In 2006, Intel supplied their XScale design to Palm for the Treo 700, to Blackberry for the Pearl and Curve AND to HTC for use in the XDA/MDA Windows Mobile line, in 2006 arguably the much bigger wins as all those were established constantly-growing product-lines already on sale globally.

Apple demanding a (probably much) lower price-point to have the SoC applied in a mysterious unknown project without a volume-commitment could as well have destroyed the business and profit-margin for the entire Xscale business for Intel and its other customers...

There's no reason Intel had to give the same price they would have given Apple to another customer.

Intel often cuts prices to favored customers to win business, for example they did so for the original Xbox CPU, to prevent an AMD from being used.

There's no reason for other customers to strangle Intel or move (again) to TI OMAP platform when they find that Apple as a new entrant in their market got favorable terms from one of their suppliers...

In 2006, Intel has just won back Palm from TI and were under incredible pressure from Qualcomm who had their MSM7200 SoC in the pipeline (which integrated both CPU and Modem in a single low-power package).

> Intel often cuts prices to favored customers to win business, for example they did so for the original Xbox CPU, to prevent an AMD from being used.

There's "cutting prices" and then there's selling BELOW COST, without a volume-commitment from the customer for long-term break-even...

> There's "cutting prices" and then there's selling BELOW COST,

Otellini himself later claimed that they miscalculated the cost regardless of volume.

> In 2006,

Problem is that they had already decided to get rid of XScale due to "reasons" by that point.