Analyst: Olivier Blanchard
Publication Date: September 10, 2024
Document #: AIOAB202409
Overview: Intel has released its Lunar Lake Core Ultra AI PC processors ahead of its original ready-date but months behind Qualcomm and AMD. This insight peers into the state of the nascent AI PC segment to determine, from both a silicon and a PC OEM angle, if Intel’s late entry into the Copilot+ ecosystem will hurt Intel’s chance at capitalizing early on the impending PC refresh supercycle, and if it will even matter six months from now.
Does Intel Entering the Copilot+ PC Ecosystem Late Really Matter?
Analysis
In case you need it, here is a little background on this topic: Just last May, Microsoft announced a new category of Windows 11 AI-capable PCs, dubbed “Copilot+ PCs” in partnership with Qualcomm. To earn a spot in the Copilot+ PC ecosystem, the processor powering a PC must be capable of delivering over 40 TOPS (trillions of operations per second) on the NPU (neural processing unit), and meet or exceed other minimum system requirements that ensure fast, thermally efficient AI-enabled features. The initial June launch only included laptops powered by Qualcomm’s new Arm-based Snapdragon X processor – both the flagship 12-core Snapdragon X Elite processor and its slightly lesser 10-core Snapdragon X Plus. Virtually every major PC OEM participated in the launch (Acer, Asus, Dell, HP, Lenovo, Microsoft, and Samsung), releasing their first wave of Snapdragon X powered Copilot+ PCs. Microsoft teased that it was working as fast as it could to also bring AMD and Intel into the ecosystem, which was expected to happen later in the year.
Jump forward a few weeks to the June Computex conference in Taipei: AMD announced new Ryzen AI series processors – an x86 processor built for the Copilot+ PC ecosystem, immediately followed by announcements from key PC OEMs. With Snapdragon X boasting incredible performance and battery life, and AMD rolling in with up to 50 TOPS and impressive battery performance of its own, the Copilot+ PC semiconductor race was officially on. The only major PC processor missing from the party, however, was Intel.
Pat Gelsinger did deliver a keynote at Computex, promising that its new Lunar Lake processors were at least as good or better than Qualcomm’s and AMD’s, and indicated that the chips would be ready to launch in September. Given how light on details the keynote was, there was some question as to whether or not Intel would be able to deliver on those promises. Add to that Intel’s daisy chain of challenges in recent months, and people watching these events unfold had a cause to wonder if Intel might struggle a bit to catch up to Qualcomm and AMD on the Copilot+ worthy processor front.
Jump forward again, this time to the first week of September, to the pre-IFA press week in Berlin, and as promised, Intel introduced the PC industry to its new Lunar Lake Core Ultra processors – all nine of them. The press conference was unusually bold for Intel, betraying both the company’s pride in its product, certainly, and perhaps also some frustration at having been doubted. Swings at Qualcomm and AMD aside, Intel’s new Lunar Lake processors looked solid, and appeared to provide a worthy alternative to AMD’s Ryzen AI and Qualcomm’s Snapdragon X processors. And just as with Qualcomm and AMD, major PC OEMs wasted no time announcing entirely new Copilot+ ready PCs powered by Intel’s new chips launching in the October–November timeframe, effectively welcoming Intel to the ecosystem at long (or short) last.
Microsoft support update: Microsoft simultaneously confirmed that support for Copilot+ PCs powered by AMD and Intel’s Copilot+ PCs would begin sometime in November, ending Qualcomm’s Snapdragon X exclusive earlier than I had expected.
Does Intel entering the ecosystem late really matter? One of the most common questions I have gotten in recent weeks, including since Intel’s Lunar Lake announcement just before IFA, is “will Intel being late to this market matter?” My answer is no. It won’t. Not in the long term. Let’s discuss this question and other important considerations.
What you need to know about Intel’s entry into the Copilot+ PC ecosystem: Opportunities, threats, timing, and other competitive considerations
- Where there were two, now there are three: With Intel’s Lunar Lake Core Ultra processors entering the AI PC market – and more importantly the Copilot+ PC ecosystem – the semiconductor trinity is now complete: By the end of this year, consumers and commercial users of PCs will be able to purchase Copilot + PCs with either Qualcomm, AMD, or Intel processors, depending on their needs and preferences.
- Opportunity/threat – New PC category = a full reset of performance expectations: This new category of PCs, which can deliver not only exciting on-device AI-enabled features but also significant improvements in processor speed, performance per watt, and battery life, effectively resets expectations for the PC segment – expectations that Intel will have to meet (or exceed) in order to be competitive against AMD and relative newcomer Qualcomm. This means that while Intel enjoys a strong incumbent advantage, it may not be able to rely on it quite as much as it might have in the past. PC users have more options now, and Intel will have to earn their business, not just expect it. However that manifests itself – better battery life, better performance, a more well-rounded user experience, lower price points… it doesn’t matter. Intel will need to communicate and prove its unique value to PC buyers all over again.
- From PCs to AI PCs to Copilot+ PCs – the segment’s reset won’t be trivial: Copilot+ PCs are expected to become the dominant PC segment within three years. While it is too early to gauge exactly how fast the segment will grow YoY, we expect as much as 60% of the PC market to transition to Copilot+ PCs in the next 2–3 years. This is why many of us in the tech industry are talking about being on the edge of an AI PC refresh supercycle. This translates into very high stakes for PC OEMs and their semiconductor partners, including Intel.
