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Intel made a huge mistake 10 years ago

163 points by molecule 10y ago

woodandsteel 10y ago
The article uses Clayton Christensen's theory of disruption to explain why Intel missed the mobile phone market and gave it away to ARM. I would just add that I think the same is happening in the Internet of Things.
- zeeshanm 10y ago
  Would be interested in hearing your analysis on IoT.
  - woodandsteel 10y ago
    What I meant is I think that Intel is focused on producing high-profit margin chips, so it is missing the boat on IoT because its chips cost too much, and ARM is dominant. But I'm not an expert in this area, so I might be wrong.
hga 10y ago
Beware, for this article includes a gem like this: Instead, these companies turned to a standard called ARM. Created by a once-obscure British company, it was designed from the ground up for low-power mobile uses. Nope, their price budget required plastic instead of ceramic packaging, which had a 1 watt power budget. They were sufficiently conservative that it ended up dissipating 1/10 of a watt. The usefulness for mobile applications came later. On the other hand, if Intel turned down an offer from Apple to supply the iPhone CPU, well, that sounds like a mistake. Then again, it's such a different business that it's not clear it would have worked for them, especially given the opportunity cost. So different, their FPGA aquisition Alteria is still having their lower end more price sensitive chips fabricated by TSMC, apparently because Intel is just too expensive for that market. And Apple could well have changed to ARM later, Macs are now on their third CPU architecture.
- bsder 10y ago
  > The usefulness for mobile applications came later. True, but not quite the whole story. Some enterprising engineers wrote a cellular protocol stack in ARM assembly language that let everybody use a far cheaper core than anything else. Very quickly, ARM became entrenched in the feature phones. Then, the evolution occurred to smartphones, and ARM was already in the phone.
- elcct 10y ago
  Maybe it is good that Intel turned down that offer, because otherwise now we could have desktop sized iPhones with built in winter warmers.
FullyFunctional 10y ago
I would agree with the analysis, but I think it's missing an interesting fact: The ARM threat was non-existant until DEC Alpha engineers created StrongARM and showed the world that you could make a fast ARM. StrongARM was effectively renamed XScale around the time Intel got hold of the IP.
- aidenn0 10y ago
  Former DEC Alpha engineers also proved you could make a power-efficient PPC at P.A. Semi, and were involved in the early versions of the MIPS SoC line that is now owned by Broadcom. Really it's hard to find a platform that isn't from Intel from the last 20 or so years that doesn't show an influence from them.
  - cm3 10y ago
    Precisely, and let's not forget AMD64, while Intel was pushing Itanium.
    - aidenn0 10y ago
      Oh, good point, I had forgotten about SledgeHammer and its descendants. Intel had to pull some shady stuff to not lose a lot of market-share while the extracted themselves from the NetBurst dead-end.
      - cm3 10y ago
        It's sad that many places call it x86_64 while it's actually amd64. If Itanium had been a success and AMD built such chips, they wouldn't call it aa64 but ia64 like the existing name. Hence, it would only be fair to keep calling it AMD64. I don't know if it's just Intel not being comfortable with selling CPUs that implement AMD64. Maybe that's why we have ARM64 and AArch64 for the same thing, one vendor neutral, one with ARM in it. I really don't understand what's so wrong with giving credit. It's not like Intel's shareholders would care.
        10y ago
Retric 10y ago
Intel's largest mistake was integrating graphics on their CPU. This cost them more than the entire cellphone CPU market is worth. This ate up valuable chip real estate, RAM bandwidth, thermal overhead etc. Worse it cemented the idea that Intel was crap at graphics while slowing down the PC upgrade cycle.
- pervycreeper 10y ago
  Could you elaborate on this?
  - Retric 10y ago
    Graphics cards have a small amount of very high bandwidth dedicated RAM close to the GPU. PC ram is further from the CPU which increases latency due to the speed of light lag. CPU's get around this by using a lot of L2/3 cache. Which means PC's don't really care as much about RAM bandwidth. Instead they want lots of RAM. Thus main memory is much slower than GPU bandwidth. So, now your on chip GPU is memory starved and reducing the bandwidth avalabel to the CPU. There are some advantages if you want to pass stuff back and forth, but the standard rendering pipeline is designed for GPU's.
