Three months ago, Intel CEO Brian Krzanich told a room full of people that his company wants to make everything smart, but the so-called 'Internet of Things' concept got little mention during last week's earnings call. There were bigger fish to fry -- most notably, Intel's smartphone and tablet division, which lost nearly $1 billion in the first quarter.

Intel has been trying for years to gain a foothold in mobile devices, and those efforts are becoming costlier. In a bid to sell 40 million tablets this year, the chipmaker is subsidizing hardware makers that use its processors.

Thus far, the subsidies aren't paying off. Intel shipped only 5 million tablet processors last quarter -- not enough for a 10% market share let alone the 15-20% that CFO Stacy Smith is predicting for full year.

The problem is that while Intel's processors have become competitive in terms of performance and battery life, they're still haunted by a lack of integration when compared to rival products built on ARM Holdings' technology. This translates into higher material costs as tablet-makers are forced to buy components a la carte. It also means poor compatibility with existing designs, the vast majority of which are ARM-based.

Full story at Minyanville.