We could be in for a bout of deja vu all over again. Last May, Intel Corp. (NASDAQ: INTC) announced a new microprocessor and a new trademark — Ultrabook — to carry the company into the new era of mobile computing. Today, the company is announcing a $300 million marketing fund that will focus on “investing in companies building technologies that will help revolutionize the computing experience and morph today’s mobile computers into the next ‘must have’ device.”
Intel has virtually no position in the new mobility market, having missed the boat on smartphones and tablets, primarily to Apple Inc. (NASDAQ: AAPL), ARM Holdings plc (NASDAQ: ARMH), Qualcomm Inc. (NASDAQ: QCOM), and others. And if the Ultrabook fund reminds you of the company’s famous ‘Intel Inside’ campaign begun in 1991, you’re probably thinking that the smaller chipmakers had better watch out.
The ‘Intel Inside’ campaign has become a text-book study in how to buy market share. Intel supported PC makers with market development funds (MDF, in industry talk) equal to up to 6% of the average selling price of a PC in exchange for putting that little sticker on the front of the CPU. Over the course of the campaign, Intel is believed to have spent up to $3 billion on MDF.
No money actually changed hands because Intel deposited the funds in an account for, say, Dell Inc. (NASDAQ: DELL) or Hewlett-Packard Co. (NYSE: HPQ) and then the PC makers would draw on the funds to pay for advertising the products. Intel got to approve every ad and to direct the media buys.
The power of this campaign lies in the amount of money committed to supporting it. The initial $300 million Intel is committing to the Ultrabook is more than the initial $250 million the company committed to ‘Intel Inside’. Intel is serious about this Ultrabook thing.
Intel’s roadmap for the Ultrabook includes shipping products by this year’s holiday buying season. A second generation processor will be available in the first half of 2012, and the third generation is expected in 2013.
Just reading today’s press release might lead one to believe that Intel is supporting companies that are fostering innovation in mobile computing. Let’s be clear: the only innovation Intel cares about is whether or not the Dells and HPs of this world use the company’s chips. And Intel is again ready to pay up to make that happen.
Paul Ausick
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