Whenever the phrase “inflection point” comes up at Intel, you know the speaker is channeling Andy Grove, the former chief executive who used it to describe a key business moment in his book Only The Paranoid Survive.

The biggest inflection point for Intel was when it came under pressure from Japanese memory producers in the mid-80s and decided to abandon that market and establish itself in the relatively new field of microprocessors.

At Intel’s spring analyst day on Thursday, Paul Otellini, the current chief executive, identified a non-existent market at present, which he predicted would be a new inflection point for the company.

He foresees Intel’s low-cost, low-power Silverthorne processor family, appearing on smaller 45-nanometre chips next year, as driving new products from small internet devices to consumer electronics boxes and ultra low-cost PCs.

Mr Otellini is making a big bet on this unproven segment, which his company thinks could be worth $30bn and total 900m units in 2011. He had earlier put 1,000 engineers to work on the Ultra Mobile PC (UMPC) concept and last month announced the smaller Mobile Internet Device (Mid) format.

The UMPC has yet to take off and Intel had previously failed to make any significant inroads with its processors in mobile phones.

However, poor battery life has been the main criticism of UMPCs since their launch in 2006 and Mr Otellini said Silverthorne chips from 2009 would have a twentieth of the power requirements of its first UMPC efforts.

Such advances could certainly boost the category, but these cheaper lower-margin chips are unlikely to represent the kind of inflection point that would see them supersede Intel’s core business of notebook, desktop and server microprocessors.

May 4th, 2007 in Mobile | Permalink