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Qualcomm is threatening to disrupt a PC CPU market dominated by Intel.
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Compatibility issues are a problem for Qualcomm laptops, as evidenced by Amazon's warning customers about high return rates.
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While Intel has multiple challenges ahead, market share losses to Qualcomm probably aren't one of them for the time being.
Intel (INTC -0.08%) is facing multiple headwinds in its core PC CPU market. First, the company's last-gen Raptor Lake chips suffered from instability issues, which permanently damaged some processors and took months to resolve. While Intel extended warranties, this mishap almost certainly pushed some customers to rival Advanced Micro Devices.
Second, Intel's latest Arrow Lake desktop CPUs struggled with gaming performance despite solid productivity performance and power efficiency. While gaming accounts for only a portion of the PC CPU market, AMD's products probably came to be viewed as a low-risk alternative.
Intel has done better in the laptop CPU market. Its Lunar Lake chips were impressively efficient, and the laptop version of Arrow Lake garnered far better reviews and compared favorably to competing chips from AMD. However, Intel faces an additional threat in the laptop market: Qualcomm (QCOM 0.01%) and its efficient Arm-based CPUs. Qualcomm entered the laptop CPU market last year, enabling Windows laptops powered by chips that weren't from Intel or AMD. Intel has benefited from its duopoly with AMD, but Qualcomm threatened to shatter the status quo.
Customers may not be happy
Qualcomm-powered laptops are made possible by a software layer that emulates applications compiled for x86 CPUs from Intel and AMD. This works most of the time, but not all the time. Problematic compatibility issues have been a known quantity since launch, and there's no easy fix. All it takes for a customer to be disappointed with a Qualcomm-based laptop is for a single application to misbehave.
While an Intel executive suggested that laptops with Qualcomm chips were being returned at high rates late last year, there's now definitive proof. Amazon slaps a dreaded "frequently returned item" label on products that see high rates of returns to give customers a warning about potential problems. This label has now started showing up on some Qualcomm-based laptops, including a model from Asus and Microsoft's Surface laptop.
For some users, compatibility won't be a problem. But for others, a game that crashes or an application that's painfully slow thanks to imperfect emulation is enough of a reason to throw in the towel and opt for an Intel or AMD-based laptop. While Intel's CPU lineup is a mixed bag right now, compatibility is not an issue.
No immediate threat
If Qualcomm sticks with PC CPUs, or if other companies enter the market with their own Arm-based chips, the compatibility situation is likely to improve. Software improvements could whittle down the list of problematic applications, and if enough laptops make it into users' hands, there will be an incentive for game and application developers to release Arm-native versions that bypass emulation entirely.
However, none of this will happen overnight. Making Arm-based laptops a viable option for consumers by fixing the compatibility issues could take multiple years. For the time being, Intel doesn't need to worry about losing market share to Qualcomm.
Intel has plenty of other issues, including a foundry business that needs customers, a data center business that needs to stage a recovery, no real presence in the AI accelerator market, and tough competition from AMD. Intel has a new CEO, Lip-Bu Tan, ready to make some big changes and carve out a viable path forward for the company. At the very least, Qualcomm's struggles in the PC market removes one thing from Tan's plate as he engineers a turnaround for the iconic company.
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