Speeds and Feeds

Don't get me wrong-- I think the Intel-TSMC alliance announced earlier this week is a good thing for both companies.

But the official explanation, that Intel wants TSMC's help to make Atom processor cores more widely available to the industry, just doesn't strike me as a sufficient reason for the deal.

Intel hardly needs TSMC's help to make SoCs (systems on a chip). Intel has been making highly integrated devices for the embedded market, as well as PC chipsets for a long time. It already has enough of the building blocks and enough experienced engineers to make Atom-based SoC products.

And it isn't as if Intel needs better process technology, or more fabrication capacity. Intel already has more of the best fabs in the world than any other company.

What's the one thing TSMC can do that Intel can't? Operate with low gross margins. In its most recent quarter, TSMC's gross margin was only 31.3 percent, while Intel's gross margin is still an industry benchmark at 53 percent. The difference is more than Intel's net profit--that is, if Intel had TSMC's gross margins, it would be losing money.

Low-margin component suppliers are a critical element of the embedded-systems market, which Intel identified as one of its target markets for this deal. Cost is king in consumer electronics, so high-margin suppliers like Intel rarely get a chance to participate.

Similarly, as average PC-selling prices decline, a growing share of the demand for processors and chipsets drops into price ranges in which Intel just can't afford to play.

The TSMC deal is Intel's way of taking a piece of these businesses without spending much money or taking much risk. For example, TSMC is already accustomed to helping its customers make SoCs for embedded systems. Intel could build such a business itself, but not at the margins it's used to.

Intel said in its press release that it will be porting its Atom cores to TSMC's technology. This is the sort of work that can get expensive in engineering time, but it's possible that the work will be made easier by a convergence between TSMC's processes and Intel's.

Last May, Intel agreed to cooperate with TSMC and Samsung in the transition to larger 450-millimeter silicon wafers (a little less than 18 inches across, up from the 12-inch wafers used today).

This doesn't necessarily mean that the three companies will co-develop fully compatible manufacturing processes, but with the 450mm transition being slated for 2012, there's still plenty of time left to drop that other shoe.

Anyway, this new TSMC deal is merely at the earliest official stage. The companies have signed a memorandum of understanding, but they have yet to work out the details. That could take a year, and it could be another year or two before Atom-based chips are ready to start rolling through the TSMC factory.

All in all, Atom SoCs might not become available from TSMC until 2012, at which point, they could, in principle, be made on a common Intel-TSMC process.

Not that Intel would provide its really good process technology to TSMC. In chips, as in other things, quality is expensive. Intel's best process technology, which it uses primarily for microprocessors, is at the leading edge of semiconductor manufacturing, with features such as a metal electrode acting as the transistor's gate, a hafnium-based insulation between the gate and the channel, and strained silicon in the transistor channel itself (where the current flows when the transistor is on). (See this Intel presentation for more details. Incidentally, did Intel ever announce which metal it's using? If so, I can't find it.)

TSMC may not need or want any of these features, and it would make sense for Intel to keep its best process technology to itself, anyway, if only to protect its high profit margins.

Even without a leading-edge process, TSMC can still make good money from Atom-based SoCs in the embedded market. That's enough to justify TSMC's participation in the deal.

But I'm not sure that explains Intel's motivation. Sure, Intel will make money it wouldn't have made otherwise, but it will also have costs it wouldn't have had otherwise. Intel may make a few bucks per chip in intellectual-property licensing fees, and perhaps this could amount to hundreds of millions of dollars a year, but that isn't a whole lot of money to a company like Intel, which makes tens of billions of dollars a year in gross revenue.

Why else would Intel be doing this deal?

Well, I think that the chipmaker could be setting itself up to kill off three of its biggest rivals.

There's already an x86 processor company using TSMC to make (some of) its chips: Via Technologies. Via isn't a big player, but it's been a thorn in Intel's side ever since it purchased the x86 processor operations of IDT (WinChip) and National Semiconductor (Cyrix) in 1999.

Via specializes in exactly the kind of processors that Intel can't afford to sell: low-cost, highly efficient designs aimed at low-cost PCs and embedded systems. Today's Atom is better than Via's best chips, but it's also more expensive. A cheaper TSMC-sourced alternative will hurt Via badly.

