPod. Intel could have just pitched to become the SoC-supplier for the iPod and didn't do it. They surely crunched the numbers several times and it didn't work out.
The first iPhone was then built on the iPod platform with an Infineon modem, so the better question to ask is probably: Why wasn't Intel interested to supply the CPU for the iPod?
No, it wasn't obvious. But it coming from Apple, who choose to go after the portable music player market ignoring the new hotness PDA and that ipod segment becoming the majority of its market cap. When that happened, as the CEO of #1 cpu maker, you have to spend more than a cursory effort into what is Apple's bet on this. Even to me, a nobody, had guessed at the iphone rumor, before the magically reveal, that it will be become Apple's main product, way surpassing even the ipod. Apple choosing to ignore the PDA market gave me an almost certain conclusion that they only ignored it due to technical challenges to produce a rivaling product that they were proud of and after years of wait, they were finally able to produce it.
So yes, hindsight is 20/20, but as CEO of intel, he failed miserably from not putting more effort into the decision making.
> Even to me, a nobody, had guessed at the iphone rumor, before the magically reveal, that it will be become Apple's main product, way surpassing even the ipod.
At the time of discussion with Intel, it was not an explicit phone project, it was _A_ Apple project. Over the years, Apple spent millions on projects to disrupt some markets which either didn't materialize at all or ended up not disruptive/competitive in the market.
There are countless examples of this. Some Moonshot where Apple thought they knew better what the market want to just figure out that it doesn't work.
The project Steve Jobs was talking about could as well have been one of THOSE projects, and Apple tried to get a established and well-working component at a price which would potentially destroy Intels business with its other customers.
> but as CEO of intel, he failed miserably from not putting more effort into the decision making.
But who said that he didn't put effort in the decision making? According to Otellini himself Apple was demanding a price lower than Intel's COST.
At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it.
I think the gap was market size estimation. Intel was (is?) famously not interested in businesses that can’t generate $1B of incremental revenue in the first year or two.
iPhone was predictably huge, but I don’t think it was a sure thing it would be this huge. And Intel’s finance-driven culture probably did the math and decided it was better to pass because of the uncertainty. Finance hates uncertainty.
Don't forget that Apple's previous phone effort in 2005 was a collaboration with Motorola on the ROKR, aka "iTunes Phone", which was a normal motorola phone except it could sync with iTunes and play media like an iPod
I agree. Apple was ascending again and everything they did seemed to be a hit. I think the real question is how large of a bet did Intel really need to make. No it might not have made sense on immediate ROI alone, but Intel had only to defend its position.
Intel misjudged how much the part would cost to make. That mistake led to a huge missed opportunity.
> Even Otellini betrayed a profound sense of disappointment over a decision he made about a then-unreleased product that became the iPhone. Shortly after winning Apple's Mac business, he decided against doing what it took to be the chip in Apple's paradigm-shifting product.
"We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it...
At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it...
And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought."
> Intel misjudged how much the part would cost to make
I just don't buy it. If Intel realized in hindsight that they could price out a competitive chip, why didn't they sell it to Android manufacturers? So much effort goes into making us lament a world where Intel iPhones existed, but I don't even see the appeal. Intel didn't have a vested interest in ARM (an attitude persisting to this day), they weren't going to acquiesce to Apple's desired margins then or now, and Apple would always have the logical opportunity to cut out their chip middleman. It's about as appealing as a shit sundae sat on a trap door.
> That mistake led to a huge missed opportunity.
Again, was it really that huge? After licensing cost to ARM, core design fees and the bulk deals worked out, I can't see Apple allowing Intel room to breathe. From a certain perspective, it almost seems like Intel never had any desire to genuflect for Apple and only signed the Mac deals to proliferate their existing design catalog. I can't say for sure what the financials worked out to be, but considering Mac market share at the time it makes sense why Intel wasn't super motivated. If we could look at a modern iPhone bill-of-materials, I don't think either of us would feel bad for Intel.
You're quoting all the stuff TFA tries to debunk. Intel simply didn't have anything to offer at that point. XScale already lost edge and about to be sold, a matching x86 chip not on the horizon yet.
The PDA/Tablet market was a reasonable size, the XScale CPUs were the highest performance ones in this sector, Intel could have seen that this market would grow.
In 2006, Intel supplied their XScale design to Palm for the Treo 700, to Blackberry for the Pearl and Curve AND to HTC for use in the XDA/MDA Windows Mobile line, in 2006 arguably the much bigger wins as all those were established constantly-growing product-lines already on sale globally.
Apple demanding a (probably much) lower price-point to have the SoC applied in a mysterious unknown project without a volume-commitment could as well have destroyed the business and profit-margin for the entire Xscale business for Intel and its other customers...