- dragontamer 10y ago
  What the hell else do you think Intel should put on those chips? Note that ~15% of Steam Players are gaming on Intel iGPUs, as awful as they are. http://store.steampowered.com/hwsurvey/ http://store.steampowered.com/hwsurvey/
  - Retric 10y ago
    A pure blank space would work as they save on manufacturing costs and get faster CPU's due to heat limits and more RAM bandwidth.
    - chadgeidel 10y ago
      No, that's not how it works. Intel had the ability to put more transistors on the same die size with the same power requirements. This was long after they reached thermal/clockspeed limits (with the P4). They started putting additional cores in there and bumped up the L2 and L3 caches, but there was still space left on the die. What do you do with those extra transistors? It would be absurd to "leave them blank" as you are basically throwing money down the drain.
osweiller 10y ago
For the past decade plus, Intel has been their own biggest competitor. Atom processors aren't weak and built on an old process because Intel can't make them better, but rather because Intel's greatest fear is undercutting their more lucrative markets. Their very high profit markets. So if you go back ten years and say "what if Intel did this" (which in that case was making a processor for Apple that Apple was paying maybe $20 each for, estimating on the very high side), it is over simplified to just imagine that it's additive. Intel has been rolling on profit margins that the hyper-competitive ARM market can only dream about. It may be time for them to adapt (and arguably they have been), but those 12,000 didn't lose their job because Intel didn't do something different ten years ago. They, and thousands others, might never have had an Intel job in the first place if Intel made different choices.
AceJohnny2 10y ago
TL;DR: Intel turned down the opportunity to make the iPhone's chip and gain a foothold in the mobile market. A more direct source, from Intel's own CEO (at the time): http://www.theinquirer.net/inquirer/news/2268985/outgoing-intel-ceo-paul-otellini-says-he-turned-down-apples-iphone-business http://www.theinquirer.net/inquirer/news/2268985/outgoing-in... Otellini said Intel passed on the opportunity to supply Apple because the economics did not make sense at the time given the forecast product cost and expected volume. He told The Atlantic, "The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do... At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it. "It wasn't one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought." But the thing I don't understand is why Intel gave up on XScale, their ARM-compatible effort (they held one of the few expensive ARM licenses that allowed them to expand the core architecture). How's Atom doing nowadays? Last I heard, Intel had partnered with Dell to make the Atom-powered Venue android tablets. Can't say they're grabbing headlines with them...
- wmf 10y ago
  Anything in Intel that's not x86 gets killed by internal politics. Somehow Intel didn't understand that when they bought it.
  - alanh 10y ago
    Eh, don’t forget the external forces. Remember Itanium vs AMD’s x86_64?
    - dogma1138 10y ago
      Itanium died because it was a very niche architecture Intel was working on their desktop/common server x64 line when AMD came out with Athlon64 which more or less won because it's desktop performance over the Pentium 4. Itanium was a RISC-y endeavour by Intel and it had it's problems but you can't really say it died because of x86_64.
alanh 10y ago
A very long-winded article with a clickbait title saying… nothing more than that they missed the mobile revolution.
- mkehrt 10y ago
  I disagree. This is an interesting article explaining what is happening to Intel and why. But you're not the target audience if you know this already; every piece of information in this article would be novel and interesting to someone outside of tech.
- chmaynard 10y ago
  Another take on the same topic: http://appleinsider.com/articles/15/01/19/how-intel-lost-the-mobile-chip-business-to-apples-ax-arm-application-processors http://appleinsider.com/articles/15/01/19/how-intel-lost-the...
