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Intel to stop subsidizing tablet manufacturers to use their chips

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Intel to stop subsidizing tablet manufacturers to use their chips

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November 17, 2014

Intel Logo

Intel 2014 began with an ambitious plan in mind, to send 40 million tablets with their processors before the end of the year. To do this, they were willing to risk reducing their profits to negative numbers, since they even paid a kind of subsidy to manufacturers so that they could equip the processors and also, lower the final price of the product. At the end of the year, things have not gone as expected and what they have achieved is create a black hole in their accounts.

Qualcomm, MediaTek, Samsung, Nvidia, Apple. All of them had managed to position themselves above Intel in the mobile device market, and the company was willing to risk whatever it took to sneak back onto this list. During some parts of the year, it seemed that they were on the right track, the figures said that they had gained market share, and many new tablet models had a Bay Trail, Core M or another, as a motor.

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Despite attracting weighty companies like Asus, Acer, Lenovo, HP and Toshiba, as well as multiple second-tier brands, by the end of July, the goal had become impossible. They would not reach the 40 million that had gotten between eyebrows. In addition, the cost of this strategy, for which they came to pay manufacturers, has been too high. They estimate that when the year ends, the losses will amount to some 3,000 million euros, which added to the previous year reached 5,500 million euros (7,000 million dollars). As you can imagine, an unsustainable situation for 2015.

According Stacy Rasgon, from Bernstein Research, Intel paid for each tablet about 40 euros, count up. Impossible to continue, as confirmed by the analyst Morgan Stanley Moore which raises two possible scenarios that would put this bleeding to good use: the massive inflow of income or a significant cut in production expenses. Both seem unreachable.

Therefore, the cheap tablets with Intel processors that this year have partially raised the quality of the lower-middle range, are finished. The normal thing is that in 2015 there are fewer representatives and with less attractive prices. Intel was confident of winning the favor of manufacturers with this strategy to continue collaborating with them in the future, we will see if it has been enough or not.

Source: AppleInsider