The Atlantic article on the interview with Otellini (which this article linked to), was very clear that Otellini wanted to say yes to the iPhone project but was swayed by data:
> "The lesson I took away from that was, while we like to speak with data around here, so many times in my career I've ended up making decisions with my gut, and I should have followed my gut," he said. "My gut told me to say yes."
It's not even sacrificing profit; it's actively reducing profits by selling at a loss.
Did you miss the part of the quote where he shares that Intel's cost estimate was wrong?
Also, after the magnitude of their error to get in at the ground floor sank in, Intel had no problems with selling x86 chips at a loss trying to break into mobile devices.
The iPod Classic when the iPhone came out had a CPU estimated to run around 80 Mhz vs. a 600 Mhz chip underclocked to 400 Mhz in the original iPhone. The software is also completely different. They didn't build it on the iPod platform at all, though I believe that was considered in the early stages of the design.
Apple used a newer generation of Samsung's CPU used in the iPod to develop both the iPod Touch as well as the iPhone, both introduced in 2007.
That's also a reason why the iPhone was not designed around a more power-efficient SoC which combined the CPU and the cellular Modem into one package: The Modem was the add-on to the architecture which turned the iPod Touch into that exclusive Phone they built for AT&T.
The pre-Touch iPods (the iPod Touch only came out after the iPhone) used very small chips; this just wasn't an area Intel had an offering in at all, and it would have been very low margin.
> The first iPhone was then built on the iPod platform
Eh? No it wasn't. The iPod that existed when the iPhone came out was an 80MHz ARM7. The Touch (a 400MHz ARM11) came out a few months after the iPhone, and was essentially an iPhone with the cellular equipment stripped out.
> I don't like how this whole article is framed as how obvious it was that Intel made a huge mistake. Hindsight is 20/20, there was no such data available.
Possibly because Otellini framed it as such?
The latter part of the article answers your other points.
Otellini's gut feeling was to go for it, the numbers didn't pencil and he decided not to and then when it went on the market the volumes were two orders of magnitude higher than estimated. Should've went for the reality distortion field... as you said, hindsight.
In 2006, Intel supplied their XScale design to Palm for the Treo 700, to Blackberry for the Pearl and Curve AND to HTC for use in the XDA/MDA Windows Mobile line, in 2006 arguably the much bigger wins as all those were established constantly-growing product-lines already on sale globally.
Apple demanding a (probably much) lower price-point to have the SoC applied in a mysterious unknown project without a volume-commitment could as well have destroyed the business and profit-margin for the entire Xscale business for Intel and its other customers...
Hindsight is also where you can fudge the numbers to justify your mistakes. Whenever you're calculating things, there's always more optimistic and more pessimistic assumptions. Given that competitors were able to supply Apple, it seems slightly dubious for Intel to say that there was no way it'd be profitable no matter what the volume.
Given Intel's fat margins at the time, it seems like a more likely explanation is that it wouldn't meet their margin expectations and that they wanted to keep showing their investors the great results they'd been used to in the desktop/server/laptop markets that Intel was truly dominating at the time.
Also, when you're a company, you have limitations on how much you can do. You can hire more people and build more fabs, but it can be hard to grow your capacity. Even looking at TSMC, Apple has been using all of their 3nm capacity for the past year. If Intel was thinking about where to allocate its scarce resources (whether that be engineers, fab capacity, etc.), it might make more sense to concentrate on the areas where you're going to have a significant advantage and higher margins - unless you really know that Apple is coming out with something world-changing, which you wouldn't know in advance. Intel was still making enormous gains in the x86 market at this time and giving users big reasons to keep upgrading their machines. 2008-2010 Intel doubled their performance. The point is that there was certainly an opportunity cost to betting on Apple's new mystery device where they wanted a low-margin chip and at the time Intel's x86 business was booming.
I think there can be other issues as well. Why didn't Intel become the iPod SoC? Maybe Intel didn't have such a low-spec'd part for that purpose. The XScale processors were higher spec'd and Apple certainly didn't need that kind of speed for an iPod. Even with the iPhone, the article notes that the Cortex A8 designs were closing the gap with Intel's XScale, but the iPhone didn't use a Cortex A8 until the iPhone 3GS in 2010 (the original and 3G used older ARM designs). So part of the issue might have been that Intel's XScale processors were powerful beyond what Apple wanted to pay for at the time and it would have cost Intel money to make what Apple wanted (a low spec processor) while others already had that available.
I think it's also hard to say that this decision meant that Intel lost out on the iPhone. Realistically, if Apple was going with an ARM architecture, Intel would have lost the iPhone in a few generations anyway. It's not like Samsung got to keep Apple's iPhone CPU business. Maybe Intel could have kept Apple's business with heavy investment in XScale, but Apple bought PA Semi in April 2008 (less than a year after the original iPhone launch). So it seems like Apple was looking to build their own processors even before the iPhone became huge (the original iPhone only sold around 7M units while iPods were selling around 50M/year at the same time). Even if Apple had chosen XScale, Intel probably would have lost the iPhone business.
