MMI has been shifting away from proprietary app and comms processors for a number of years and this is a a continuation of Jha's policies. This news is more of a loss for QCOM as they were certainly hoping to have an "in" with Jha to possibly displace TXN parts on Motorola devices.

INTC isn't done with Medfield, of course, you should expect more cores & and aggressive push on process nodes. I would consider it is a validation for their new mobile strategy: http://www.intc.com/releasedetail.cfm?ReleaseID=559064

And as to your point about ARM-based devices being more "innovative," to some extent all the ARM-based devices are basic shared-memory architecture with the same mix of IMG GPU's as Medfield. You could argue, conversely, that Intel is at least trying to innovate on their pipeline and memory architecture (an increase the L2 cache for example) which the ARM-based SOC's are not doing.

Of course I guess this just means you'll see ARM A15 designs coming to market sooner in an attempt to separate from Medfield?