The problem is 2-fold ARM is being supported by a lot of companies - Apple, Samsung, Microsoft, etc.... vs Intel by itself on x86 basically.
Second, ARM chips are too cheap. Intel's biz is built on $100+ chips. ARM chips are like $10. If intel's chip prices drop to say $25, they don't have nearly the money for R&D.
X86 won't die, but it can't grow and over time that's going to hamstring Intel.
I don't know that X86 can't grow over time (servers) but I think you're spot on that dirt cheap chips, and big companies that want to keep them dirt cheap, are in some sense Intel's deeper problem. Intel could make up any given technical gap eventually, but it's hard for them to shut down competition when other, very well-funded players want to maintain it.
But on the flipside, ARM right now is very, very low-end -- the fancy new Cortex-A15s only match up against Atoms in single-thread CPU performance, and Atom < ULV < LV < desktop/server. You get away with it in mobile because of lower user expectations and heavy use of the GPU. When you look a little further out (Cortex-A53/57 on newer processes) you can picture ARM in actual client computers, or at least in super-zippy mobile gadgets that some people will happily replace their computers with. (Consumer software will probably adapt to an ARMy world too--use the GPU well, adapt to slower cores, use UI tricks to hide some CPU-caused delays.)
But I can't see an ARM chip that acts exactly like a Xeon within the next few years. I bet ARM finds some niches in the datacenter, where servers today have far more CPU than they need, or applications adapt well to a sea of tiny slow cores, or both. (For instance, Facebook uses AMD memcached boxes; they could just as well use ARM, and are looking at it. Intel will make cheap slow cores for those use cases, too.) And I bet ARM will put some price pressure on Intel. But all the things a top-of-the-line Intel chip does to maximize instruction-level parallelism will be really hard for anyone to copy for a very long time.
Why can't it grow? Server builders still want the fastest CPUs. For them, x86 still gives the best performance per watt and dollar. Yes, ARM servers are starting to appear but I don't think they're up to par with Intel yet.
And the cloud needs servers. Lots and lots of servers.
True, Intel faces stiff competition here. But folks are sometimes forgetting Intel wasn't always a monopoly in its field. It had competition, lots of it over the years. I wouldn't bury them just yet.
I think programmers overstate the demand for servers vs. clients. By definition client machines could be 10 - 100,000 per server. So, yes, intel can sell a lot of powerful server chips, but the high volume client machines like desktops, laptops, phones, tablets, etc. are moving away from x86. That is bad for intel and AMD and x86 in general.
Second, ARM chips are too cheap. Intel's biz is built on $100+ chips. ARM chips are like $10. If intel's chip prices drop to say $25, they don't have nearly the money for R&D.
X86 won't die, but it can't grow and over time that's going to hamstring Intel.
Call it peak x86.