In a free report (http://garysmitheda.com/read.php?story=iNotes_73) on a panel held during ARM Techcon Gary Smith discusses the competitive position of ARM and Intel. The panel was about Cloud Computing and the discussion apparently focused on the business implication derived by cloud computing. Gary reports that "it was quickly decided that Intel can't compete with ARM". The major reason given is that Intel financial success depends heavily on Microsoft success in cloud computing. I am amazed that the panelists, and even Gary, seem to have their heads in the clouds by the arguments offered in defense of the statement.

One of the argument in favor of ARM winning the cloud computing battle was that ARM builds cores while Intel builds microprocessors. Actually Intel has built and successfully marketed the equivalent of what now we call ARM cores in the past, only at that time they were called microcontrollers and the semiconductor manufacturing technology required them to be a separate component. It does not require much searching to find a core that is the equivalent of a 8051 on the market today. Thus Intel can develop and sell cores that compete directly with ARM's products. The decision would depend on business considerations, like trading off profit margins and considering whether or not such direct entry would be considered a monopoly by organizations like the European Union.

The second argument was even more ridiculous as it was based on Linux increasing popularity at the expense of both Microsoft Windows (and I would add Apple OS which was conveniently forgotten). The statement, reinforced by a comment by Bill Murray, postulates that Linux increased popularity spells doom for Intel. The argument remarkably forgets that Linux runs without any problems on Intel's microprocessors today. Intel's microprocessors are General Purpose Processors, not Windows engines. Where do these people think all those Pentium based compute farms running Linux come from?

Intel strategy in designing and developing new products has nothing to do with Microsoft, the exception being that it is likely to provide a computing platform that can run Windows for as long as that OS is commercially viable. This does not preclude Intel from addressing any and all markets that are opened by the cloud computing architecture, and in fact Intel has demonstrated more than once that it can develop products that are not dependent on the X86 architecture.

This does not mean that ARM is not a formidable and well positioned fabless semiconductor company. But undervaluing a competitor like Intel is not just wrong, it can prove a fatal mistake.