Om Malik points to a Business Week article on Intel, which identifies the crux of Intel’s problem: “Part of what’s hurting Intel is changes in tech buying patterns, analysts say. Corporations are increasingly favoring low-end chips, says Steve Kleynhans, vice-president for infrastructure strategies at IT consultancy Meta Group in Stamford, Conn. Many find that even a cheap processor can run 99.9% of their applications but costs hundreds of dollars less. Plus, Web-based applications, which require little power on the desktop itself to process information, are proliferating. That’s already affecting Intel’s average selling prices.”
Om comments: “The economics is mutating the Moore’s Law into Moore’s Claw and right now it has a tight grip around Intel’s neck. It faces the same problems as Microsoft does, but it does not have as dominant a market share. It has competitors which have not only caught-up and upstaged it. It cannot change the behavior of the “edge” or millions of consumers who don’t buy into the logic of “ever-faster-processor” anymore. I used to be one of the firm believers in upgrading computers every six months. It has been nearly a year since I contemplated a new machine. (Perhaps that’s because all my spare cash is going to new cell phones and maintaining this blog!) Last week I was mucking around with a Transmeta-powered laptop, and boy I was surprised to find out that it did everything I did without as much as breaking a sweat.”
Intel needs to look seriously at (a) network computers (b) making them available on a utility pricing model for $1-2 a month.