Several important new releases and updates were recently announced. This week Microsoft released Windows Phone 8 Update 3 and pre-released Windows OS 8.1 (some reviews Windows phone and bridge to Windows tablets and Windows 8.1). Directly related to these events are the upcoming releases by Intel with Bay Trail chips for tablets and hybrids that will all have Windows 8.1 and Android slated for November, in time for the consumer electronics (CE) heavy holiday season. Not to be slighted, of course, is the much anticipated October 22nd Apple event with expectations high for updates to the iPad series and MacBook Pros, the latter to also feature Intel's new Haswell processors.
Product launches begin to frame market
While we wait for the actual releases of the next set of CE products, among the rumors and forecasts we know that Intel is both responding to and shaping market patterns for this quarter and into next year. A significant focus for Intel is the tablet and hybrid market, which aligns them in direct competition with ARM. Importantly, these Atom-based Bay Trail chips that "will be in 10 tablets and hybrids by the end of November," are also initially running on Windows 8.1 and are slated for the lower and mid-range pricing tiers, roughly US $299 - $399 (e.g., Lenovo and Acer). According to the ComputerWorld article, "Intel has projected Bay Trail tablets with Android to start as low as $150." While the initial roll-out of Bay Trail will be 32-bit, 1Q14 is expected to be the roll-out time for the 64-bit versions for Windows 8.1.
Competition is savvy and tight in this hot CE market, and the upcoming October 22nd Apple iPad announcements and other product releases are expected to directly line up against the Windows and Android OS devices. Rumors circulating around the upcoming iPad 5 next week are fixed on an expected upgrade to the processor. According to MacRumors, "It is expected to come equipped with an A7X 28-nanometer chip from Samsung as well as increased RAM." As CNET reports:
The iPhone 5S' A7 is a powerful piece of silicon, but if history is anything to go by it will pale in comparison to the iPad 5's expected A7X. With a larger higher-resolution screen, the iPad 5's GPU has more pixels to render, which means more work and a higher bandwidth requirement.
So, don't be surprised if we see a few extra GPU cores in the A7X.
New hope for the PC?
At the crux of the competition being played out before us in the form of new CE product and processor releases, is the question of device popularity translating into demand and forecast. Unfortunately for the traditional PC, the market continues to disfavor these devices over smartphones and tablets. A recent IHS report found that "Total PC shipments reached 74.4 million units during the April to June period, as presented in the figure, down a steep 13 percent from the same time a year ago—the largest drop so far of the last eight quarters."
As IHS argues, the upcoming Microsoft Windows updates do still hold the potential for supporting new desktop and ultrathin laptop purchases because of the new versions running on 64-bit processors meaning enterprise and consumers will have to make choices since older machines will not handle the new OS. Similarly, the increase in competition and falling prices for ultrathin portables may also drive demand and help boost the wider PC market, according to the same IHS report.
A bit of a monkey wrench has hit the Intel and Ultrabook roadmap though, as Intel recently announced a delay in production for the Broadwell processors "due to a manufacturing glitch," as reported by ComputerWorld. The Broadwell processors are produced at the 14nm process level, while Haswell is produced at the 22nm level. The delay in the Broadwell processors could trickle down and adversely affect OEMs, "Analysts said the manufacturing issue could delay the chip's release to PC makers, affecting the release dates of their products," according to the same ComputerWorld article. Next year, Intel is slated to release Airmont for tablets and smartphones, another processor at the 14nm node.
Meanwhile, according to the Wall Street Journal (WSJ), TSMC, "which makes microprocessors based on designs provided by clients such as ARM Holdings PLC and Qualcomm Inc.," is expected to go into 20nm mass production next year and follow to 16nm architectures in 2015. But TSMC has been facing difficulties as well, as the WSJ reported, "[TSMC] posted record-high revenue in the third quarter, [but] warned growth is likely to slow in the current quarter as smartphone makers order fewer chips for high-end phones. But it also expects the slump to be temporary, predicting a return to new revenue records next year as it begins mass production its most advanced chip-making technology."
In short, competition in the smartphone and tablet sector continues to be tough and has pushed up the supply chain to the chip manufacturers themselves. Noteworthy in the recent releases and news, we are seeing the increasingly inter-connected aspect of device OEMs, chip manufacturers, and operating system platforms that need to align for a successful device launch today. At the crux of this relationship are the changes in design to processors and core architectures alongside of the demands made of devices today, a critical shift in the evolution of the processor wars as discussed in the recent Smith MarketWatch Quarterly, recently released to subscribers (free subscription).