The personal computer industry is undergoing a major shift, with Arm-based processors starting to challenge the long-standing dominance of Intel’s x86 architecture. While this change marks a new chapter for the market, it’s not without its challenges. Intel’s interim co-CEO, Michelle Johnston Holthaus, recently raised concerns about the rising popularity of Qualcomm-powered Arm laptops, specifically pointing to high return rates caused by compatibility issues with commonly used software.
Compatibility Issues Fuel Return Rates for Arm PCs
At the Barclays 22nd Annual Global Technology Conference, Holthaus highlighted that retailers are facing high return rates for Qualcomm’s Snapdragon-powered laptops. She attributed this issue to compatibility problems with essential applications, claiming that returns have become a major concern for retailers. However, actual data on these return rates is limited, making it hard to verify her claims. Qualcomm swiftly responded, maintaining that their return rates are in line with industry standards and that they expect a significant shift toward non-x86 laptops in the next few years, with predictions of 30% to 50% of laptops transitioning to Arm-based platforms.
Arm PCs Are Gaining Traction Despite Challenges
Despite the ongoing debate, Arm-based PCs are gradually making their mark. Qualcomm, for instance, sold 720,000 PCs in the third quarter of 2024, capturing around 0.8% of the market. The overall Arm-based PC segment now accounts for approximately 10% of the total market share, largely driven by Apple’s successful M-series chips. However, while growth is evident, Arm-based PCs still lag behind x86 systems in terms of market share and broader adoption.
Intel remains confident in its x86 architecture, with Holthaus asserting that it remains the “best overall basic architecture.” She also pointed out that Intel continues to enjoy strong customer loyalty, despite the growing competition from Arm-based devices.
Qualcomm’s Ambitious Outlook and Growing Ecosystem
Qualcomm is aiming to carve out a bigger slice of the PC market with its Snapdragon X Elite chips. These chips promise extended battery life and enhanced support for AI features like Microsoft’s Copilot. However, despite these advancements, Qualcomm’s share of the market is still relatively small when compared to Intel’s x86 chips. Industry rumors also suggest that other companies, such as MediaTek and Nvidia, may soon enter the Arm-based PC market, further intensifying competition. Nevertheless, Qualcomm remains optimistic, anticipating growth in the coming years as more users embrace Arm-powered devices.
Intel’s Strategy: Innovation and Performance
Intel is aware of the competitive pressure from Arm-based systems and is responding with innovations to maintain its leadership. The company has focused on improving performance and power efficiency, especially with its new hybrid architecture that combines Efficient-cores (E-cores) and Performance-cores (P-cores). This design aims to balance power efficiency with high performance, addressing the challenges posed by Arm-based competitors.
Intel’s Lunar Lake processors are a prime example of these efforts, offering significant performance improvements, including a 2.6x boost in performance-per-watt in data center applications. Additionally, Intel is working with Arm to develop low-power system-on-chip solutions, demonstrating its willingness to adapt to the evolving market dynamics.
Artificial intelligence is playing an increasingly important role in shaping the future of the PC market. In the third quarter of 2024, AI-enabled PCs accounted for 20% of all PC shipments, marking a 49% increase from the previous quarter. While Intel and AMD continue to dominate this sector, Qualcomm’s Snapdragon X laptops are gaining attention for their AI capabilities, as well as their impressive battery life.