Most of the same reasoning applies to ARM, which licenses its processor cores to be used in SoCs made at TSMC, among other fabs. That's almost the same business model Intel is adopting with its own TSMC deal.

ARM dominates the market for microprocessors in cell phones. Intel's current Atom processors are too expensive and too power-hungry for that market. But remember, it'll be a couple of years at least before Atom-based chips start shipping from TSMC. The Atom cores of 2011 or 2012 will be more directly competitive with ARM's cores.

So put ARM on the endangered-species list too.

There's one other company that ought to be worried by this deal, and it probably isn't one you'd expect: Nvidia.

Nvidia is generally thought to be TSMC's biggest customer. It doesn't make x86 processors (though there are persistent rumors that the company is developing one), but it does make the ARM-based Tegra family, which would run up against these future Atom chips.

It's Nvidia's graphics chips that I'm worried about, however.

Intel is developing graphics chips of its own under the Larrabee code name. I wrote about Larrabee last August, and it seemed like a bad idea to me at the time. One of my key objections, however, was that graphics chips are inherently a low-margin business due to the strong competition between AMD and Nvidia, and I didn't think that Intel could afford to drag down its margins just to compete in that market.

The TSMC deal changes all that.

Larrabee's cores aren't Atom cores, per se, but they're similar enough that Intel might consider them to be covered by the language in the TSMC partnership announcement. Or if not, agreements can always be expanded later.

Making Larrabee chips at TSMC would solve the margin problem, putting Intel's graphics chips on a level playing field with Nvidia's. Larrabee would still be at a significant disadvantage because its x86-based design isn't as well-suited to graphics acceleration as Nvidia's chips, but Intel has a special ability to sell inferior products along with other chips its customers need--especially processors. That's reportedly how Intel's slow integrated-graphics chipsets ended up in so many systems during the Windows Vista transition, leading to many disappointed customers.

Or it's possible that Intel will not allow the TSMC deal to harm these companies, if only because Intel may still be in court defending itself against AMD's antitrust lawsuit.

But I wouldn't make that assumption, and I bet that ARM, Nvidia, and Via won't either. Intel isn't the only paranoid company in this industry.

I suppose if I were just in search of controversy, I'd write a post to proclaim the death of the MID (mobile Internet device) category. My obituary for the Netbook earlier this week generated a ton of traffic; I suppose I could do that again. Certainly, the concept of a MID--a device midway in size and capability between smartphones and the smallest notebooks--is under tremendous pressure from both sides.

Customers have learned that with a well-engineered browser, the small displays on phones such as Apple's iPhone and T-Mobile's G1 "Google phone" are sufficient for most Internet applications (Web browsing, e-mail, chat, etc.). And as I described yesterday, small notebooks are quickly lifting themselves out of the "Netbook" ghetto, gaining performance and cutting power consumption to become reasonable alternatives for those times when a smartphone just isn't enough.

The tokidoki edition Fujitsu LifeBook U820 mini notebook.

(Credit: Fujitsu Computer Systems)

But I think there's still a legitimate niche for MIDs and other miniature mobile PCs. As I've mentioned here before, I used to carry around a 1.5-pound computing gizmo along with a conventional laptop. It was an Apple Newton MessagePad 2100--officially a PDA, not a MID--but it was as close to a MID as the technology of the time allowed. It came with a Web browser, and for a while I had mine equipped with a Metricom Ricochet wireless modem, so I could access the Web and e-mail on the go.

It often seems to me that I would like to go back to that kind of device, rather than trying to make my iPhone and my laptop do the same jobs. In fact, I think my note-taking capability has actually declined with each new handheld platform I've adopted--the Newton was better than the Palm Treo, and the Treo was better than the iPhone. Today, when I attend conferences or want to scribble down some idea that can't be represented in a paragraph or two, I grab a Moleskine notebook (the pocket Sketchbook version).

My own experience is merely anecdotal evidence, however, and I know better than to rely on that. So what are the real markets for the MID?

Coincidentally, I think it works out to three E's: education, entertainment, and executive applications. All three areas lead to situations where a person might want access to more computing and communications resources than a smartphone can provide but won't necessarily want to carry around a notebook--or try to use one while standing--to get that.

