Desktops, notebooks, tablets: Just five years ago, those three words defined three distinct classes of products. But now consumers are being asked to choose among all-in-ones, two-in-ones, convertibles, mini-tablets, ultraportables, and phablets. With Intel’s new “Bay Trail” Atom chip, due this fall, you can expect the market to diversify even more.
And that’s a beautiful thing.
For all of the various types of computing devices we might purchase, each is defined by its operating system. We buy a Windows machine, an Android device, or an iPad.
But that may soon change. Intel’s Bay Trail supports both Windows and Android, and hardware manufacturers will be able to build machines that boot into either OS—or both. Their OS implementations notwithstanding, system prices could drop as low as $150, Intel executives have claimed.
Intel’s investors might worry that the advantages of Bay Trail will encourage customers to migrate away from the more expensive Core chips used in traditional PCs. To PC makers, however, the new chip may well prove to be an escape hatch for a market that’s on its way down: Bay Trail represents a chance to offer consumers the tablets that they overwhelmingly prefer plus the most popular mobile OS in Android, as well as an opportunity to expand market share through a new tier of low-cost devices.
Bay Trail is the successor to the chip code-named “Clover Trail,” the Atom Z2760 processor that Intel originally aimed at the Windows convertible market in September 2012. Although Clover Trail’s low power consumption and long battery life were impressive, the chip’s performance was disappointing. But Intel promises that the “Silvermont” architecture underlying Bay Trail will improve upon Clover Trail by offering two to two and a half times the performance, while providing a power reduction that’s about four and a half times that of the Clover Trail chip.
Last year, Intel began offering a Clover Trail+ variant that could run Android. While the total number of design wins remains small, the dual-core Clover Trail+, also known as the 1.6GHz Intel Z2560 chip, powers one biggie: the Samsung Galaxy Tab 3.
Intel’s new chief executive, Brian Krzanich, says that with respect to Core chips, Atom will be “an equal player in technological leadership.” And Intel is thinking first and foremost about the ultramobile market, with tablets playing an increasing role. “We believe what [Bay Trail] really does [is that] it allows us to get into these markets that we’re not in, in a big way today,” he noted during an earnings call last month.
It seems almost inevitable that Intel will release several different versions of Bay Trail, simply because the chip straddles so many different markets. When Bay Trail enters the ultraportable Windows 8 PC market, it will have very little competition—just Intel’s own Core chips, and a small showing from AMD.
In the tablet arena, however, “Intel is battling Qualcomm and Nvidia,” says Tom Mainelli, an analyst for IDC. “And you’ve also got dozens of small ARM-processor makers all fighting for a share of the market.”
In Asia and in other emerging markets, the situation is even worse, with cut-rate tablets vying for the consumer’s wallet. Mainelli says that at the recent Computex show in Taiwan, he saw $99 and $129 tablets “that are pretty good.” That means even cheaper chips to compete with, such as MediaTek’s MT8125, a quad-core 1.5GHz ARM processor that the Asian chip designer has aimed at budget tablets.
What these conditions will create is “hypersegmentation,” says John Wallace, a business line manager within Intel’s Mobile Communications Group. Bay Trail will play within a number of tiers, from smaller, 7- to 8-inch minitablets all the way up to 11.6-inch tablets and two-in-ones that do double duty as laptops.
“No doubt it will be a challenging environment for everyone involved,” Wallace says. “But we like a good fight.”
The sizzle? Android. The steak? Bay Trail’s price
So Bay Trail is important for Intel. But what will it mean for hardware makers and, eventually, for customers? The answer: flexibility.
None of the top-tier tablet vendors we reached out to—including Asus, Lenovo, and Samsung—would provide on-the-record comments regarding their Bay Trail plans. Two smaller manufacturers, Archos and MSI, declined to comment as well.
But analysts and two OEM sources say that what interests them most of all is Bay Trail’s pricing advantage, and how it could help push prices downward into high-volume growth segments. NPD stated last month, for example, that the sub-$300 PC market is expected to grow more than 10 percent in 2013, while the overall PC market should decline by about 7.8 percent overall. The overall tablet market, meanwhile, grew 59.6 percent recently.
“My guess is that Windows 8.1 on Bay Trail, at $149 and $199, is a pretty compelling offering,” says Nathan Brookwood, an analyst for Insight64. “Windows 8.1 cleans up some of the controversies from the Windows 8 launch last year.”
