Intel To Lay Off 1000 Managers

sprash writes to mention a Forbes article about an Intel cost-cutting measure. In response to stiff competition from AMD, the company is laying off 1000 managerial positions. From the article: "In April, Intel reported a 38 percent drop in first-quarter profit as demand slackened for PCs and microprocessors from AMD continued to steal market share. That same month, Chief Executive Paul Otellini vowed to spend the next 90 days identifying underperforming business groups and cost inefficiencies in an effort to save the company $1 billion a year. He said he planned to make changes as his analysis progressed, rather than waiting until the end of his review."

Comments

Where are those anti-trust advocates now?

[dada21]

I remember over the years how a bunch of the regular mods used to mod me down as troll when I defended Intel against the "they're a monopoly!" posts. For the newbs here, Intel in the past was right up there with Microsoft now, IBM in the 90s, GM in the 80s, etc. Intel wasn't a monopoly, they were just a very aggressive company with a great marketing system, great support, great products and happy customers. As I said many times (I wish I could dial back to quote my old posts), Intel's future would be as shortlived as IBMs was, as Atari's was, as GM's was -- there is no need to start screaming anti-trust! anti-trust! when a company you don't like seems like they'll never fall. I said Intel would have its down days, just as I say today that someone will beat Microsoft fair and square some day, too.

Here are some posts that I recall people talking about Intel being a "bad monopoly," looking back in recent slashdot times:

Timeline Set for Intel/AMD Antitrust Trial
Intel and Skype Exclude AMD
AMD Files Antitrust Lawsuit Against Intel
Japanese Government Raids Intel Tokyo Offices
AMD Alleges Intel Compilers Create Slower AMD Code

Of course, some people will defend their "Intel is a monopoly" belief by saying they're not really a monopoly, they just engage in anti-competitive practices. Like what? Lowering prices below market value? That is _good_ for consumers because NO business can sell for a loss forever -- the minute that they raise their prices after they've wiped the competition clean, new competition will turn up the beat them down again. It has to be good prices, good quality hardware and good quality support -- if they want to give items away, let them. The other anti-competitive practice we hear about is how they "force" suppliers to buy bundles or maintain a certain ratio of items sold to branded items bought. Again, this is all acceptable if the contract stipulates these situations -- most suppliers are happy to sign agreements if they know what the customers want.

I'm glad to see these big companies fall because they're all colluding with the various governments to maintain their power through what I consider negative rights -- copyright, patents and ridiculous mandates requiring their products. Some even have defense contracts. They fall because the customer decided -- there are no natural monopolies as long as the customer is given the opportunity to make their decisions. The market will decide the victor, and the victor won't be on top for long.

Re:Where are those anti-trust advocates now?

[rainman_bc]

That is _good_ for consumers because NO business can sell for a loss forever -- the minute that they raise their prices after they've wiped the competition clean, new competition will turn up the beat them down again.

Not necessarily. It takes enourmous amounts of capital, and even more importantly, reputation to compete in the processor space. It's not like anyone can jump on that...

Recall the success of Cyrix, and consider the success of Transmeta and Via today. The processor space is currently about reputation. AMD started getting some respect around the time of the Athlon.

Re:Where are those anti-trust advocates now?

[GlassHeart]

Lowering prices below market value? That is _good_ for consumers because NO business can sell for a loss forever -- the minute that they raise their prices after they've wiped the competition clean, new competition will turn up the beat them down again.

You are wrong. Every business has a barrier to entry, and a new entrant always risks losing the resources they spent overcoming that barrier. If a monopolist is allowed to sell below cost to get rid of a competitor, it creates a chilling effect even if they later raise their prices. A new competitor must consider what happens if the monopolist does it again, and if the barrier to entry is already high (a fab, for example), the competitor will think twice and walk away instead.

Sure, if competitors keep showing up, the monopolist cannot withstand the losses forever. However, everybody except the last competitor who dethrones the monopolist loses, and nobody wants to be cannon fodder.

Re:Where are those anti-trust advocates now?