And Intel probably wouldn't have made up for it on the Android side. Qualcomm's control of CDMA (important for the US) and subsequent domination of high-end modems was used to reinforce their CPU business. Maybe Intel could have overcome that, but we've seen that modems are a hard business - Intel failed in its modem business and while Apple has seen huge success in their CPU business, they haven't had the same success in modems. To put it in perspective, Apple bought PA Semi with 150 employees in 2008 and 4.5 years later had new custom Swift cores in their A6 CPUs. Apple bought Intel's modem business with 2,200 employees in 2019 and 5 years later they'll be introducing the iPhone 16 still on Qualcomm modems.
So did Intel truly miss out on the iPhone? Maybe somewhat. However, it kinda sounds like Intel's XScale business was too high-end and even if Apple had selected XScale, they were still going to be making their own CPUs given that Apple could license the ARM architecture (unlike x86). There certainly was some space for Intel, but it would have been a difficult fight even if Intel were committed to it. Qualcomm's strategy of tying together its patents, CPUs, and modems to reinforce each other is hard to overcome.
In hindsight, sure: the mobile market would have been worth fighting for. But it seems like it would have been a tough market to crack into given what Intel had (a processor too high-spec'd for what the market wanted at the time) and the fact that vendors could easily switch away from Intel to any number of other ARM manufacturers, including ARM's reference cores. If Intel had bet big on mobile, they probably could have made it a good business for them, but it would have been a big gamble for a market without good barriers to entry and where competitors like Qualcomm might have their own barriers.
> So it seems like Apple was looking to build their own processors even before the iPhone became huge
So but possibly only because they had no alternatives. After all building your own chips is a huge long-term investment with all of risk. Intel fully committing to XSCale would probably have significantly altered that calculation.
> license the ARM architecture (unlike x86).
They still had to design their own cores which isn't cheap or straightforward. Something even Qualcomm struggled a lot with (and ended up failing at).
> So it seems like Apple was looking to build their own processors even before the iPhone became huge (the original iPhone only sold around 7M units while iPods were selling around 50M/year at the same time).
This is almost certainly true once they decided that iOS was going to be based on MacOS. Those software design choices had to have been based on a very aggressive hardware roadmap
To be clear the article doesn’t frame it as being clear it was a huge mistake at the time - rather that it’s clear now - and seeks to explain why that decision was made.
>I don't like how this whole article is framed as how obvious it was that Intel made a huge mistake. Hindsight is 20/20, there was no such data available.
Intel is a big reason things are so great, but also so crap, in computing.
Try to remember, the computing revolution didn't start in the 21st century. It's just got incredibly insane, in the 30 years of personal computing.
>Why wasn't Intel interested to supply the CPU for the iPod?
Because Intel and Apple had beef, long-since, already. The iPod was just another mp3 device, until - suddenly - it wasn't.
The writing on the wall for personal computing has been there for all of the computing pioneer companies .. the fact that Intel and Apple didn't get connected, is as much about the fact that these people were really in competition with each other from the beginning.
Apple was always going to own its own fabrication capabilities. From the outside of the box, all the way in.
Intel wanted all the other boxes, not just Apples, too ..
> Apple was always going to own its own fabrication capabilities
I'm not sure that was a foregone conclusion back in 2005-2007. If anything Apple was forced to design their own chips because nobody else was able to offer what they wanted. M-series is a thing because Intel couldn't build the low-power/higher-performance CPUs that Apple wanted.
If it wasn't the iPhone, it would have been something else. The logic that drove the decision and not the end result was the undoing of Intel and the logic would have remained the same as long as the culture remained the same.
I worked for an Intel spinoff whose CEO was a former high-level Intel exec from the 1990-2010 era. Internal goss attributed much of Intel's decision to stay out of the iPhone to him... there was a supposed quote that went something like "we make chips for computers, not g*d** telephones!"
As the tale went, he was sent out to this doomed-from-birth spinoff as a "sunset cruise" to basically force him into retirement (for this bad decision) without the bad publicity of a public head-chopping.
When I think back to that time period (serving tables, T9 texting in my apron on my Blackberry Pearl lol) I remember the touch screen being a tough learning curve for the majority of people.
The first iPhone was also gigantic, hideous, couldn't send pictures - something even a cheap $20 Samsung from the carrier could do - and it also didn't sell very well. People were more into "The Google phone", the Sidekiq, or the latest Razr. Think it wasn't til the 3GS came out with a ton of marketing push that it started to gain popularity, and it ended up having more to do with the App Store than the hardware - people did not like those touch screens for the first several years of smartphones. They came out at the height of texting and ringtone era, and we were pretty set in our ways, and it took years to change that behavior.
