The next generation could tilt the balance in Atom's favor by fully exploiting Intel's manufacturing advantage. Up to now, Atom chips have lagged behind the company's PC and server processors. Whereas Intel manufactures its leading PC and server chips in the latest 22nm FinFET process, "Medfield" gets by with the previous-generation 32nm planar process.
From a business standpoint, this strategy makes sense, because PC and server processors sell at higher prices and in higher volumes. Future Atom chips, however, will no longer be hand-me-downs. Atom chips are moving to 22nm technology this year and to next-generation 14nm technology in 2014. ARM manufacturers simply can't match that pace.
But even if Atom can beat ARM's power/performance efficiency, Apple may not switch iOS to the x86. All those zillions of apps for iPhones and iPads are natively compiled for ARM. Either software developers would have to recompile them for the x86 or Apple would have to provide an ARM-on-x86 emulator. Although Apple has successfully used emulation to smooth the Mac's platform transitions, an emulator's overhead in CPU clock cycles, memory, and power would be a greater burden for a mobile device. Unless an Atom processor can emulate ARM faster than an ARM processor can run its own native code, Apple would have little or no technical reason to switch CPU architectures.
Don't rule out the Steve factorSo far, all this analysis overlooks one vital factor: Steve Jobs. Although Apple's co-founder no longer dwells among the living, his famous "reality-distortion field" radiates from the grave.
Jobs never liked sharing profits with anyone, which is why Apple's platforms are walled gardens. Apple's "curated" model of app-store merchandising exerts almost total control over software distribution while keeping a large slice of the revenue. That model started with iTunes, surged with the iPhone and iPad, and is gradually encompassing the Mac. Now, instead of buying readily available off-the-shelf chips, Apple is designing its own ARM CPU cores and iOS application processors -- difficult projects that cost the company about $500 million for acquisitions, licenses, and engineering just to get the first chip out the door.
In other words, sometimes Apple goes to great lengths to assert control over its platforms and customize its products, never mind the expense. Thus far, the strategy has paid off, making Apple one of the world's largest companies by market capitalization and amassing it $121 billion in surplus cash.