'Regardless a small trade-off in margins to get to 4X tablet growth is well worth it. '
It won't be worth it to the stock price because it will stunt its growth next year if there is no profit increase next year because of it. It is symptomatic of the old Intel who felt it had to rush in price-wars with AMD for single digit percentage gains while asps lost much more per cents in the ensuing bloody battles. Atom can succeed on its own merits in time to become numero uno and without throwing money at to get arbitrary early marketshare which will hurt the following year's models as prices would have already been lowered before their arrival. It was the 2nd strategy mistake in this meeting, the other one was the openness to fab anybody's ARM chips if the price is right regardless of the long-term competitive effect on x86. BK and SS were too smug, they don't yet fully realize what negative forces they have unleashed.
The point is without that 1.5% hit they would have not guided flat profits for 2014 too. They should only use n-1 process Atoms as price weapons not the latest n process atoms too. Creates a bad precedent and basically says if there is any growth of any sort in 2014 we are not expecting it. He's basically killed the stock guidance for a year unless there is a surprise upside.
' That ARM would move up on a day where Intel indicates ...' it is not averse to becoming another ARM foundry for the right price is not laughable.
slide 19 of 2013_IM_Smith.pdf
–Increased operating loss on higher NRE and contra revenue
–Corporate gross margin impact of (1.5pts) in 2014
Intel's x86 strategy is fine now. They have gone from nowhere in mobile to arguably having the best two tablet chips, Haswell-Y and Bay Trail. Look what ARM chips fabbed in inferior fab processes have done to the PC industry, Now what will Intel fabbed ARM chips do again to that same PC industry ? Why would Intel in their right mind indulge in purposely aiding external cannibalization by companies who are prepared to live on lower GMs than them ? It's a knee-jerk panic move, unnecessary when the x86 pipeline is full enough to do the job by itself. This is how great companies can die, by choosing a wrong strategic fork in the road.
Don't know. For the first time since 2006 I now have doubts about Intel and its business strategy.
How about this for a nightmare scenario ... just say someone keeps building good ARM chips continuously like say Apple and Intel makes them for them and PC chips say fall behind eventually for arguments sake. Now what if Intel has a process hiccup one generation and another foundry does not so it loses Apple's business to them. With not so pricey x86 chips now and failing external foundry business does Intel look like Intel any more or more like AMD before it sold its fabs ? This is obviously a worst case scenario but it does show the potential future long-term pitfalls of enabling competitors.
They are not doing it to compete organically but to quadruple tablet market share in a year by using price as a weapon but at the expense of 1.5% company gross margins ! They did the same silly thing with AMD competing in unnecessary price wars for years and all that happened was that marketshare roughly remained the same for both but PC asps collapsed during the price wars.
Once upon a time Intel used to get virtually all the money from the world's application processors. Those times will never return if it aids competitors to x86. With its process lead it has a chance to turn the whole ARMy into AMD eventually when it comes to profits but not if it fabs their chips. It will help keep them alive. ARM is like a cancer to Intel, it needs to be cut out not offered a host body.
Flat because he has foolishly decided to enter the ARMs race to the bottom when quite frankly he could have just held back with Core and let the server part of it get Intel greater profits next year. They are trying to win the last battle which is long gone now.
Exactly. He's just pumped ARMH by 4% and INTC will go down tomorrow because they guided for flat revenue. You know why they guided for flat revenue ? Because they are subsidizing Atom next year just to compete with ARM cheapies in a race to the bottom for marketshare rather than letting its superior value take marketshare organically and profitably albeit at a slower rate. I could tell just by looking at him the light is on but no-one's home.
'If INtel can get more per wafer than x86.'
Seriously how likely is that for an applications ARM SoC ? This is fantasy talk.
I have been right about both ARM and ARMH. ARM products have faltered and stuttered and ARMH could not hold $50.
' now's it's 2-4 more years'
How long did it take the Core architecture to destroy AMD and you have your answer.
'realizing there's LOTS of money to be made on other than x86..'
Not remotely enough to replace the $20bn cash that x86 brings in.
'BK is a top-notch CEO '
No. He does not really know what he is doing.
No he's a simpleton like you. A guy promoted beyond his capabilities. An E.L.E is what he is offering.
He said low-margin not low-end. A small enough ARM SoC die priced at $30-40 could be quite high margin but unfortunately it would keep ARM in the game indefinitely. Sorry but I carefully looked at his eyes and facial expressions when he discussed this and it seems to me that he does not understand the full implications of this line of thought when carried through to its logical conclusion. He's just looking at this from a pure die profit POV which is too simplistic.
Great PR headlines for a day and it pleases the idiot herd but no long term good will come of it unless you are an ARM groupie like getanid61 who does not like Intel making obscene money off its PC chips. My worst fears about BK (and the BOD) have been confirmed, they did not fully understand the high x86/process moat Otellini was building which only needed more time (2-4 years) to succeed spectacularly.
No, he is serious. It is a FATAL mistake. It will be snatching defeat from the jaws of victory. What is the point of a process lead if you let your competitors share it ? I don't know if it is because he has been bullied by the Press, Analysts or Board of Directors or just because he was a manufacturing guy and is just looking at it in simplistic terms. However it is a ridiculous notion and will only destroy shareholder value in the long run, yeah let's fab $20-30 ARM chips for the world so they never become slow and obsolete !!! There was always a non-trivial chance of that happening if you promoted a manufacturing guy. Bring back Otellini !!
Growing Intel by blunting its x86 cash cow by fabbing much cheaper ARM cpus making sure they don't go obsolete ? Apparently simple BK agrees with your simple thinking. You just hate Intel being strong and powerful.