I think the App Store resonated a lot more with people back then rather than the iPhone as a device. MySpace was still around, the Bush-era recession had everyone looking for a side hustle. Most young/ambitious people I was around in "tech" (which was effectively HTML-based SEO and WordPress design) had a Blackberry and a side business. This kid I worked with became "rich" from an iPhone app that just combined other iPhone apps haha. Loved that time period. Graffitio!
Would have been very hard to predict the success of the iPhone, even as I was already entering orders for customers on a fully touch screen Aloha point-of-sale long before iPhone.
You’re right. The first iPhone was so bad that “the Google phone” was delayed by many months as they scrambled to completely redesigned their launch phone to be multitouch instead of keyboard.
The razr2 sold 5M units and the sidekick sold 3M to iPhone 1’s 6.1M.
The n95 did outsell the iPhone with 10M units but Nokia had a massively more mature sales pipeline whereas Apple had to build out carrier relations. It also shipped before the iPhone was even announced which gave it time to accumulate sales.
Everyone in the space though recognized how big it was because carriers were going out of their way to try to get it on their network (since at the time Apple was doing 1 carrier per country). Apple got lucky that AT&T bought Singular which made the iPhone accessible to many many more people.
3GS’s 37 million units was because Apple had 2 years to build up manufacturing capacity and carrier sales channels to match demand for what had become clearly a smartphone revolution.
To be honest, I think you're badly misremembering that era. People were calling the iPhone "the Jesus Phone" after the original keynote announcement, the lines on launch day were around the block, and upon release, there were definitely tons of flame wars around physical vs. touchscreen keyboards but there was a widespread consensus that the iPhone's predictive typing correction was pretty good and that the touchscreen was miles ahead of any similar-equipped phone (many of which were still resistive, ugh!).
It definitely didn't get mainstream popularity until the 3GS/4 and the App Store, but people were definitely interested from day 1. Don't forget that early builds of Android looked much more like a Blackberry clone until the iPhone was announced, and then Google immediately scrapped everything and rewrote it from the ground up to be iPhone-like.
> I think the App Store resonated a lot more with people back then rather than the iPhone as a device
You are forgetting, there was no App Store when the iPhone launched. Apple was originally against the idea of Apps. The App Store launched a year later, with the iPhone3G. Yet the iPhone was wildly popular not just from the day it launched, but from the day Apple first demoed it.
I think what caught people's attention with the iPhone is that it's one of the first phones where you could easily browse websites from your phone in a way that didn't feel like a gimmick.
Other phones had web browsers, but they only really worked on special mobile versions of websites. They were also slow and painful to use even on those mobile optimised websites.
Then iPhone came along, and Apple had someone managed to squash a full desktop web browser on it. It did a half decent job of reformatting desktop-only websites to fit on the screen. When pages didn't reformat, the new touched-based panning and pinch-to-zoom gestures allowed you to still experience them with ease.
And Apple managed to make the whole OS feel responsive, despite using the exact same hardware as their competitors.
> Think it wasn't til the 3GS came out with a ton of marketing push that it started to gain popularity, and it ended up having more to do with the App Store than the hardware - people did not like those touch screens for the first several years of smartphones. They came out at the height of texting and ringtone era, and we were pretty set in our ways, and it took years to change that behavior.
This was not true per my memory. Literally everyone I knew in their 20s and 30s in NYC was switching to the iPhone 3G as of summer 2008. You had to wait in line to buy it for months.
Unlimited 3G + GPS + touchscreen browser was what made it explode. Broadband internet, in your pocket, with mapping capabilities. It felt like the possibilities were limitless, with new apps and functionality being discovered and released daily.
Yea it definitely felt like at the time Intel was in a tough spot.. while the article is stating that the narrative about the margins being narrow for arm chips so Intel was nervous about the area, one thing I can attest to is that even if that narrative was false when it comes to Apple, competitors of Apple at the time definitely would be assuming that if Intel went into that space that they gave Apple a good price, so just the perception of them selling a good chip to Apple could have hurt Intel's fat profit margins. Like Apple was selling phones for the same price Intel was selling chips for -- so maybe the higher cost could be justified by Apple who knows, but the perception of Intel's profit margin they are willing to live with impacts their negotiations with other customers dramatically as well.
Well volume is an issue. Even a low margin part which has very high volume sales can help you afford to build leading edge Fabs, and keep process technology leadership.
Apple can only do that now, because of the billions they have made on the iPhone, plain and simple.
And - more importantly - they were well geared to do that, since the beginning of computing.
There being no money in SoC's, is because they're all being made across the other side of the planet, mostly, from the intended final users.
