Apple (NASDAQ:AAPL) chips away Intel’s (NASDAG: INTC) chip market share

FOR many years, Moore's Law was regarded the sacred rule of information technology. It predicted that industry advances would require a doubling of chip capacity every 18 months. 

The law was named after Gordon Moore, a co-founder of Intel, who first postulated the idea in 1965. Unfortunately for Intel, the company paid too much attention to the law and too little attention to what was really going on in the consumer electronics world. Personal computers, the old industry standard, were becoming eclipsed by mobile Internet devices like tablets and smartphones that required a new kind of chips.

Intel officials attending the annual Intel Developer Forum held in Beijing last week admitted with some embarrassment that Moore's Law no longer holds true. 

"It's a pity that we looked forward, but we acted at a slow pace," said Ian Yang, Intel China's president.

It was a remarkably frank admission from the world's biggest computer chip maker, a company that many think blew the opportunity to position itself early in the market for chips operating on mobile Internet devices. That market is now dominated by the likes of Apple (NASDAQ:AAPL) and ARM.

For past decades, Intel developed chips for computers and set market trends because of its huge market share and influential sway over the industry, The company captured around an 85 percent share of the computer chip market, especially after it developed products for netbooks - super mobility computers with basic Internet functions.

Moore's Law might have held true for Intel had not seen the tablet computer suddenly burst on the scene. When Apple (NASDAQ:AAPL) launched its iPad globally last year, the industry framework changed dramatically - and not in a way favourable for Intel.

Compared with the traditional computer and the lightweight netbook, the iPad provides users a long battery life, touch screen and huge amount of online applications that add up to a popular user experience.

For the industry, it has boiled down to a battle between computing power and user experience, and Intel is finding itself on the wrong side of the trend.

Intel has focused its chip development on computing ability and now the firm isn't able to provide a chip with what is known as "good enough" power consumption for mobile devices.

"'Good-enough computing' has become a firm reality," said Jay Chou, an analyst at IDC, a research firm. "The real question PC vendors have to think hard about is how to enable a compelling user experience that can justify spending on the added horsepower." 

In 2010, Apple (NASDAQ:AAPL)  sold 15 million iPads. In the United States, Apple (NASDAQ:AAPL) 's mobile computer sales, including iPad and Mac laptops, have surpassed that of Hewlett-Packard, the world's No. 1 PC maker.

In the past two weeks, Lenovo, RIM, Motorola and other companies have launched their own tablet computers in China. 

Acer was the latest to join them with a new line of tablet products unveiled last Friday. Most tablet products now feature ARM chip architecture and Qualcomm chips, though Apple uses its own chips. In short, Intel has been bypassed. 

The popularity of tablets and even smartphones is hurting PC sales, a segment that Intel heavily depends on at present. 

Global PC sales fell 1.1 percent in the first quarter compared with the same period last year, according to Gartner.

IDC estimates PC sales have fallen 3.2 percent because consumers are flocking to the newer mobile technologies. 

The consumer wave has not only hit Intel but other industry players who put their faith in Moore's Law.

Source: Shanghai Daily