The educational market for these small machines has yet to develop because current MIDs don't yet offer the right combination of small size, all-day battery life, and low price, but I believe they'll get there within the next year or so. People often talk about e-book readers as being the right answer for educational computing, but e-books are more about static content, and education is ideally an interactive process.

The entertainment focus was clearest with UMPCs (another dead category, though I'm hardly the first to point that out). UMPCs were marketed as "lifestyle" gizmos, as if many people were ever going to make a relatively bulky 7-inch display tablet PC with two-hour battery life part of their lifestyle. But in a smaller form factor--say a 5-inch display, a total weight under a pound, and battery life of at least five or six hours--a MID can fit this bill. As long as it's small enough (and rugged enough) to carry around in a purse or jacket pocket, and cheap enough to be written off to the entertainment budget like a Netflix subscription or a new TV, a MID could indeed become a lifestyle product.

The Viliv S5 Entertainment MID provides full PC compatibility in a PDA-size package.

(Credit: Yukyung Technologies)

I saw a gizmo at CES that fit this definition pretty well, the Viliv S5 from Korean consumer-electronics maker Yukyung Technologies. Yukyung is one of many companies making portable video players, but its new offerings are quite distinctive.

The S5 is like a right-sized UMPC, with a 4.8-inch touch-screen display (800x480 or 1024x600 pixels, depending on model). It can play HD video, and it comes with Windows XP on a real hard disk, so there's no problem installing other software.

The S5's Intel Atom processor provides very good battery life: the company specifies six hours of movie playback. The device is about 6 x 3.3 x 1 inches in size--a lot smaller than my old Newton--and weighs less than 14 ounces.

There are also two 7-inch screen Viliv machines, the X70 slate-style tablet and the S7 convertible tablet. Both, amazingly, are still smaller than my old Newton.

Executives have always been the focus of some high-end handheld PC developers such as OQO, Sony, and Fujitsu.

Fujitsu didn't have any major updates to announce at CES for its LifeBook U820 series, though it was showing a model with case art from tokidoki, an Italian (but Japanese-inspired) lifestyle brand, and I got a chance to talk with a couple of PR people from Fujitsu about the U820 and other Fujitsu products.

The U820 is basically a complete convertible tablet PC squeezed into a 1.3-pound package: a 5.6-inch touch-screen LCD with 1,280x800-pixel resolution, a 1.6GHz Atom processor, 1GB of RAM, a 60GB or 120GB hard disk, Windows Vista Home Premium, and so on. It offers pretty much every kind of communication technology a person could ask for: Bluetooth, a/b/g/n Wi-Fi, optional AT&T wireless broadband, and even a GPS receiver.

From my perspective, the U820 is actually smaller than it needs to be, which is most apparent in the micro-sized keyboard, but it's an impressive technical accomplishment nonetheless.

For many people, the new Sony Vaio P-series (a CNET Best of CES award winner this year) may prove to be more practical, with its 87 percent-pitch keyboard and 8-inch widescreen LCD. But the Sony is beyond all but the largest pockets. Sony has made smaller machines in the past, such as the Vaio UX series, but these have been discontinued.

The OQO model 2+ brings better performance at a lower price than earlier OQO models.

(Credit: OQO, Inc.)

OQO also made a big splash at the show with its new model 2+, an unprepossessing name for a product even more technically impressive than Fujitsu's. The new OQO machine has almost all the features of the U820, but in a considerably smaller, lighter package. There are some differences; the model 2+ has a lower screen resolution (800x480) but is available with a faster CPU and more RAM. Also, the OQO is available with an OLED (organic light-emitting diode) display that really looks fantastic, with high contrast and deep saturated colors.

The model 2+ is in the same enclosure as the older OQO model 2, hence the trivial name tweak, but there's another big difference from that older product: the 2+ has a starting price of just $999, $500 less than the starting price of the 2. And the base model of the 2+ is a much better system than the high-end model 2 configuration was.

Just as there were some ARM-based Netbooks at CES, there were also some ARM-based MIDs on display. With no clear advantages over smartphones except for display size, I don't think these products will attract customers. But that problem is CPU-specific; it doesn't apply to the more powerful x86-based products.