But the real surprise was the Samsung Ativ Q, a 13-inch tablet-laptop hybrid that combines a 3200-by-1800-pixel display with a more traditional Core i5 processor. Users can swap between Android and Windows at the touch of a button, and the clamshell notebook folds back into a more traditional tablet shape. Asus took the same one-button, swappable approach with the Asus Transformer Book Trio, an 11.6-inch Android tablet that, when snapped into a keyboard dock (complete with its own Core i7 processor, by the way), can run Windows 8. Asus hasn’t revealed a price or a ship date for the device (see the image at top), but it’s most likely due by the end of the year.
According to IDC, Android is the mobile OS leader, owning 79.3 percent of the worldwide smartphone market and 62.6 percent of the tablet market. It’s also killing Windows in the apps battle: While over 800,000 Android apps are available, the Windows 8 ecosystem claims just over 100,000. So dual-booting Bay Trail devices will allow customers to combine the best of both worlds, supporting productivity software such as Microsoft Office on Windows and more recreational apps on Android. The Ativ Q can even share data between the operating systems.
That doesn’t mean that all OEMs will pursue the same approach, however.
“One thing I’ve learned: Dual boot means something different to every OEM,” Intel’s Wallace replied when asked whether other products would follow the Ativ Q’s lead. “It can mean app virtualization, or it can mean dynamic switching between one OS and the other. Without saying too much, some are looking to [use Bay Trail] to configure build-to-order machines, or Windows and dedicated Android hardware using a common bill of materials and inventory. I can’t comment on specific OEM plans, but it’s an interesting question. Among all of those vendors we’re working with, there’s work going on” in many of those segments, he said.
Some experts still aren’t excited about the prospect of running Android apps on large-screen devices, however. That group includes Pat Moorhead, principal analyst for Moor Insights and Strategy. “I think the Android/Windows dual-boot capabilities are a really bad idea on any devices above 7 inches,” Moorhead said in an email. “There are less than 5,000 Android apps that are optimized for devices above 7 inches and therefore I think it delivers a lousy experience.”
Wallace is quick to back Windows, citing Strategy Analytics numbers that put Windows tablets at about 8 percent of the market. And the growth rate of Windows apps is strong—combine that with the existing Android app market, and “it bodes well for the future,” he says.
It’s true that the Windows tablet market needs a kick in the pants. IDC puts it at just 0.8 percent of the total market. To parse the numbers in a different way, just 2 million Windows tablets shipped during the second quarter, according to Ryan Reith, who runs the Mobile Device Tracker program for IDC. Of those, about 300,000 were Microsoft’s Surface.
“While the total is still somewhat small compared to the overall tablet market size, I think this shows decent progress,” Reith said in an email. “We expect that growth to continue into the second half of 2013 as those same vendors continue to push price points of Windows tablets down closer to that of iOS and Android tablets.”
Designed for Android or Windows
Wallace declined to comment when asked whether Intel would sell more Bay Trail chips to the traditional Android tablet market, or to the Windows tablet/ultraportable segment. “The fact that Intel can design for both of them is a major statement of credibility,” he says.
Questions remain, however. Intel isn’t acting in a vacuum; Bay Trail will be competing against ARM chips such as the Qualcomm Snapdragon 800, which has already been benchmarked, in traditional Android tablets. If Qualcomm or Nvidia can convince buyers that their chip is the premium offering—whether in an Android tablet or a refreshed Surface RT—Intel may have to sit on the sidelines for a generation.
Several sources also made the point that consumers have already sampled cheap tablets, were turned off by the experience, and may be reluctant to try such models again. “There’s definitely a difference in buying a $59 no-name tablet from BigLots and a Nexus 7,” IDC’s Mainelli notes. “I think that in mature markets, like the U.S., consumers will only be willing to do that once. Next time around, they’ll want to spend a bit more money” for a better experience, he says.
Wallace agrees, saying that Intel’s internal research had showed a higher rate of returns and dissatisfaction with tablets currently priced at $80 or so.
A ‘converged’ tablet?
If OEMs do choose the dual-boot route, combining Android and Windows in a single device, it could create a new class of device. Call it a converged tablet, for lack of a better name. But it’s a strange dichotomy, too: Bay Trail also seems poised to help the market diversify further, with converged tablets providing yet another option for consumers. Spin it as you will—is the market growing more flexible, or is it merely fragmenting?
“We’ve had this discussion internally as well,” Intel’s Wallace says. “Is the market going to settle on just a few devices? My personal opinion is, in the near term we’ll see increased experimentation, and I mean that in a good way.”
Disclosure: PCWorld, TechHive, and IDC are all owned by International Data Group.