Intel Extends "Intel Inside" Brand campaign To Smartphones -- But Will Consumers Benefit?

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News Posted: Mon, Sep 24 2012 2:30 PM
Intel's four beat, three second jingle has become synonymous with the company's brand, despite the fact that it contains no spoken words or associated text. To date, Santa Clara has reserved the sequence for its desktop, laptop, and server products, but it's planning a major smartphone marketing campaign as well.

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.
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I think Intel made a smart move to make small processor from Intel in smartphone or cell phone. It sound like quite powerful processor at 2 GHz in smartphone. I would like to know more about this and am wonder how it will handle the tasking on smartphone. It will make more benfit for Intel and along PC, laptop, ans server with Intel inside.

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realneil replied on Mon, Sep 24 2012 7:07 PM

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.

Agreed, there is way too much crap on new laptops these days.

Dogs are great judges of character, and if your dog doesn't like somebody being around, you shouldn't trust them.

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JDiaz replied on Mon, Sep 24 2012 8:30 PM

The Z2460 Medfield is actually 1.3GHz, but it has what is called a Burst Mode... Similar to the Turbo Boost used in Core i5/i7, it allows the SoC to over clock for short periods to give boost as needed, within the power and thermal constraints of the system of course.

Originally, this was set to a max of 1.6GHz for the Burst Mode but FAB yields and average tolerance proved better than expected. So they upped the newer release to have Burst Mode of 2GHz...

LTE and dual core will be coming early 2013 with the release of the dual core version, Z2580, which will also get a more powerful GMA based on a dual GPU version of the SGX544. Along with a lower end Z2000 for more basic phones...

Meaning the present Z2460 is actually the mid-range offering and was just first to market.

However, Intel's Mobile offerings won't really get interesting until 22nm updates come out for Medfield's replacement, Merrifield... Probably early 2014...

While the tablet range offering to replace Clover Trail will likely come out first in the second half of 2013.

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I would love to see Intel get more involved in the mobile phone market.

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karanm replied on Tue, Sep 25 2012 9:17 AM

Joel brings up a good point with all the third party crap that comes on laptops nowadays, OEMs have a hard time with Intel's pricing (perfect example being the whitebook that Intel put out and the other ultrabooks at the same pricepoint) and hopefully this doesn't trend into the phone market as well. Either way its good that Intel is getting into the game, now we just might see some true innovation.

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Joel H replied on Tue, Sep 25 2012 12:01 PM

I think there are two ways to look at this situation. On the one hand, Intel has kept its margins high, even as OEM margins have cratered. On the other hand, the OEMs themselves *chose* to buy into the race to the bottom.

Apple has something like 9-10% of the laptop market (I don't count tablets as part of laptop sales, the two products are not fungible), but a *huge* chunk of the profits. HP and Dell, in contrast, have done occasional high-value products surrounded my a morass of cheap stuff. it has not served them well as far as establishing brand trust.

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