Intel’s contra-revenue antics may be coming to an end, according to Morgan Stanley analyst Joseph Moore. Intel’s decision to subsidize Bay Trail chips for Android tablets was somewhat controversial, to put it mildly.
The company’s subsidies per tablet were estimated at as much as $51 and the chipmaker practically lost money on each Intel-based Android tablet. More conservative estimates put the figure at $20+.
In a recent note Moore wrote that Intel is expected to phase out subsidies over the course of 2015. He said the decision could “blunt the company’s momentum in tablets significantly.”
"Eliminating these losses would require either massive revenue gains, or massive expense cuts, and we don't see a clear scenario for either of them," said Moore.
Moore estimated that Intel would lose $4 billion this year thanks to its contra-revenue programme. The company’s mobile chip arm lost $3 billion last year for a combined total of $7 billion over the course of just two years.
Intel says it is on track to hit its target of 40 million tablet parts this year, but the market share gains were made possible by generous (and unsustainable) subsidies.