[Chris Burke]

Intel wasn't a monopoly, they were just a very aggressive company with a great marketing system, great support, great products and happy customers.

I won't argue against the description in the last half of this sentence, but you are on a dangerous crack/heroine mix if you think Intel wasn't a monopoly in desktop PC processors.

As I said many times (I wish I could dial back to quote my old posts), Intel's future would be as shortlived as IBMs was, as Atari's was, as GM's was -- there is no need to start screaming anti-trust! anti-trust! when a company you don't like seems like they'll never fall. I said Intel would have its down days, just as I say today that someone will beat Microsoft fair and square some day, too.

I wouldn't light the candles on your "The market's Invisible Hand has proven me right!" cake yet.

First, what even makes you think this vindicates your "not a monopoly, market corrects itself magically" position? This is not the first time Intel has layed off workers. This is not the first time they have had a large downturn in revenue.

Second, what is the only reason you could come close to saying that Intel has lost their monopoly position? AMD.

Who would not exist were it not for the restraints placed on Intel by anti-trust laws? AMD.

It would have been so easy for Intel to kill off AMD if they could have used their position with impunity. They could have "cut off the air supply" of AMD in a way that would have made Bill Gates weep. Microprocessors are not like operating systems. There is a very real and very expensive investment in manufacturing facilities necessary. If Intel had, say, given the OEMs the ultimatum to stop selling AMD or pay double for Intel parts after AMD had built and bought the equipment for their Fab 30 in Dresden but before it started shipping parts for revenue, AMD would have gone bankrupt in a year. Some OEMs may have defected, but not enough to keep AMD's afloat. AMD had neither the marketshare nor the market credibility nor the manufacturing capacity to be a replacement for Intel. Ergo, they would have gone with Intel. Bye, bye, AMD. Bye, bye, dada's smug assurance that the market sorts everything out.

Even as it was, limited as they were by their fear of anti-trust action (and I interned there; believe me Intel was definitely scared of anti-trust action and made a point of listing all the things they'd like to do but can't because of it), Intel still used their position to hurt AMD. They have been giving sweetheart deals and cooperative marketing dollars to OEMs based not on how many Intel parts were sold, but on how few non-Intel parts were sold. That's literally anti-competitive.

It's great to think that the consumer will simply choose an alternative if some dominant force becomes too abusive. The reality is that they can only choose an alternative if one exists, and they will not shift instantly. If they don't shift fast enough to keep that alternative alive, the alternative goes away and then where are you? That's right: back in monopoly land.

I know you think that all monopolies can only exist if they are government enforced, but reality says that monopolies can exist and be quite stable for a long time, and that the very nature of their power allows them to make their position more stable. I will even hypothetically grant that eventually any monopoly must fail, but "Eventually may recover from years or decades of horrible stagnation" is not a great advertisement for the Laisse Faire system. The fact is that monopolies are both a stable point and broken corner case of free markets, and having reasonable restrictions on the actions of monopolies is a good thing -- because it grants the little upstart who otherwise could be easily and legally crushed a chance to build up and face off against the behemoth. Alternatives don't just spring from the ether and they don't just sustain themselves on their impassioned belief in the free market. Especially not in an industry with barriers to entry as large as microprocessors.

Sorry, but Intel is a perfect example of why anti-trust is a good thing.

Re:Where are those anti-trust advocates now?

[Slack3r78]

Lowering prices below market value? That is _good_ for consumers because NO business can sell for a loss forever -- the minute that they raise their prices after they've wiped the competition clean, new competition will turn up the beat them down again.

I don't have the time to respond to your whole post, but this reeks of someone that whole-heartedly embraces free market economics but skipped the chapters regarding barriers to entry.

What you're describing is predatory pricing, which is generally only good for the consumer in the short run. In the long run, the lack of competition resulting from it generally ends up being bad for the consumer, especially in a market which has excessively high barriers to entry like the processor business.

The processor business is exceedingly difficult to get into these days. First off, you need very smart (and therefore, very expensive) engineers. Then there are IP issues all over the place. As a startup, you most likely wouldn't have the kind of patent portfolio neccessary to interest Intel, et al into any kind of cross-licensing agreements.

