Intel needs to move quickly in tablets, which are eating into the sales of netbooks and low-end laptops, a staple of Intel's business, said Nathan Brookwood, principal analyst at Insight 64.
"Nobody expected the iPad to be the phenomenal success it has been," Brookwood said.
Intel is the dominant player in the PC market, with its chips going into more than 80 percent of the world's PCs. But PC shipments have declined due to a growing interest in tablets, according to surveys by IDC and Gartner this week. Worldwide PC shipments declined by 3.2 percent in the first quarter of 2011 compared with the first quarter of 2010, according to IDC. The research company estimates that tablet shipments will reach 44 million units this year, up from just 18 million last year.
Intel took some time to assess the tablet market, but its accelerated strategy should bring it closer to ARM on power consumption, a key variable.
"People don't value the performance as much as they value the battery life in the [tablet] space," Brookwood said.
The rapid progress in Intel's manufacturing process will leave "ARM suppliers scrambling to keep up with the process wars," said Jack Gold, principal analyst of J. Gold Associates, in a research note on Thursday.
"Once Intel gets to 32-nm, and then advances to 22-nm, we expect them to be as energy efficient and effective as ARM," Gold wrote.
Intel will also differentiate its chips through features such as integrated security and specialized accelerators to improve multimedia performance, Gold said.
Intel has also helped to extend a variety of operating systems, such as Google's Honeycomb, to work on its x86 Oak Trail tablets. The upcoming Windows OS will also work on both Atom and ARM processors, so the competition there will be on even ground, Gold said.
"It's not that the ARM vendors ... won't be successful. It's that they now have a formidable competitor with attractive products and huge manufacturing capability," Gold wrote.
As Intel draws closer, chip makers that license ARM processors are also improving performance while reducing power consumption, Insight 64's Brookwood said.
ARM has already announced the Cortex-A15 chip design, which is faster and more power-efficient than its predecessor, the Cortex-A9. Qualcomm, which makes the Snapdragon processor, and Nvidia, which offers the Tegra processor, will also offer chips made with 28-nm processes by early next year.
ARM processors are designed with smartphones in mind, which gives the platform an architectural advantage to cut power consumption, Brookwood said. Intel's chip designs originate from PCs, and the company may find it difficult to reach deep down to cut lower levels of power consumption.
"Intel would have to be better [to beat] ARM. They are the challenger," Brookwood said.
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