3.0 Cents Down -- Part 1

3.0 Cents Down

Down Down Up, Down Down Down Up, Down Down Down Down Up ... ...... ......... Wondering what this is? If you familiar to the electronics industry and follow the processor market closely, this pattern should be familiar to you. It does not strike a chord, then may be let me not put you through more ignominy. I am referring to the stock price pattern of the bellwether of the silicon manufacturers Intel.

Now Now, don’t look at me that way as if I have committed a blasphemous act. We have to accept the facts however hard they be. I am not here to track the stock of Intel, however I should accept that it was the primary inspiration for what is to follow in this piece of a few hundred words.

Before any further let us delve briefly into the history. Started in 1968 by three legends Robert Noyce, Gordon Moore, and Andy Grove as a memory manufacturer, Intel quickly changed gears to the design and development of the microprocessors. Being the pioneers in this space and with their business acumen, they became trend setters in an increasingly competitive industry. A look at the historical stock performance should ratify the previous statement. I was truly impressed with the way they built on a notorious FP bug to create a space, a brand called intel in the minds of consumer. Consider this does an average consumer care which company provides the chip inside its latest music system, its latest HDTV, or for that matter the ubiquitous cell phone and numerous other electronic items that we use daily. But, when it comes to microprocessors every body irrespective of his knowledge of computers has an opinion on which processor to use. Giving due credit where it is due, AMD owes Intel for creating a market in the mind of consumers for what we call “CPU”.

After the kick off of this successful campaign, Intel always lead the path with Pentium, then the Pentium MMX, then the GHz campaign. All the while laughing there way to the bank with over 90% of the market behind them. Then came the .dotcom burst and the industry went into the worst recessions of our times. But the picture at intel was different, there was a tenacious team in Israel which came up with a very power efficient entity when combined with couple of other entities gave a product which has changed the way people define computing. Not surprisingly this contributed to the bottom line and continues to do so.

The run after the bubble was simply brilliant in its own words. Is it truly so? I doubt, why do I do doubt? Look at the stock price. An all time high revenue could not interest the market to raise this one time , “apple in the eye”, to new levels. Any way with much ado and fanfare Intel entered into what it termed its next version Intel 3.0 a platform company. Now I stop here on the history and move on.

In spite of all the talk about the new brand image and the subsequent brand promise, the promise of the upcoming products doesn’t convince me of the rosy days ahead. Why I am not convinced forms the crux of the rest of this article. Let me first talk about the things that intel is doing that even I feel are right. And then I will put down my explanations on what will go wrong unless we at intel pull our socks and get back to the table (Please!! not the board room). Then I will also suggest a solution which I am sure are highly controversial, but keeping that we are in business to make money first, and then anything else, just give a thought to this.

The tenets of business requires it to keep itself relevant to the needs of its target market. When you feel bigger than the market, a day will come when you will be humbled, and made to bite the dust. Did we at intel lose sight of the market needs or did the market really expect something else?

In the processor market it is a tricky question to answer. Until the dawn of the new millenium this market was more or less like a monoploly, dominated by one company and its only other competitor lying low in slumber. Did customer really had a choice? Intel is a terrific opportunist, taking stock of the situation and there excellent capabilities to innovate in manufacturing, kept on launching new products, which were faster than the previous ones. Now there is nothing wrong with this, intel was doing the right things winning more and more customers.

Here we will digress a bit to understand the human dynamics of success. When one is hugely successful he will garner as many detractors as admirers. Same is the true with companies. As they grow successful you will find many resenting its offerings just because it is successful and nothing else.
Coming back, as we saw intel was doing very well. And success is not a sweet word if it makes you complacent.

If we had lose market share to our competitor This to the the architecture that intel is being raved about by the industry. Will it stand the market, only time will tell. One thing is for sure that it is better than the previous processors based on the P4 core.

Netburst architecture tauted as the architecture for the future not so long ago fell flat on the face. It is very common in an industry of this nature that we make mistakes, but what matters is how fast we learn from it.
Itanium referred to as the Itanic a la. Titanic is one of the biggest flops of the decade. I always believed that it has got the stuff in it to revolutionize the HPC. And intel is doing good by putting in moolah behind it.