If Intel were really 'leading edge', they'd have made desk-side custom fabrication a thing in the makerspace already. Such that I can, as a computer user, print 10 or 20 or X little chips, for my own specific purposes, non-mass-market.
This would be a truly revolutionary adventure from a 'grandfather of computing' style company.
Alas, the x86 is, indeed, everywhere. Grandfather Intel has a massive garden.
If only the SoC battles were truly localized, and a real computing revolution can happen (before its too late).
You should have a locally-built device in your hand.
The mid to late xscale era got very weird. Between the 90s and early 2000s handheld processors were growing in leaps and bounds. At the height in 2004 devices like the Dell x50v were shipping with 624mhz xscale chips with a dedicated GPU with 16MB of VRAM. Then they just stumbled. Later devices dropped the maximum clock speed, dropped the dGPU, even dropped the screen resolution from 640x480 to 320x240.
I had a Dell Axim (not sure of the spec), I'm pretty sure Dell gave it away for buying a couple Dell branded printers or something like that. I also had an HP iPaq which was pretty similar (I also think I got Linux running on that one somehow).
It could do a few fairly impressive things, like running emulators as you mentioned. But I think the problem with those was Windows Mobile or Windows CE or whatever they called it at the time. The touchscreens stunk as well.
It was just a crappy scaled-down version of Windows. It was missing the ability to run actual Windows software. It had a browser and a serviceable camera (it helped fulfill my eBay addiction at the time), but it wasn't the same as browsing on a PC.
It probably still wouldn't have been ideal, but within another 2-3 generations it would have been improved/faster and then 'good enough', just like the early iPhones.
> Apple had to create a 32-bit version of the OSX operating system for Intel’s x86 architecture before quickly phasing it out because Intel was late releasing its 64-bit Core 2 architecture designs.
I've read before that internally, OSX always had a working x86 port, to ensure the OS is actually portable should the need for a switch arise. Like it did in the past with older macos versions. So in that case they even got lucky because it was the very architecture they switched to.
Apples original iPhones were MVP. The real juice is when they bought that company and designed a 64bit ARM chip out of nowhere and found themselves 5 years ahead of the competition
Intel hired too many MBAs. When will companies realize hiring people with nothing but MBAs (because they have no hard skills) is a recipe for long-term failure?
Andy Grove flew in Clayton Christensen to let him talk for about 15 seconds before deciding that Intel would disrupt themselves by taking huge losses on Celeron. But Celeron did not save Intel; ASCII Red and multicore saved Intel. If he had actually read Clayton’s book, he would have understood that. Otellini got the disruption theory correct, and stayed out of mobile. But was that right? Maybe not in the current monetary environment where investment flows dwarf operating flows. A big mobile market could attract more investment than the losses it would generate. So disruption theory now works in reverse, and I’m not sure how far that implication goes.
Readit News
I don't like how this whole article is framed as how obvious it was that Intel made a huge mistake. Hindsight is 20/20, there was no such data available.
It was not predictable that the iPhone would be a success, especially not to a degree of Intel sacrificing every profit calculation in mere "hope" of huge volume later.
The numbers were there for the iPod. Intel could have just pitched to become the SoC-supplier for the iPod and didn't do it. They surely crunched the numbers several times and it didn't work out.
The first iPhone was then built on the iPod platform with an Infineon modem, so the better question to ask is probably: Why wasn't Intel interested to supply the CPU for the iPod?
So yes, hindsight is 20/20, but as CEO of intel, he failed miserably from not putting more effort into the decision making.
At the time of discussion with Intel, it was not an explicit phone project, it was _A_ Apple project. Over the years, Apple spent millions on projects to disrupt some markets which either didn't materialize at all or ended up not disruptive/competitive in the market.
There are countless examples of this. Some Moonshot where Apple thought they knew better what the market want to just figure out that it doesn't work.
The project Steve Jobs was talking about could as well have been one of THOSE projects, and Apple tried to get a established and well-working component at a price which would potentially destroy Intels business with its other customers.
> but as CEO of intel, he failed miserably from not putting more effort into the decision making.
But who said that he didn't put effort in the decision making? According to Otellini himself Apple was demanding a price lower than Intel's COST.
At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it.
iPhone was predictably huge, but I don’t think it was a sure thing it would be this huge. And Intel’s finance-driven culture probably did the math and decided it was better to pass because of the uncertainty. Finance hates uncertainty.
https://www.phonescoop.com/articles/article.php?a=1362
With that in mind, you can see how someone might look at it and say "ok Apple isn't that serious about phones"
But I'd bet what actually happened was Steve Jobs used one and said "this thing sucks, throw more money at our iPhone project"
> Even Otellini betrayed a profound sense of disappointment over a decision he made about a then-unreleased product that became the iPhone. Shortly after winning Apple's Mac business, he decided against doing what it took to be the chip in Apple's paradigm-shifting product.