Now, assuming you somehow manage to overcome those obstacles you need to actually make the things. A modern chip fabrication facillity costs literally billions of dollars and takes several years to build. Oh, and assuming you somehow manage to get the capital for a fab, you're going to run into yet more IP issues regarding the fabrication process. You see, making chips that are both profitable and competitive these days means you're going to need to use bleeding edge fabrication techniques that are also patent encumbered, which generally aren't covered in any cross-licensing deals over actual processor technology. (See: IBM's strained silicon on insulator technique. There's a reason Intel's not using it.)

If you go down the list of barriers to entry in the Wikipedia article, you'll find the only two that *don't* apply to the processor business are government regulations and "restrictive practices." It's an exceedingly hard business to get into and just a difficult to stay in once you're there. Just look at the charred remains of Cyrix/National Semiconductor and Transmeta if you need examples.

Re:Where are those anti-trust advocates now?

[starseeker]

Lowering prices below market value? That is _good_ for consumers because NO business can sell for a loss forever -- the minute that they raise their prices after they've wiped the competition clean, new competition will turn up the beat them down again.

Actually, there is an optimal point there that basic capitalism doesn't gravitate toward. What happens in a scenario of brutal competition is not only does the price go down, but the quality goes down too - to the bare acceptable minimum that still gets people to buy the product. If you want to stay alive in a brutal market you cut costs, and keep cutting them until you're down to bedrock. Unfortunately this means cheaper ingredients, less severe tolerances, etc. etc. etc. People are not good at identifying pre-purchase (at least at the consumer level) when a product loses quality - in most cases, they won't find out about it until they actually put the product into real use, at which point its not returnable. And since EVERYONE in the industry is doing the same thing, high quality goods will vanish from the market place. There aren't enough discerning customers (statistically speaking) to force a high quality level. PCs are a good case in point - remember those Compaq video cards a few years back? My university's IT department didn't even need to debug the problem - they just brought over a new video card when the signal failed because they knew that's what it was.

the minute that they raise their prices after they've wiped the competition clean, new competition will turn up the beat them down again.

Which is why, once the quality goes down, it is hard to get it up again. Over-engineering is considered a waste of money in an economy where durable goods are considered less desirable (from a business standpoint) than goods that last only a short time - as long as people buy more, you can make more money off of selling the same (cruddy) design over and over than selling a good product once. Of course, this assumes that our resources are infinite, and I suspect someday we will be mining our dumps for raw materials that we are today burning through at an appalling rate.

there are no natural monopolies as long as the customer is given the opportunity to make their decisions.

Actually, there are natural monopolies. Some, like the phone system, were temporary. Others, like Windows, are longer term because they are rooted in the complexity of the training required to use them effectively. Windows users spend a great deal of time learning the complex task of using a computer running Windows, and that investment is so large almost any purchase price is preferable to repeating the training. I'd call that a very natural monopoly.

Capitalism, when functioning properly, is quite efficient. The problem is, it is insufficient to guarantee quality. That's why we have an FDA, for example.

Most of the time, things work reasonably well. However, we could be using our resources FAR more efficiently than we are. Computer cases, for example - why on EARTH should we replace the case when upgrading the hardware? Just make the best form-factor case possible and make the electronics pluggable components. Most of the fans, case plastic, etc are usable for decades when done correctly. My IBM keyboard is probably 20 years old, and it works as well or better than most modern keyboards I have used. That is the standard to aspire to - use resources effectively for the long term. How to do that, I'm not quite sure - but a way needs to be found.

Unlike other companies...

[Alizarin Erythrosin]

Unlike the company I work for that creates an entire new layer of management, then does layoffs for all its technical (read: non-management) workers.

Management Still Important

[ObsessiveMathsFreak]

Despite the expierience of not a few Slashdotters, managers are still quite important in any organisation. Their job is to manage things so that you can get your job done. They're there to make sure the lights stay on, that there's water in the coolers, donuts in the kitchen, that you get a new computer, that you can order software, that you get feedback on your code, that you don't have to go looking for customers, and so that you don't have to deal with every trifling detail that goes with running an organisation and basically can just get down to work.