- touristtam 10y ago
  I actually think that other factors have not been mentioned in the article, like the contract lost to AMD in the video console market, or the long winded legal battle with Nvidia that didn't go the way intel had wished.
kristianp 10y ago
It's not just intel's (and ipads) fault that pc sales are down. I think the big mistake PC makers are making right now, is that the PCs they make aren't improving from generation to generation for their mass market products. Sure the processors aren't doubling in MHz like they used to, but the rest of the machine isn't improving either. If I go into a shop with $3-400 today and buy a laptop, the machine I get is the same as I would have gotten 3 years ago: 1. 768 line display 2. 5400 rpm hdd 3. 2 GB of ram (4 if I'm lucky) 4. Similar weight 5. Similar poor battery life 6. loads of crapware. The pc manufacturers aren't pushing hardware manufacturers to improve the cheapest spec. Why don't cheap new laptops have greater DPI on their LCDs than 3 years ago? Because manufacturers haven't changed their main production lines. They are saving money on retooling, but on the other hand their product isn't improving, and now they're paying the price. Apple is doing the same thing with their Air line, which is only improving the processor generation, it has the same body and screen as years ago. If manufacturers improved their cheapest line every 3 years, people would see enough of an improvement in their price range to buy a new machine every 3 years like they used to.
- cm2187 10y ago
  I'd be inclined to agree. I do not know anyone who doesn't also own a laptop, even the most extreme mobile junkies. They may keep their laptop for longer, and perhaps do not bring their laptop everywhere, which means less coffee spilled on it. But they won't work, refresh their CV, plan the design of their new kitchen or build their budget for the holidays on a mobile or a tablet. Are mobiles and tablet really substitutes for laptops? They probably become obsolete more quickly. But even that is not really the case anymore as the slow down in iPhone sales is showing.
- ac29 10y ago
  Exactly the same complaints could be made about the bottom of the smartphone market ($100-200 range). Higher end smartphones may have improved more than high end laptops over the past few years, but mid-range to high end laptops are definitely nicer than they were 3 years ago. You're also a bit disingenuous on your laptop complaints, the best selling laptop on Amazon in that price range has a 1080P screen, 4GB RAM, a decent i3 Broadwell (which is faster and uses less power than its equivalent Sandy/Ivy Bridge processor you would have gotten 3 years ago). Crapware is only a valid complaint if you choose to use Windows and are incapable of taking an hour to install a clean copy when you unbox it.
spiritomb 10y ago
don't forget that Intel also made a big bet at a critical time on a partnership with Nokia. that was another couple of years wasted .. further behind Intel fell.
- rasz_pl 10y ago
  Intel? What about Nokia making miserable 'smartphones' running 24MHz i386???
deleted 10y ago
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btilly 10y ago
The most important part of the article is easily missed unless you've read The Innovator's Solution. Which is the follow up book and spends a lot of time looking inside of organizations to see why it is so darned hard to catch the disruptive train. A company with a profitable niche and a profitable technology will wind up with high internal costs. That's fine in their main business because they have a profit margin to play with. But it is surprisingly hard to trim back that "fat" to go after much lower margin revenue with a cheaper technology. (Fat is in quotes because it isn't really fat. It is necessary for the high margin business.) It is common to try, and to conclude that it is a failure. That is why Intel made this mistake.
- bsder 10y ago
  Until Intel isn't producing chips with way more profit margin than an ARM at 100% capacity, it's not a mistake. ARM has volume, but x86 has profit.
  - btilly 10y ago
    It can be a good business decision to run a business for maximum profit and a quick exit. However when you do that with a major corporation like Intel, it tends to make people unhappy. Intel will continue with the high profit margin right until the chips don't sell. And then Intel gets to go out of business.
    - coldtea 10y ago
      So, just like Apple, with the same "high margin" strategy, their 19th year of record revenues and $600 billion in store? And how exactly would them (Intel in this case) selling commoditized, low margin, products make it better for them? Isn't it even worse, even quicker, for low margin players when their stuff doesn't sell?