"We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it...
At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it...
And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought."
https://archive.ph/B0Bbs
I just don't buy it. If Intel realized in hindsight that they could price out a competitive chip, why didn't they sell it to Android manufacturers? So much effort goes into making us lament a world where Intel iPhones existed, but I don't even see the appeal. Intel didn't have a vested interest in ARM (an attitude persisting to this day), they weren't going to acquiesce to Apple's desired margins then or now, and Apple would always have the logical opportunity to cut out their chip middleman. It's about as appealing as a shit sundae sat on a trap door.
> That mistake led to a huge missed opportunity.
Again, was it really that huge? After licensing cost to ARM, core design fees and the bulk deals worked out, I can't see Apple allowing Intel room to breathe. From a certain perspective, it almost seems like Intel never had any desire to genuflect for Apple and only signed the Mac deals to proliferate their existing design catalog. I can't say for sure what the financials worked out to be, but considering Mac market share at the time it makes sense why Intel wasn't super motivated. If we could look at a modern iPhone bill-of-materials, I don't think either of us would feel bad for Intel.
Apple demanding a (probably much) lower price-point to have the SoC applied in a mysterious unknown project without a volume-commitment could as well have destroyed the business and profit-margin for the entire Xscale business for Intel and its other customers...
Just adding some historical notes, Portalplayer's IC was used in the iPod until 2006ish ( https://en.m.wikipedia.org/wiki/PortalPlayer ), the first iphone used a Samsung ARM chip (https://en.m.wikipedia.org/wiki/IPhone_(1st_generation) ) , and fabless design companies like P.A. Semi and Intrinsity were acquired by Apple in 2008 and 2010, respectively.
> "The lesson I took away from that was, while we like to speak with data around here, so many times in my career I've ended up making decisions with my gut, and I should have followed my gut," he said. "My gut told me to say yes."
It's not even sacrificing profit; it's actively reducing profits by selling at a loss.
Also, after the magnitude of their error to get in at the ground floor sank in, Intel had no problems with selling x86 chips at a loss trying to break into mobile devices.
Remember their contra-revenue strategy?
That's also a reason why the iPhone was not designed around a more power-efficient SoC which combined the CPU and the cellular Modem into one package: The Modem was the add-on to the architecture which turned the iPod Touch into that exclusive Phone they built for AT&T.
> The first iPhone was then built on the iPod platform
Eh? No it wasn't. The iPod that existed when the iPhone came out was an 80MHz ARM7. The Touch (a 400MHz ARM11) came out a few months after the iPhone, and was essentially an iPhone with the cellular equipment stripped out.
Possibly because Otellini framed it as such?
The latter part of the article answers your other points.
Apple demanding a (probably much) lower price-point to have the SoC applied in a mysterious unknown project without a volume-commitment could as well have destroyed the business and profit-margin for the entire Xscale business for Intel and its other customers...
Given Intel's fat margins at the time, it seems like a more likely explanation is that it wouldn't meet their margin expectations and that they wanted to keep showing their investors the great results they'd been used to in the desktop/server/laptop markets that Intel was truly dominating at the time.
Also, when you're a company, you have limitations on how much you can do. You can hire more people and build more fabs, but it can be hard to grow your capacity. Even looking at TSMC, Apple has been using all of their 3nm capacity for the past year. If Intel was thinking about where to allocate its scarce resources (whether that be engineers, fab capacity, etc.), it might make more sense to concentrate on the areas where you're going to have a significant advantage and higher margins - unless you really know that Apple is coming out with something world-changing, which you wouldn't know in advance. Intel was still making enormous gains in the x86 market at this time and giving users big reasons to keep upgrading their machines. 2008-2010 Intel doubled their performance. The point is that there was certainly an opportunity cost to betting on Apple's new mystery device where they wanted a low-margin chip and at the time Intel's x86 business was booming.
I think there can be other issues as well. Why didn't Intel become the iPod SoC? Maybe Intel didn't have such a low-spec'd part for that purpose. The XScale processors were higher spec'd and Apple certainly didn't need that kind of speed for an iPod. Even with the iPhone, the article notes that the Cortex A8 designs were closing the gap with Intel's XScale, but the iPhone didn't use a Cortex A8 until the iPhone 3GS in 2010 (the original and 3G used older ARM designs). So part of the issue might have been that Intel's XScale processors were powerful beyond what Apple wanted to pay for at the time and it would have cost Intel money to make what Apple wanted (a low spec processor) while others already had that available.
