But after Intel Chief Executive Officer Brian Krzanich's keynote at the Consumer Electronics Show (CES) 2014 in Las Vegas Monday evening, it's clear the world's largest semiconductor maker is determined not to repeat that mistake with wearable technology.
It's a smart strategy; wearable technology is one of the top growth areas of consumer tech. Research firm IHS says the wearable technology market will triple from $10 billion in 2013 to $30 billion in 2018.
And growth in new markets is something Intel desperately needs.
While Intel stock rose a healthy 28% in 2013, its revenue has been stuck at around $53 billion - and has even slipped a bit over the past few years thanks to the decline in PC sales. Since the 1980s, most PCs were powered by Intel's chips - which helped the company prosper.
But Intel's chip industry reign was washed away by the wave of mobile device sales that started with the 2007 iPhone. Mobile devices are most often powered by chips made by Intel rivals Qualcomm Inc. (Nasdaq: QCOM) or Samsung Electronics (OTC: SSNLF) and based on technology licensed from ARM Holdings (Nasdaq ADR: ARMH).
Now with wearable tech still in its infancy, Intel sees an opportunity to recapture some of the sales for consumer device chips it lost to the mobile wave - and fuel a continued climb for INTC stock.
How Intel (Nasdaq: INTC) Plans to Profit from Wearable Technology
CEO Krzanich heavily emphasized wearable technology in his CES speech, unveiling several Intel-designed products including a smartwatch, earbuds that can monitor the wearer's heartbeat, and an audience favorite - a "smart" bowl that can recharge the batteries of any mobile device tossed into it.
While the products Intel is showing at CES won't appear in your local Best Buy Co. (NYSE: BBY) any time soon - they're "reference designs," or prototypes intended to inspire other manufacturers - they prove Intel has been doing a lot of thinking about the potential of wearable technology.
And the Intel prototypes boast a key attribute not shared with all wearable tech products...
They don't require another mobile device, like a smartphone, to function.
"What's holding back wearables in this marketplace?...They don't integrate all the features you want. You still have to have something else with it. And you're not solving the real problems that people want solved," Krzanich said. "So then we asked: How do we fix that? Then we came up with a simple answer: Make everything smart."
It's also important to realize that while much of the wearable technology of today, such as Google Glass, may seem awkward, we're really in the very first chapter of this era. Remember how clunky the first cell phones were, or the first PCs from the early 1980s?
While Intel's wearable tech prototypes grabbed most of the attention, that's obviously not how the chipmaker expects to make money from this tech trend.
That's where Quark and Edison come in, both of which Krzanich also discussed in his CES keynote.
Quark is a tiny, low-cost, low-power "system-on-a-chip" designed specifically for wearable technology devices and the "Internet of Things" (the idea that most everyday objects will have embedded microchips in them, allowing them to transmit data to other computing devices.)
Edison is a tiny, Quark-based computer that fits on an SD card - the same diminutive cards used by many digital cameras. Edison, which is about as powerful as one of Intel's old Pentium processors, will go on sale in mid-2014.
While such tiny chips sell for much less money than the chips Intel makes for PCs or high-end data servers, the company expects that its efficient manufacturing processes will deliver good profit margins.
And with demand for embedded chips expected to run into the billions over the next several years, for use not just in wearable technology, but in such diverse areas as healthcare, energy, and transportation, innovations like Quark and Edison could completely re-invigorate Intel.
Of course, Intel is also pushing hard to maintain its primacy in the PC market, to aggressively go after more business in the server and cloud computing market, and to become more competitive in the mobile device market.
"Our strategy is to lead in every segment of computing," Krzanich said at a September Intel developer conference.
Intel (Nasdaq: INTC) stock was trading at about $25.32 as of mid-day Thursday. It pays a dividend yield of 3.5%.
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