I hope everyone can agree that any competition is good competition. In more cases, than not, drives innovation and growth within the industry. There isn’t a lot of competition in discrete merchant graphics in PC gaming, commercial, workstation, and datacenter- there’s AMD and NVIDIA. I have always believed that three vendors are better for a competitive market. Look at smartphones- two vendors dominate 80% of the device profit dollars. That’s unhealthy. There are three general-purpose IaaS providers, AWS, Azure, and Google Cloud, and even more for focused workloads with IBM and Oracle. That’s healthy.
Four years ago, Intel announced its intention to re-enter the space after a 24-year absence with the i740. It couldn’t be a better time to re-enter the market with Arc products now shipping as there’s a chip shortage and a growing PC gaming industry. The week before last, Intel formally launched its Arc 3,5 and 7 notebook processor lineup for notebook PC gamers.
The chip shortage
One of the consequences, good and bad, of the COVID-19 pandemic was and still is the chip shortage. When everyone in various times of the pandemic went into lockdown, the number of devices per home skyrocketed because people were spending more time at home, students needed a device for school, and workers went to the home office. All three of these trends resulted in tremendous growth in PCs overall and PC gaming as those at home found gaming to be a way to socialize, and the need for a school or work PC became a reason also to get a gaming PC. I doubt it needs more explanation considering it impacted everyone globally.
I believe the opportunity for Intel within the PC gaming space is so promising for Intel that it would be difficult not to be competitive. I also believe that Intel is offering many gaming-specific features, like Smooth Sync, that could match what the competition is offering. For the most part, these offerings could ensure that going with Intel Arc is not a compromise when it comes to opposing NVIDIA and AMD offerings.
Selling everything it can make
The chip shortage is not going to last forever. However, I believe it allows Intel to jump into the HPG market while setting the expectation within the boundaries of supply constraints. Intel is strategically starting in notebook mobile graphics, targeting the Intel Evo thin and light notebooks. As I mentioned earlier, many consumers who bought laptops for school and work also planned on gaming. Low-end(Intel Arc 3) mobile graphics should be easier to implement into an Evo-based laptop without unbalancing the Evo Platform itself while also providing better than integrated graphics gameplay.
The PC gaming market is a huge opportunity for Intel and one of the driving markets for discrete, high-performance graphics (HPG). While I do not know the competitiveness of Intel Arc within the gaming space fully, I do know that it takes gaming very seriously with its CPU offerings. While Intel’s DeepLink technology is not a new concept, It is something to be taken seriously as Intel is making it a feature within its Arc graphics at launch. Positionally, Intel DeepLink targets all of the same qualities of the Intel Evo Platform, looking to improve performance and battery life while maintaining a thin and light footprint.
Intel introduced the Intel Arc 3, 5, and 7 mobile graphics cards with core counts and specifications, although only the Arc 3 mobile graphics will be available now, with Arc 5 and 7 coming this Summer (2022). The Intel A-Series mobile graphics will come with XeSS, DirectX12, XMX AI acceleration, Xe Media Engine, PCIe 4.0 support, and Intel Evo support. Targeting the Intel Evo thin and light notebooks allows Intel to keep its Intel Arc GPUs close to its CPU wins, ensuring that Intel should sell everything it makes. Keep in mind that Intel DeepLink and other Intel Arc features are exclusive to Intel systems.
I believe that three HPG vendors are better than two, and Intel’s presence in the HPG market should relieve NVIDIA and AMD, both of which have had difficulty fulfilling demand. While I do not believe there will be an immediate drop in price, as Intel will not make enough to make a difference, I believe innovation and availability should increase over the long haul as long as Intel remains competitive. Eventually, as we see the rollout of Intel Arc across the higher end of mobile graphics and discrete desktop graphics, pricing and availability should result in a “golden era” of high-performance graphics, and that is what we all look forward to.
However, while the number of GPU and CPU combinations has now doubled, I believe the reality of the combinations has gotten narrower in that it would be most beneficial for a notebook to have exclusive GPU and CPU offerings. Intel will have a complete GPU, CPU, and I/O offering as opposed to NVIDIA’s GPU offering and AMD’s CPU and GPU offering. Long term, I believe this should be a competitive advantage for Intel, especially on the mobile front, where upgradeability suffices for storage and memory upgrades.
I am happy to see that many OEMs have signed on to Arc notebook graphics, including Acer, Asus, Dell, Haier, HP, Intel NUC, LAVIE, Lenovo, MEDION, MSI, Samsung, CLEVO, iP3, Lengda, and WingTech. Samsung is the first of Intel’s partners with Intel Arc 3 to market in the Samsung Galaxy Book2 Pro. Although Samsung is not known as much for its notebooks as it is for its smartphones, the Galaxy Book2 Pro builds on Samsung’s credibility within the laptop market.
Intel’s 14-year discrete PC graphics hiatus couldn’t have come at a better time for gamers and OEMs. Both AMD and NVIDIA have had a hard time fulfilling demand with the chip shortage, and PC gaming is at an all-time high.
I was pleased to see so many OEMs sign on to Arc notebook graphics, and I’m interested in SKU count and how the OEMs market versus AMD and NVIDIA solutions. Intel is good at getting design wins as they pay for many of the designs with OEM R&D dollars. And from a marketing PoV, Intel spends a lot more in MDF in the channel from a cubic dollar metric.
I am disappointed not to see the 5 and 7 notebook lineup and desktop discrete, but I know Intel has a lot to think about, given AMD’s and NVIDIA’s new cards I expect in the next few months. While I always thought we should expect a mid-range Intel discrete experience, it appears Intel wants more for positioning’s sake. As AMD has learned in the ultra-premium desktop space, sticking the Arc positioning is crucial. It takes more than one good showing to change minds. If Intel delays sticking a mid-range position, that isn’t optimal and should be a warning sign.
I’m most interested in how Intel architecturally takes better advantage of owning the CPU, GPU, and I/O in the long term. Does a more unified memory architecture like the Apple M1 Series has adopted make more sense? Are there duplicate instructions you can remove from the combined CPU and GPU to improve efficiency and lower cost? Is there a better way to do ray tracing? We will see.
For right now, we have a third discrete PC GPU merchant vendor, Intel, and that’s a good thing. I expect availability to increase, prices to decline and innovation to increase. Isn’t competition great?
Note: Moor Insights & Strategy co-op Jacob Freyman contributed to this article.
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