Intel’s Atom Cancellation Has Big Ramifications for a Surface Phone

Microprocessor giant Intel has had an even harder time adapting to today’s mobile computing world than has Microsoft. And the latest evidence is a just-announced cancellation of an Atom processor designed for smart phones and tablets … which I think has big ramifications for a rumored Intel-based Surface phone.

Intel, like Microsoft, has watched from the sidelines as mobile devices have laid waste to the traditional PC market that previously defined personal computing. This has been happening for well over a decade, and Intel’s inability to effectively compete with mobile-oriented ARM chips is just the latest example of a long string of mobile defeats.

Two other examples spring immediately to mind: Intel’s adoption of the AMD x64 platform and its switch to the Core micro-architecture in the mid-2000s. Put simply, Intel has been struggling to keep up with mobile personal computing since mobile personal computing has been a thing.

But this week’s admission of defeat is particularly troubling. As you must know, Intel has had literally zero success getting its chipsets into the smart phones that now dominate personal computing. And its had only middling success in tablets. Meaning that Intel’s most enduring success, like that of Microsoft, is with PCs, the part of the market that is contracting the most and is essentially a legacy business, not a growth business.

The Broxton news comes courtesy of an article by Patrick Moorhead, who spoke with Intel CEO Brian Krzanich. It’s worth reading.

“Intel’s senior management has determined that they will be ending their SoFIA projects (specifically 3Gx, LTE, LTE2) as well as their Broxton SoC for smartphones and tablets,” he writes. “The cancellation of these projects is intended to free up Intel’s resources to refocus their brainpower on their modem technology and 5G efforts … With Intel’s refocused efforts on 5G and commitments to profitable segments of the PC and its continued development, I think we are going to start to see a very different Intel.”

If this sounds familiar, you must be thinking of Microsoft’s mobile device strategy, which boils down to this: The software giant knows it has lost the smart phone war, so it is stepping away from that market while artificially keeping Windows phone around so it can wait for the next big thing, and hopefully be a leader in that thing rather than an also-ran.

Intel is doing the same thing: Conceding the current generation and investing in the future. Which in its case is next-generation 5G networking chipsets. It will of course continue investing in its soon-to-be-not-core business of supplying the PC industry, just as Microsoft is doing with Windows 10.

Here’s how Intel phrases it.

“Intel is accelerating its transformation from a PC company to one that powers the cloud and billions of smart, connected computing devices,” an Intel statement reads. “We will intensify our investments to fuel the virtuous cycle of growth in the data center, IoT, memory and FPGA businesses, and to drive more profitable mobile and PC businesses.”

Intel also confirmed that it has canceled Atom Broxton for both smart phones and tablets.

I’m no hardware expert, but according to a very detailed analysis by Anandtech, Broxton would have followed the Atom “Cherry Trail” chips this year. Like Cherry Trail, Broxton was a 14nm design, albeit one with a new-generation core, and we can assume they would have been marketed as Atom x3, x5, and x7 SoC chips. I suspect Atom-based chips will continue for tablets and small laptops. But I have to think this change effectively signals Intel’s exit from the smart phone market. You know, just like Microsoft.

Speaking of which. One naturally wonders whether this change impacts a rumored Intel-based Surface phone. Yes, it does.

Back in February when I spoke with the person directly responsible for the HP Elite x3, I asked a few pointed questions. Why on earth would HP adopt Windows 10 Mobile? And why not use an Intel chipset?

The answers will not please Windows phone fans.

First, Windows 10 Mobile was HP’s last choice. They investigated Android first, of course, and even checked to see whether some kind of iOS deal could be made. Google, surprisingly, wouldn’t work with HP to improve certain aspects of Android to meet their security and management needs, in particular. And Apple, well. No surprise there.

As for Intel, I was told that the microprocessor giant was “years away” from fielding a viable smart phone chipset. This explains, I think, the Broxton defeat, but it also helps to explain why HP was forced to adopt ARM like everyone else and jump through multiple hoops to sort-of get Windows desktop apps working remotely via Continuum and Remote Desktop technologies. It’s a necessary kludge because Intel is so far behind.

As for Surface phone, you will recall that Mary Jo Foley previously reported that Microsoft had pushed its late-2016 hardware releases—Surface, primarily—back to early 2017. Most of these devices run on much higher-end chipsets than Atom, of course, but then given the problems with Intel’s Skylake chipset one can understand why Microsoft might want to wait a few months before shipping devices based on that chip’s successor. (What about a Surface 4? I suppose Microsoft could choose the more expensive Core m chipset now, and up the price while making it a more premium device.)

These things are, I think, all related. And while it’s still not clear whether Microsoft will in fact ever ship a Surface phone—my vote is no, it makes no sense—this development suggests that such a device, like the HP Elite x3, will need to be yet another ARM-based smart phone. Intel isn’t just years away from fielding a viable smart phone chipset anymore. It has literally conceded the field for this generation. Thus, an Intel Surface phone is not happening.

(For the pedantic: Yes, Microsoft could ship some Surface mini-something that can also make phone calls and thus sort-of satisfy the need for a “Surface phone.” But I think a pure-play Intel-based Surface phone is off the table.)

The fallout from Intel’s decision will be interesting. But this is as bad as when Microsoft conceded the smart phone market last July. It’s all over, folks.