So okay, there's some good MID hardware out there. Unfortunately, that isn't enough. What MIDs need are lower prices, more rugged designs, and some MID-optimized software. The fact that Windows runs on these small displays doesn't mean that style of user interface is right for them. I know people at Microsoft who are working on this aspect of the problem; I hope they get the chance to bring their solutions to market, ideally in the Windows 7 time frame.

All in all, there's a lot of interesting activity in these smaller form factors. I think these tiny machines face a long uphill struggle to gain market share, but at least they have a unique and clearly defined product concept: a PC in a pocket.

Much coverage of this year's Consumer Electronics Show is full of references to new Netbooks introduced at the show. But in fact, there were hardly any Netbooks at all, and those that did appear went almost unmentioned.

The truth is, the Netbook is dead, and good riddance. The concept of the Netbook was based on a tragic misunderstanding: the belief that tens, perhaps hundreds of millions of people worldwide wanted a portable computer that was small, power-efficient, and (here's the misunderstanding) not good for much beyond accessing the Internet.

Asus's Eee PC T91 convertible tablet

(Credit: ASUSTeK Computer Inc.)

That's where the "Net" in "Netbook" came from: the Web, e-mail, chat, maybe some VoIP (voice over Internet Protocol communications).

That's what the earliest Netbooks delivered, too--machines like the Eee PC 701 from Asus (which I described here) that came with slow single-core processors, small amounts of RAM, small liquid crystal displays, and tiny, slow flash drives. They were good enough for light Web browsing and e-mail--and not much more. They wouldn't run Windows XP with acceptable performance, never mind Windows Vista.

Well, nobody wanted those machines. Companies that tried to sell them saw unprecedented return rates. Asus, for its part, couldn't upgrade the Eee PC fast enough; current Eee PCs have faster processors, more memory, larger screens, and larger flash drives or real rotating hard disks.

At CES, Asus expanded its line of Eee PC systems to include the S101, S101H, 701, 701SD, 701SDX, 900, 900A, 900HA, 900HD, 900SD, 901, 901XP, 904HA, 904HD, 1000, 1000H, 1000HA, 1000HD, 1000HE, 1000HG, 1002HA, 1003HG, and 1004DN laptops; the T91 and T101H tablets; and multiple Eee Top desktops. (Seriously! Most of these model numbers are on Asus's Eee PC site; the others are from CES. And I may have missed some.)

Certainly, all of these Eee PC systems were clearly distinct from Asus' mainstream offerings: Celeron or (mostly) Atom processors, 10-inch or smaller displays (on the laptops), and smaller amounts of RAM and mass storage.

But the fact is, they're all capable of much more than simple Web browsing. Asus specifically promotes the use of Windows XP Home with all of these machines, and it looks like they'd all run Vista as well, though perhaps without all the visual bells and whistles.

You wouldn't buy these machines to run Photoshop, edit high-definition videos, or play 3D games, but for most simpler purposes, they'd be fine.

In fact, as a cross-platform kind of guy myself, I'm thinking about getting one of those T91 tablets, when they go on the market later this year. I used to use a Motion tablet for meeting notes (with Microsoft Office OneNote, a great package) and PowerPoint presentations at Montalvo Systems, and I'd really like to do that again.

Small-screen laptops over the years. Foreground: a TRS-80 Model 100 (1983); rear, from left: an Apple PowerBook Duo 270c (1993), a Dauphin DTR-1 pen computer (1993), and an Asus Eee PC 701 (2007). From the author's collection.

(Credit: Peter N. Glaskowsky)

So what's left of the Netbook concept? Small displays? C'mon, we've had small displays since the dawn of mobile computing. There hasn't been a day since 1983 when you couldn't get a laptop with a small display.

So these new machines aren't merely Netbooks that are "evolving" or "overachieving". They're notebooks. And Moore's Law will ensure that these systems will eventually suffice for any fixed workload. (3D games get more demanding each year, so small notebooks will always be inadequate for bleeding-edge gaming.)

Actually, there were some true Netbooks at CES. What distinguished them from these other machines, which were merely called Netbooks?

Well, today, if you want to make a subnote with a few hundred MHz of processor power and really basic 2D/3D graphics, an x86 processor and chipset is the expensive way to get it. It's better to start with an ARM processor. Some of those are single chips with almost everything you need except RAM, and they'll save you up to $50 off the x86 alternatives.