Unfortunately, some managers get it into their heads that not only should they make the company run smoothly, but that they should also run it outright. When this happens, it's best for the CEO's/directors to prune things pretty quick.

Re:Management Still Important

[asuffield]

I can make that even shorter:

A good manager removes problems without people noticing. A bad manager creates problems in order to be noticed.

Problems to be removed particularly include anything that could waste the time of people who are supposed to be doing real work. Problems that are often created are ways of wasting those people's time - like compensating for the manager's lack of understanding by explaining things to them, instead of doing something productive.

If you can't understand what you're employees are doing without them explaining it, you probably aren't qualified to manage them. This problem seems extremely common in the technology sector. Presumably people think that because managers are interchangeable in the low-skill sectors (retail, customer service, etc) where anybody can understand what the workers are doing, the high-skill sectors should work the same way - but they don't.

That's not to say that managers need to be smarter than their workers - they don't need to be able to *do* those jobs. They just need to be nearly-as-smart as their workers in order to understand without needing to be educated all the time.

Overdue, maybe?

[JayDot]

How do you have thousands of managers and not have someone who needs to be laid off (for real reasons)? And to have 1000 that can be shown the door just seems to indicate that such an action is loooooong overdue.

Intel should layoff 1 manager

[Coward Anonymous]

It's funny how when a company does very well, the CEO takes credit for all the brilliant choices s/he made. Yet, when a company flails, it's not that CEOs fault until after it has been thousands of underlings' faults.
Otellini should resign. He stands for all the things Intel is/was not. He's a marketroid in what was and should be primarily an engineering driven organization.

CxO pay cuts?

[DAldredge]

How much of a pay cut will the Board of Directors and CxO's take?

Re:10% cut?

[flooey]

I personally know three people who worked at Intel, one who still does. All worked in the same division, so this isn't a representative sample. But all of them saw money thrown around quite freely, including on hardware and on salaries (which are among the highest in the area here). I hope they tried to cut other things before they started firing.

Well, I don't think it's that simple. If you reduce employee benefits, you risk having some of your best people (the people who could most easily get jobs elsewhere) start leaving. By having a layoff, you're hopefully going to be getting rid of some of your worst people. So, it may be wiser (from a business perspective) to lay off people rather than cut benefits, even though it's not very nice.

This should improve profitability

[ElectricRook]

less managers will probably allow their employees to actually get some work done

In some cases, that's right. My last manager practiced the BDOS attack (Boss Denial of Service). Where every 15 minutes, he would ask me the status of project [X, Y, Z]. This occured when I was using the debugger and stepping through my foobar PERL program. I had all the variables and contexts loaded in my head, and PHB would jump in for the next round of BDOS attack... Needless to say, my brain does not do cache hits very well. Massive core dump, my face probably had the expression of a SPED (special ed) for a few minutes. I'd have to re-group to even think about what projects were in work. Then I could look up the log files, and check on the progress. Needless to say, I then re-started the debugging from the beginning again. After 15 minutes, PHB started up the next round of BDOS, again ElectricRook does the core-dump.

I always made great progress when I'd order a pizza, and stay late debugging.

Yes, I work for Intel.

Re:10% cut?

[Monkelectric]

Yes, I've been through this as well. The company makes people nervous, and all of your *TOP* talent leaves because they're top talent, they can get a job anywhere. You loose signifigant domain knowledge with those people. Then the middle teir starts leaving under the stress of having to do *ALL* the work (remember: the bottom does very little work). Eventually you are left with a few middle teir people, and everyone who never should have worked for you in the first place.

I find layoffs to be a logical fallicy. Unless you are reducing your product lines, or support, or sustaining engineering ... Then you're either saying "We are overstaffed and therefore fuckups" or you're saying, "We plan to abuse our current employees into doing more work." Either way, a sign taht the end is coming.