      - nhaehnle 10y ago
        Apple isn't selling technology, though, they're selling a brand. There are different dynamics in play.
corford 10y ago
Early on, Microsoft missed the internet revolution but were big enough and good enough to survive that early misstep. Intel is big enough and good enough to survive their mobile blunder (though, admittedly, they're taking more time than MS did to get back on the horse).
- twoodfin 10y ago
  Early on, Microsoft missed the internet revolution but were big enough and good enough to survive that early misstep. This has become popular myth, but I don't think it's true. Sure, Microsoft wasn't far ahead of the curve on the internet, or they wouldn't have been developing proprietary online services designed to compete with AOL and CompuServe. But the Bill Gates "Tidal Wave" internet memo was sent in May of 1995! Netscape's IPO was still months in the future, Amazon had maybe a few million $ worth of revenue, and essentially every other web-based company still in business today hadn't been founded yet. IMHO, billg's memo should be seen as an example of great prescience, rather than a belated corrective maneuver.
  - corford 10y ago
    I guess I'm looking at it from where I was back then (a spotty young teenager). I remember Windows 3.1 needed Trumpet Winsock, then came IE 1,2,3 and they were awful, when IIS appeared it took about a decade to become any good versus Apache. From my point of view things started changing with IE4 and then Windows 98 getting automatic updates. For me that's when MS turned it around (i.e. ~4 years after Mosaic).
asah 10y ago
Sigh, the author forgets that Intel tried to leave x86 with Itanium, which was an expensive disaster, and they vowed to never make that mistake again.
asah 10y ago
Sigh, the author forgets that Intel tried to leave x86 with Itanium, which was an expensive disaster, and they vowed to never make that mistake again.
tdsamardzhiev 10y ago
Ugh, in 2005 AMD X2's were wiping the floor with any desktop processor Intel had. The only reason Intel stayed in business was that being much, much bigger company than AMD, so they could 1) outsell AMD on availability basis and 2) ditch NetBurst and come up with newer architecture (which was a glorified version of their mobile/older architecture).
- mrpippy 10y ago
  Don't forget the giant (possibly illegal) payouts to keep big customers (Dell in particular) Intel-only. $4.3 billion to Dell between 2003 and 2006. http://money.cnn.com/2010/07/23/technology/dell_intel/ http://money.cnn.com/2010/07/23/technology/dell_intel/
pj_mukh 10y ago
Doesn't this mean Qualcomm should be doing splendidly? But its not[1] :(. What gives? [1] http://www.sandiegouniontribune.com/news/2015/sep/17/Qualcomm-layoffs-workers-samsung-cost-cutting/ http://www.sandiegouniontribune.com/news/2015/sep/17/Qualcom...
- wmf 10y ago
  Disruption theory predicts that mobile SoCs will be more profitable than PC processors at some point in the future and by that point it will be too late for Intel/AMD to start the transition. But it's hard to predict when that point will be and it may never happen because disruption theory isn't always right.
- mtgx 10y ago
  Qualcomm did poorly last year, because of its failed Snapdragon 810 chip. It lost a ton of sales. Otherwise Qualcomm was and still is dominant in the mobile chip market with close to 50% market share.
  - deleted 10y ago
    [deleted]
  - Grazester 10y ago
    Yep, those things were throttling like mad due to heat issues and performance was not on par with its competition, the A9 and the Exynos processors.