- x86 vs Arm – The Windows PC ecosystem just got a lot more interesting: I could (and probably should) write a thesis on this, but the short of it is that unlike Intel and AMD’s processors, Qualcomm’s Snapdragon X processors are Arm-based, just like Apple’s M-series chips. This opens up exciting new possibilities for Windows PCs, and this was evident during Microsoft’s Copilot+ launch keynotes. What Snapdragon X processors deliver is Mac-like performance on a Windows 11 machine, essentially giving Windows PC users the best of both worlds: Windows and Mac. While this is wonderful news for PC users and Microsoft, it isn’t necessarily great news for Intel, who now finds some of its market share potentially threatened by Snapdragon X processors.
- Update – Software compatibility isn’t the thorn in Arm-based processors’ side that it once was: Qualcomm and Microsoft spent several years working on this problem and all but solved it – partly by working with major software solution vendors to address it natively, or by significantly improving emulation. Windows 11 was designed for this. Intel won’t be able to rely on that advantage in the way it might have two years ago.
- Gaming performance – Advantage Intel (maybe): Snapdragon X does seem to struggle a bit with gaming though, so Intel may seize on the opportunity to push gaming performance benchmarks to assert itself over Qualcomm (and perhaps even AMD). We saw some evidence of that already in Intel’s keynote, so expect more of it in the coming months.
- Battery life – Advantage Qualcomm (mostly): It is too soon to have a clear sight of the new Core Ultra’s real world battery performance, but based on its 1/3 NPU, 1/3 CPU, 1/3 GPU approach to processing, and the beefy GPUs Intel equipped Lunar Lake processors with, I expect battery performance to vary wildly depending on the tasks being performed. I will be surprised if Core Ultra battery performance for most workloads manages to outperform Snapdragon X processors.
- AMD advantage – AMD: AMD has its fans, and rightly so. High performance at a lower price point, different approach to hardware design, an x86 alternative to Intel… there are dozens of great reasons to prefer AMD to either Qualcomm or Intel, and that too will play a part in the looming market share land grab that the Copilot+ ecosystem may unlock.
- Threat – The AI PC refresh supercycle could drive new PC market share away from Intel: Don’t discount Intel’s ability to compete and win in a segment it has dominated for decades, especially on the commercial side where risk aversion will help Intel retain a chunk of market share, no matter what. Having said that, watch carefully for signs that AMD and Qualcomm are leveraging their unique value propositions to win market share away from Intel, though perhaps more with consumers than professionals, which brings us to the main question of the day.
- Will Intel releasing Lunar Lake months after Qualcomm and AMD’s processors matter? While it certainly didn’t help Intel to enter the market last, I don’t think it will make much of a difference in the long run. Copilot+ PCs have only been available for a couple of months now. Intel is still inside of the launch window for the new PC category. So long as Lunar Lake processors deliver on Intel’s promises, Intel will be fine. If the processors underdeliver, don’t quite meet expectations, or can’t compete against their Snapdragon X and Ryzen AI counterparts, however, that’s a different story. The slight launch delay should be all but forgotten by next spring.
- Timing is of essence though – Support for Windows 10 sunsets next fall: It was important for Intel to accelerate its release and have Lunar Lake processors in commercial and consumer laptops as soon as possible for two reasons. The first is that support for Windows 10 is scheduled to end next fall. This means that IT departments are starting to accelerate their next PC refresh cycle now. Every week that Intel failed to have Lunar Lake-powered PCs in the sales channel was a week left open for AMD and Qualcomm-powered AI PCs to ship instead. And the second reason is that from the numbers that we are seeing, IT departments have not been in a “wait and see what Intel is going to do” mode. Purchasing has remained fast and furious for Copilot+ PCs. If anyone was waiting for Intel before making a purchase, they were in the minority. Intel knew that it had to move, and it did.
- Opportunity – The end of Windows 10 support is actually a much more critical factor in the adoption of (Windows 11) Copilot+ PCs than their impressive AI capabilities: Businesses and consumers aren’t primarily buying Copilot+ PCs for their AI features yet. Future proofing for AI is obviously critical, but performance improvements and potential are driving the lion’s share of purchasing decisions. The MVP of reasons why the PC refresh is bound to accelerate in the next 12 months, particularly in the commercial side of the PC segment, is the end of Windows 10 support next fall.
What remains for Intel and its PC OEM partners is to clarify for PC users what exactly Intel brings to the Copilot+ ecosystem that differentiates its processors from AMD’s and Qualcomm’s enough to make people choose them over the alternatives. For now at least, Intel is finally in the race for what looks like very compelling IP, and that’s a start.
Read Intel’s full Lunar Lake Core Ultra press release, as well as our coverage of the Lunar Lake Core Ultra launch.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
Intel Sticks Lunar Lake Core Ultra Landing as AI PC Race Heats Up
Computex 2024: Intel Catalyzes AI Everywhere
The PC Segment’s AI Inflection Point: Copilot+ PC Cheat Sheet
Author Information
Olivier Blanchard has extensive experience managing product innovation, technology adoption, digital integration, and change management for industry leaders in the B2B, B2C, B2G sectors, and the IT channel. His passion is helping decision-makers and their organizations understand the many risks and opportunities of technology-driven disruption, and leverage innovation to build stronger, better, more competitive companies.