Such Netbooks have been announced by several companies, including Pegatron, and LimePC. There's nothing wrong with these machines. I'm sure they'll do everything they're advertised to do.

But this still brings us back to that tragic misunderstanding: few people will buy an ARM-based Netbook priced at $199 to $299 when there are good x86-based notebooks starting at less than $400. Certainly not when the x86 machines can run Windows or a mainstream Linux distribution, provide far more CPU and GPU performance, and come in the same small sizes.

So that's that. The Netbook is dead. Long live the notebook.

Intel announced on Monday that it will be presenting a paper at Siggraph 2008 about its "many-core" Larrabee architecture, which will be the basis of future Intel graphics processors.

The paper itself, however, has already been published, and I was able to get a copy of it. (Unfortunately, as you'll see at that link, the paper is normally available only to members of the Association for Computing Machinery.)

Intel's Larrabee includes "many" cores, on-chip memory controllers, a wide ring bus for on-chip communications, and a small amount of graphics-specific logic.

(Credit: Intel)

The paper is a pretty thorough summary of Intel's motives for developing Larrabee and the major features of the new architecture. Basically, Larrabee is about using many simple x86 cores--more than you'd see in the central processor (CPU) of the system--to implement a graphics processor (GPU). This concept has received a lot of attention since Intel first started talking about it last year.

... Read more

With Intel's focus on the new Atom-brand processors being described at the Intel Developer Forum this week, "Atom-powered" is the obvious description of the mobile Internet devices (MIDs) these chips will go into... and it seems like half the IDF stories on the Internet this week are using that phrase.

Intel's Atom processor (on the right) and its companion System Controller Hub code-named Poulsbo.

(Credit: Intel Corp.)

Intel, however, seems to want even more hyperbole-- it expects people to believe that Atom will recharge the whole company. CEO Paul Otellini reportedly said "This is as important to Intel as the launch of the Pentium in the mid-1990s"-- but that's ridiculous.

The original Pentium processor and its descendants were responsible for nearly all of Intel's revenue. Atom will be merely a blip on Intel's financial reports.

The problem with Atom, especially these early models, is that the niche they occupy is a no-man's land between truly mobile devices like cellphones and MP3 players, and truly powerful devices such as laptop computers.

Atom consumes ten times as much power as cellphone processors and one-tenth the power of laptop processors. This power consumption makes for a device that has to be larger than a cellphone, and has to be smaller than a laptop because it can't provide comparable functionality. And there simply aren't enough applications that fit naturally into devices in that size range.

Look, I have as much experience with MIDs as anyone. I used an Apple Newton for seven years (as I've written about here several times). The Newton had roughly the same form factor and somewhat lower power consumption than today's MIDs. For a while I had a Metricom Ricochet wireless modem that gave me wireless Internet access.

But the simple fact is that the Newton wasn't useful enough to make me carry it around all the time. I loved mine because I had one critical application for which it was perfect. It was my electronic reporter's notebook, and no small-screen device could ever substitute for it. But most people don't need one of those.

And most people don't need a 5" to 7" display for basic Web browsing... at least, not enough to actually carry one around. And if you can carry something too large for a pocket, you can carry a small notebook PC that can handle a traditional notebook CPU.

Even after the Atom family evolves to the point that it can fit into cellphones-- which is the only way it's going to achieve significant sales volumes-- profits from these chips will never be very high. Intel's never going to achieve a monopoly in cellphone processors, and the competition from ARM-based cellphone chips will keep the value of a CPU core under a few bucks.

What Intel doesn't want people to think about very much right now is that in a cellphone, the CPU core is about the least-valuable part of the system. Even in a MID with an Atom processor, the CPU is just a tiny part of the whole package. Look at that picture up there-- the Atom processor is small compared with its companion system controller. In a cellphone, there's even more circuitry required for the radios.

And that's why Intel's never going to be an Atom-powered company, and I'm sure Otellini knows that in spite of everything he's been saying. But when your stock price has been trending downward for seven years in spite of the fact that you're running the world's largest semiconductor company with a stranglehold on the world's largest semiconductor market, I suppose you have to try to drum up as much excitement as possible for every new product that comes along.