I think it's also hard to say that this decision meant that Intel lost out on the iPhone. Realistically, if Apple was going with an ARM architecture, Intel would have lost the iPhone in a few generations anyway. It's not like Samsung got to keep Apple's iPhone CPU business. Maybe Intel could have kept Apple's business with heavy investment in XScale, but Apple bought PA Semi in April 2008 (less than a year after the original iPhone launch). So it seems like Apple was looking to build their own processors even before the iPhone became huge (the original iPhone only sold around 7M units while iPods were selling around 50M/year at the same time). Even if Apple had chosen XScale, Intel probably would have lost the iPhone business.
And Intel probably wouldn't have made up for it on the Android side. Qualcomm's control of CDMA (important for the US) and subsequent domination of high-end modems was used to reinforce their CPU business. Maybe Intel could have overcome that, but we've seen that modems are a hard business - Intel failed in its modem business and while Apple has seen huge success in their CPU business, they haven't had the same success in modems. To put it in perspective, Apple bought PA Semi with 150 employees in 2008 and 4.5 years later had new custom Swift cores in their A6 CPUs. Apple bought Intel's modem business with 2,200 employees in 2019 and 5 years later they'll be introducing the iPhone 16 still on Qualcomm modems.
So did Intel truly miss out on the iPhone? Maybe somewhat. However, it kinda sounds like Intel's XScale business was too high-end and even if Apple had selected XScale, they were still going to be making their own CPUs given that Apple could license the ARM architecture (unlike x86). There certainly was some space for Intel, but it would have been a difficult fight even if Intel were committed to it. Qualcomm's strategy of tying together its patents, CPUs, and modems to reinforce each other is hard to overcome.
In hindsight, sure: the mobile market would have been worth fighting for. But it seems like it would have been a tough market to crack into given what Intel had (a processor too high-spec'd for what the market wanted at the time) and the fact that vendors could easily switch away from Intel to any number of other ARM manufacturers, including ARM's reference cores. If Intel had bet big on mobile, they probably could have made it a good business for them, but it would have been a big gamble for a market without good barriers to entry and where competitors like Qualcomm might have their own barriers.
So but possibly only because they had no alternatives. After all building your own chips is a huge long-term investment with all of risk. Intel fully committing to XSCale would probably have significantly altered that calculation.
> license the ARM architecture (unlike x86).
They still had to design their own cores which isn't cheap or straightforward. Something even Qualcomm struggled a lot with (and ended up failing at).
This is almost certainly true once they decided that iOS was going to be based on MacOS. Those software design choices had to have been based on a very aggressive hardware roadmap
This isnt right, Intel's Lunar Lake is built partially on TSMC N3B. It launches in a few days.
Intel is a big reason things are so great, but also so crap, in computing.
Try to remember, the computing revolution didn't start in the 21st century. It's just got incredibly insane, in the 30 years of personal computing.
>Why wasn't Intel interested to supply the CPU for the iPod?
Because Intel and Apple had beef, long-since, already. The iPod was just another mp3 device, until - suddenly - it wasn't.
The writing on the wall for personal computing has been there for all of the computing pioneer companies .. the fact that Intel and Apple didn't get connected, is as much about the fact that these people were really in competition with each other from the beginning.
Apple was always going to own its own fabrication capabilities. From the outside of the box, all the way in.
Intel wanted all the other boxes, not just Apples, too ..
I'm not sure that was a foregone conclusion back in 2005-2007. If anything Apple was forced to design their own chips because nobody else was able to offer what they wanted. M-series is a thing because Intel couldn't build the low-power/higher-performance CPUs that Apple wanted.
Apple still does not own its own fabrication capabilities. I assume you mean design capabilities.
As the tale went, he was sent out to this doomed-from-birth spinoff as a "sunset cruise" to basically force him into retirement (for this bad decision) without the bad publicity of a public head-chopping.
The first iPhone was also gigantic, hideous, couldn't send pictures - something even a cheap $20 Samsung from the carrier could do - and it also didn't sell very well. People were more into "The Google phone", the Sidekiq, or the latest Razr. Think it wasn't til the 3GS came out with a ton of marketing push that it started to gain popularity, and it ended up having more to do with the App Store than the hardware - people did not like those touch screens for the first several years of smartphones. They came out at the height of texting and ringtone era, and we were pretty set in our ways, and it took years to change that behavior.
I think the App Store resonated a lot more with people back then rather than the iPhone as a device. MySpace was still around, the Bush-era recession had everyone looking for a side hustle. Most young/ambitious people I was around in "tech" (which was effectively HTML-based SEO and WordPress design) had a Blackberry and a side business. This kid I worked with became "rich" from an iPhone app that just combined other iPhone apps haha. Loved that time period. Graffitio!
Would have been very hard to predict the success of the iPhone, even as I was already entering orders for customers on a fully touch screen Aloha point-of-sale long before iPhone.
