Intel Extends "Intel Inside" Brand campaign To Smartphones -- But Will Consumers Benefit?
Intel is only just now dipping a toe in the US market -- the company has launched several Medfield-based phones this year, but they were destined for markets in China, India, Russia, and the UK. Last week's Razr i from Motorola is the first US phone to use an x86 processor, and it contains a faster Medfield, at 2GHz, than its cousins in other markets.
Intel sees smartphone branding as a key component of its long-term success. "Without a doubt, my goal would be to have consumers walk into stores and have Intel Inside as a key driver of which phone or tablet they choose, just like we've done in the PC space," Brian Fravel, Intel's head of branding, told Reuters.
The company's impact on the smartphone market could be substantial. In the past 12 months, smartphone profits have been split almost entirely between Apple and Samsung, with the majority going to Apple. Companies like HTC have struggled in 2012; the company's operating profit fell 57% in Q2, to $273M. Q3 is thought to have been even worse, with operating margin down as low as 7%. Google's Motorola Mobility division has pledged to exit the feature phone business and pursue fewer smartphone models with better features. That's a strategic alignment that fits well with Intel's plans to position Atom as a higher-end product with a low-end variant. As for Samsung, the company's smartphone future in the US is still uncertain. Apple has gone back to court to ask for an additional $707M in fees plus an additional $155.8M on the initial judgment.
These judgments would bring Samsung's total penalty up to $1.92B. Even a penalty of this magnitude doesn't directly threaten Samsung's smartphone business, but it does punch a serious hole in the corporation's profits. Samsung has always been willing to explore multiple chipsets and vendors; an opportunity to pair with Intel and develop a jointly funded advertising campaign could look extremely attractive to a company hemorrhaging money thanks to ongoing legal costs.
Will this benefit consumers?
It's worth asking whether or not this sort of an arrangement actually provides consumers with a long-term benefit. The Intel Inside campaign was an enormous success for Intel, and certainly helped the company maintain its profit margins and resist commoditization. HP and Dell, however, got the short-end of the stick. In their eternal race-to-the-bottom, PC OEMs signed up for affiliate programs, software distribution deals, and co-branding options until brand-new systems all but collapsed under the weight of preinstalled software.
Asus' G50V -- a high-end gaming laptop -- actually shipped out looking like this:
Someone call engineering. Let's get a sticker on that trackpad
The idea that an end-user should have to buy a product and then spend an hour or three making it run well is ludicrous. It flies in the face of what people expect in other contexts when they buy a new product, but it's where we are today because manufacturers like Dell and HP chose to slash costs rather than enforcing requirements regarding the user experience on third party vendors. The "HP/Dell/Lenovo experience" has been effectively outsourced to software vendors who have precious little reason to care. Grass roots attempts to roll back the amount of bundled software often fail, because OEMs literally can't afford to listen to what their customers really want. Long-term, these sorts of agreements have paralyzed the PC industry, to the point that Microsoft -- Microsoft -- had to build its own cutting-edge Windows 8 device. Regardless of whether Surface turns into a smash hit or a dud, it says something that Redmond couldn't find an OEM willing to think so far outside the box.
We're not suggesting that this problem be laid solely at Intel's feet, but the last thing we want to see is for smartphones to explode in labels and associated failware the way laptops did. If Intel is going to launch a major campaign like this, we hope the company has put standards in place that didn't exist when the major desktop/laptop partner ads debuted. Otherwise, we can all look forward to the same game playing out in smaller form factors.