How Intel Missed the iPhone: The XScale Era

Original Article ↗ Hacker News Discussion ↗

Early Mobile Devices and the XScale Era

  • Several commenters reminisce about early 2000s PDAs (Dell Axim x50v/x51v, HP iPaq, Sony Clie) using Intel XScale.
  • Hardware was briefly impressive: ~600 MHz ARM CPUs, discrete GPUs, good media playback, emulation, and (for the time) usable web browsing.
  • Later devices regressed in clocks, GPUs, and display resolution, and Windows Mobile/CE is widely described as clunky and limiting despite some strengths (one‑handed nav, non‑volatile memory).
  • Workarounds included overclocking, storage cards, Wi‑Fi adapters, and even running Linux/BSD.

How Intel Evaluated the iPhone Opportunity

  • Many object to framing Intel’s choice as obviously wrong at the time, emphasizing hindsight bias and lack of clear data.
  • Others counter that Apple’s iPod success and trajectory made a large mobile play at least worth a serious strategic bet.
  • Otellini reportedly wanted to say yes but rejected Apple’s offer because the requested price was below Intel’s forecasted cost; later he said both costs and volumes were badly misestimated.
  • Commenters note Intel’s culture: finance‑driven, fixated on high margins and $1B+ businesses, wary of uncertainty and of undercutting pricing for existing XScale customers.
  • Intel later burned substantial money on “contra‑revenue” subsidies trying to push x86 into mobile, suggesting recognition of the earlier miss.

ARM, XScale, and SoC Economics

  • XScale was already widely used in PDAs and early smartphones (Palm, BlackBerry, HTC); some argue canceling it was a major strategic error.
  • Others argue XScale was over‑spec’d and too costly for early iPod/iPhone needs, and ARM reference cores plus many vendors meant little moat for Intel.
  • There is disagreement over “no money in mobile SoCs”: some point to Qualcomm and TSMC’s enormous value as clear counterexamples.

Debate Over the iPhone’s Early Impact

  • Strong disagreement on how obvious iPhone’s success was:
    • One side: from launch it was a “Jesus phone,” lines around the block, immediate #2 US smartphone vendor, and Android was radically redesigned in response.
    • Other side: initial sales were modest versus Razr/Nokia/BlackBerry, touchscreens and AT&T exclusivity limited adoption; real takeoff came with 3G/3GS, App Store, and cheaper contracts.
  • Most agree the App Store, full browser, unlimited data, and multitouch UX were eventually decisive, though exact timing and predictability remain contested and somewhat unclear.

Apple, Fabs, and Long‑Term Consequences

  • Apple now designs its own chips but relies on TSMC; several argue TSMC’s early, high‑volume Apple business underwrote its process lead over Intel.
  • Some think if Intel had embraced ARM/XScale for Apple early, Apple might not have gone so hard into in‑house silicon, and Intel might have retained more relevance in mobile and possibly Macs.
  • Others argue Apple’s drive for control and margins meant it would eventually replace any external chip designer regardless.