Emergic: Rajesh Jain's Blog

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Intel’s Problem

July 18th, 2002 · No Comments

Writes David Futrelle (Business 2.0):

Squeezing a billion transistors on a chip is pretty darn impressive, but you don’t exactly need a 10 gigahertz processor to check your e-mail. The only people who hunger for ever faster PCs these days tend to be hard-core gamers and aspiring indie filmmakers attempting to edit feature films on their laptops in their dorm rooms.

Most business customers and consumer PC users remain in what US Bancorp Piper Jaffrey analyst Ashok Kumar calls “a perilously high state of satisfaction.”

Satisfied customers have made for a lot of dissatisfied Intel investors of late. The stock has fallen some 50 percent from its January highs — and 30 percent from where it stood before it issued its earnings warning in early June.

And while some (including Kumar) are convinced that Intel’s recent troubles may mark the nadir for the stock, it’s hard to see what might send PC chip demand moving smartly upwards again. “If Moore’s Law continues in force,” Kumar notes in a recent research note, “the performance of PC processors and the systems they power will continue to bound farther and farther ahead of what the vast majority of buyers need.”

I agree. My own behaviour in the past month or so has convinced me that Moore’s Law has taken technology past what customers need. I am using an Intel-powered Fujitsu notebook (about 3 years old) like a 486/16 MB machine, connected to a Thick Server, which is actually a new Intel-powered desktop. And am very happy with the performance!

I gave my prescription for what Intel needs to do recently.

Intel needs to look at new markets. It is facing the “Innovator’s Dilemma”. Instead of looking to get hundreds of dollars for its microprocessors upfront, Intel should power computing for the next 500 million years with low-cost motherboards, collecting a few dollars each month as rentals. There are huge untapped opportunities at the bottom of the pyramid, but it means shifting the centre of gravity from the West (Silicon Valley and US) to the Eastern countries.

Tags: Thin Client-Thick Server

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