The razr2 sold 5M units and the sidekick sold 3M to iPhone 1’s 6.1M.
The n95 did outsell the iPhone with 10M units but Nokia had a massively more mature sales pipeline whereas Apple had to build out carrier relations. It also shipped before the iPhone was even announced which gave it time to accumulate sales.
Everyone in the space though recognized how big it was because carriers were going out of their way to try to get it on their network (since at the time Apple was doing 1 carrier per country). Apple got lucky that AT&T bought Singular which made the iPhone accessible to many many more people.
3GS’s 37 million units was because Apple had 2 years to build up manufacturing capacity and carrier sales channels to match demand for what had become clearly a smartphone revolution.
It definitely didn't get mainstream popularity until the 3GS/4 and the App Store, but people were definitely interested from day 1. Don't forget that early builds of Android looked much more like a Blackberry clone until the iPhone was announced, and then Google immediately scrapped everything and rewrote it from the ground up to be iPhone-like.
Nah. The only reason the iphone didn't take off faster was that, for its time, it was extremely expensive.
$600 upfront plus a 24-month, $60/month contract [1]. That's $2000 back in 2007, or $3000 today.
[1] https://www.theregister.com/2007/06/26/iphone_contract_price...
You are forgetting, there was no App Store when the iPhone launched. Apple was originally against the idea of Apps. The App Store launched a year later, with the iPhone3G. Yet the iPhone was wildly popular not just from the day it launched, but from the day Apple first demoed it.
I think what caught people's attention with the iPhone is that it's one of the first phones where you could easily browse websites from your phone in a way that didn't feel like a gimmick.
Other phones had web browsers, but they only really worked on special mobile versions of websites. They were also slow and painful to use even on those mobile optimised websites.
Then iPhone came along, and Apple had someone managed to squash a full desktop web browser on it. It did a half decent job of reformatting desktop-only websites to fit on the screen. When pages didn't reformat, the new touched-based panning and pinch-to-zoom gestures allowed you to still experience them with ease.
And Apple managed to make the whole OS feel responsive, despite using the exact same hardware as their competitors.
This was not true per my memory. Literally everyone I knew in their 20s and 30s in NYC was switching to the iPhone 3G as of summer 2008. You had to wait in line to buy it for months.
Unlimited 3G + GPS + touchscreen browser was what made it explode. Broadband internet, in your pocket, with mapping capabilities. It felt like the possibilities were limitless, with new apps and functionality being discovered and released daily.
There was no money in mobile SoCs, and there still isn’t. Apple makes their own chips anyway!
Intel was right to focus on the x86.
Qualcomm market cap: $193 billion
TSMC market cap: $888 billion
Seems designing and fabbing SoCs is plenty valuable
In any other context, that might be splitting hairs but it’s a meaningful distinction in this conversation.
Intel could have moved big volumes during that period. At the very least they could have been a fab.
They also largely switched to their own chips because vendors weren’t meeting their needs.
Again, Intel could have staved it off on both computers and phones if they didn’t mess up so badly on delivery over the last several years.
Apple can only do that now, because of the billions they have made on the iPhone, plain and simple.
And - more importantly - they were well geared to do that, since the beginning of computing.
There being no money in SoC's, is because they're all being made across the other side of the planet, mostly, from the intended final users.
If Intel were really 'leading edge', they'd have made desk-side custom fabrication a thing in the makerspace already. Such that I can, as a computer user, print 10 or 20 or X little chips, for my own specific purposes, non-mass-market.
This would be a truly revolutionary adventure from a 'grandfather of computing' style company.
Alas, the x86 is, indeed, everywhere. Grandfather Intel has a massive garden.
If only the SoC battles were truly localized, and a real computing revolution can happen (before its too late).
You should have a locally-built device in your hand.
But the ability to mostly browse the web on it was amazing.
Also, if I remember correctly, you could adjust the clock speed to trade off battery life / performance.
It could do a few fairly impressive things, like running emulators as you mentioned. But I think the problem with those was Windows Mobile or Windows CE or whatever they called it at the time. The touchscreens stunk as well.
It was just a crappy scaled-down version of Windows. It was missing the ability to run actual Windows software. It had a browser and a serviceable camera (it helped fulfill my eBay addiction at the time), but it wasn't the same as browsing on a PC.
It probably still wouldn't have been ideal, but within another 2-3 generations it would have been improved/faster and then 'good enough', just like the early iPhones.
Great devices overall. I've been tempted to pick one of these up for nostalgia purposes. Truly peak PDAs.
I've read before that internally, OSX always had a working x86 port, to ensure the OS is actually portable should the need for a switch arise. Like it did in the past with older macos versions. So in that case they even got lucky because it was the very architecture they switched to.
Why isnt anyone talking about that?