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Crossroads for Intel
pillageplunder writes "Businessweek offers a pretty balanced read on what challenges Intel faces in the upcoming year. Rivals Samsung and AMD are making inroads on Intels core businesses, an expected cyclical industry downturn looms next year, and with several critical delays in new (for Intel) markets puts its strategy at risk. A neat read."
Most businesses are considered "cyclical". Basically, this means they do better whent he economy is better, worse when the economy is worse. i.e. they do better when people and businesses have more money to spend. People hold off buying when they don't have the money, because these are discretionary expenses.
This is in contrast to some businesses which are fairly "noncyclical"--demand is relatively constant over time, regardless of ability to paty. Medical care is a classic example here--people don't decide to hold off on having tha heart attack until they have a better job.
Then, there are some "countercyclical" industries--ones that do BETTER when people have less money to spend. Examples here are businesses that make "inferior" goods--cheaper substitues for more expensive products. They do better when people have less money, because in good economic times, their products are more attractive.
To an extent, there's an aspect of being "cylical" to most businesses, but some are more tied to economic cycles than others. Intel makes a good case for being a very cyclical business--computing upgrades are a fairly discretionary expense, and delaying upgrades is a fairly common response to bad business climates. On the other hand, when the economy picks up, and people have money to spend, getting those computer upgrades they've been meaning to get for awhile becomes more attractive.
Despite Intels problems, they made a record revenue and profit report this year. They still know how to make money and some reports says that their yields are far better than others and this may be a sign of this.
In other news, there are some benchmarks on AMD's dualcore Opteron: http://episteme.arstechnica.com/eve/ubb.x?a=dl&s=5 0009562&f=174096756&x_id=1097194717&x_subject=Opte ron+dual-core+details+emerge&x_link=http://arstech nica.com&x_ddp=Y/
It appears AMD designed the Opteron from ground up to be dualcore.
I am a viral sig. Please help me spread.
I am predicting that Intel compilers department will be trashed soon. According to latest Coyote's benchmarks, GCC is caching up with performance. Moreover, you cannot improve performance of C++ compiler beyond certain limit, and it seems both intel and gcc (also MS) are close to that point. So, nobody will buy ICC to gain 5% on one app and loose 3% on another. Times when Intel had 30-40% over gcc will never come back.
839*929
I hear the pipeline on the P5 is going to be so long that Halliburton want to license it for reconstruction work in Iraq.
Well, you must have heard wrong. The Pentium only has 5 stages. Or did you mean whatever comes after the P4?
"We returned the General to El Salvador, or maybe Guatemala, it's difficult to tell from 10,000 feet"
Their new Power5 chip is a seriously good piece of engineering which will make a rather savage dent in the Intel market when people realise how good it actually is.
;-) will not even have to think twice.
Has anyone realised that it has an MTBF of well over half a century? More computing with less power: if you're running lots of blade servers this chip also solves your other big problem: heat.
The moment IBM comes out with pricing that approache Intel (and, frankly, I would be surprised if that isn't coming) anyone competent enough to work out the real TCO (get the REAL facts
IMHO, in comparison Sun or AMD don't even feature as a threat..
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Normally a cyclical industry is one that involves large capacity additions which make up both a signficant amount of the productive capacity and a signficant portion of the cost of each unit. Semiconductors and tankers are both classically cyclical industries. In real terms let us imagine that you and I have built a brand new fab, we perhaps raised $500 million in equity, got grants of $500 million and borrowed $2 billion. Perhaps we decide to compete in memory manufacture. Prior to our fab going on line let us say that capacity was 100/k 8" wafers per month. Following our fab now capacity is 140k 8" wafers per month. Each month to pay for our fab we need to generate sales of about $1600 per wafer to cover our fabs cost. If we did our market research well we should be able to cover that cost if we didn't (perhaps price declines signficantly at 145k wafers and one of our competitors increased their capacity by 20k wafers while we built our fab. Now everyone is producing to shut someone down (or waiting for demand to grow so that we can produce 160k wafers profitably (which could take several years). Upturns are caused by longer waiting by all competitors downturns are caused by capacity being added more quickly than demand, and the most money to be made is accomplished by being the only one to build before an upturn. Under those three rules (with no collusion) you will always have big upturns then overbuilding then downturns then upturns and you have a nice sine wave cycle. The overall trend of the sine wave is up, but the sinewave has a big amplitude.
In processors and other high value chips this is less true (as engineering and design talent reduces the number of competitors you are dealing with allowing more normal capacity increases to take place. Over the last thirty years only three big semiconductor companies have reliably generated more cash than is required to build for the next cycle (Intel, Analog Devices, and Linear Technologies) all three compete with very few competitors and their products require a considerable amount of design before manufacture can take place.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
In recent years, Intel has come out with the PIII with the built-in ID number, the Itanium which ran existing 32-bit software very slowly, and the P4 which has probably boosted electricity consumption worldwide to meet its voracious appetite while increasing room temperatures and air conditioning demand. Intel has allied itself with most of the major computer makers through all sorts of sleazy schemes to the point that most of the computers for sale are 'Intel Inside' machines. The largest maker, Dell, does not offer a single machine using a non-Intel chip. Millions of users have actually had to build their own machines from components if they wanted to use non-Intel parts, such as those by AMD. If General Motors dominated the car business like Intel dominates the computer business, we would have to buy a whole box of Chrysler or Toyota parts and put them together if we wanted to drive something besides GM.
So yes, Intel is at a 'crossroads' of sorts, but it is of their own making. Actually it is more like a fork in the road and Intel took the wrong turn back about the time of the Pentium.