Intel's outgoing CEO explains how they turned down the original iPhone

Intel CEO Paul Otellini has stepped down from his post, but not before divulging some interesting revelations in the process. As it turns out, Otellini and Intel turned down the chance to work on the original iPhone, now with some element of regret. As Otellini told The Atlantic:

"We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it. The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do... At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it. It wasn't one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought."

On the one hand, at the time no-one probably did know just how much of a success the iPhone would become, and how many units would be shipped. Since then, Intel has finally begun to make moves into the mobile market, but they're very much late to the party and going their own way.

The full article at The Atlantic is a lengthy profile of Paul Otellini's time at Intel, and is definitely worth a read. If they had supplied chips to the original iPhone, though, how different their presence in mobile could be today.

Source: The Atlantic

Richard Devine

Senior Editor at iMore, part time racing driver, full time British guy

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Intel's outgoing CEO explains how they turned down the original iPhone

4 Comments

The really interesting question is whether that proposed iPhone chip was ARM-based or legacy x86-based, e.g. Atom. I'd guess Intel proposed a legacy x86-based chip, and Otellini asked for an ultra-high Intel Tax because he thought Apple had no choice. If so I'd imagine that Otellini's thought process went something like this:

"Dang. Those ARM chips are cheap and powerful. But no, there's simply no way Apple can cram a legacy desktop OS like Mac OS X into a device that small. And OS X already runs on our legacy x86-64 architecture anyway. It would take them years to port OS X back from CISC to RISC."

"And no, there's no way Apple can achieve economy of scale on a niche market product like a touchscreen smartphone. It'll be a low-volume product, and it will need vastly more power than any ARM chip could ever deliver. Apple will be forced to pay our price, for Atom, no matter how high it is. We've got our boot on their neck."

So yeah, maybe Otellini's claim of Apple not wanting to pay "a nickel more" is true.
But one thing is for sure. When Otellini says "I couldn't see it," he isn't kidding.
How could he see it? His company has built chips for Windows boxes for decades.