ChuckMcM 10y ago
Waaaaay back when I worked at Intel it was pretty clear they didn't stop doing things that worked. And when the going got tough they stuck with what worked. In the 80's Intel had a really remarkable set of of computing products, from high integration "soc" type x86 chips (80186), high end graphics chips, (8276x), embedded chips (8051), and "server" chips (431 series). Plus a memory business and a whole passel of support chips. But the chips in the PC had the best margin by far. So the more of those they made, the more profitable they became, and when the chip recession was in full swing in the late 80's and early 90's that is what they kept, shedding all the rest. In the early 2000's when Moore's law ran right smack into the power wall, Intel was betting they could have an "enterprise" line (Itanium) and a "desktop" line (Pentium), and an embedded line (8051). They guessed wrong and for a brief time AMD's Opteron was kicking their butt. But once they realized the writing on the wall they realigned around 64 bit in the Pentium line and got back on track. The problem with the ARM assault is that unlike AMD, which could be killed by messing with other users of the chipset and patent attacks and contract shennanigans, killing off someone making an ARM chip does nothing but make the other ARM chip vendors stronger. And they can't kill all of them at once. And worse, to compete with them they have to sacrifice margin on their x86 line and that is something they have never done, it breaks their business model. Its a real conundrum for them, they don't have a low power, reasonable performance SOC architecture to compete with these guys. And that is driving volumes these days. Further, the A53 (ARM 64 bit) killed off the chance of trying to use 32 bit only ATOM microarchitecture chips in that niche without impacting the value of the higher end Pentiums. One of the things Web2.0 taught us was that it doesn't matter how "big" the implementation of a node is if your going to put 50,000 of them in a data center to run your "cloud." Ethernet as an interconnect is fast enough for a lot of things. It definitely makes for an interesting future.
- flamedoge 10y ago
  > if your going to put 50,000 of them in a data center to run your "cloud." And therein lies Intel's quest to become relevant again. Make more bloated languages so more processors can be sold to servers :/
  - pjmlp 10y ago
amist 10y ago
>Now 12,000 workers are paying the price I guess there are 12,000 other workers somewhere else in the world that now have a job because they get to create what Intel doesn't. BTW, according to past statistics, most of the workers that are now "paying the price", wasn't even Intel's employees 10 years ago.
xiphias 10y ago
I don't think 10000 people have problems finding jobs..if you worked at Intel, I'm pretty sure that sounds good in your resumé
ricksplat 10y ago
I think the culture of Intel is such that they'll turn this around - sadly it had to come to job losses first. But it was the same (if less severe) in the late 90s when AMD nearly stole their lunch.
jbb555 10y ago
" The PC era was about to end." Not bothering to read the rest. This is entirely 100% wrong. The PC era has not "ended". It's just that we only upgrade every few years instead of every year. And grandma now reads her email on a tablet instead but that was never what PCs were really for. PCs are still just as much used as ever. We just use other things too, and don't buy a new one every year. If they can't get this basic fact right then I have no hope for the rest of the article.
- seanmcdirmid 10y ago
  Post PC never meant "no PC," it just meant the end of the PC as a growth market. There is still money to be had in the market, but it is all rather predictable and boring now. When you are a company looking at getting your profits and stock price up, that is important, especially for Intel.
- lovemenot 10y ago
  I disagree. The PC era ended when the PC was no longer the dominant computing platform. We can argue on dates specific markets etc. Eras are ill-defined, but if you can assert that we once were in a PC era, you must also accept a definition that allows, in principle, for an end to an era. The dominant platform of its era is the one with the greatest user and developer person hours, sales volume, zeitgeist and so on. We are in the mobile era.
  - arielb1 10y ago
    PCs are still used more than mobile. It's just that the average person had bought a Pentium 4 PC running XP a decade ago and is not going to upgrade it until it breaks. PCs are now a mature technology, just like cars, and have the resulting long lifecycle. Smartphones are also getting into this stage.
fauria 10y ago
According to the article, back in the 1990s DEC was forced out of business because they underestimated the imapact that PCs would later make on the market, leaving Intel as a leader. In the 2000s smartphones and mobile devices outnumber PCs. Intel missed that and so ARM dominates the business. Maybe that same pattern will repeat again with the rising of IoT and wearables, where smaller and cheaper chips become ubiquitous. The development of Edison and Curie processors might indicate that Intel is betting on this, gearing up for the next "disruptive innovation".
- TheOtherHobbes 10y ago
  In which case we should all buy shares in Broadcom and learn to program Raspberry Pis. Or possibly more likely - the next transition which will be much messier, with no single winner. The mainframe -> mini -> desktop -> laptop -> mobile -> SBC path was about miniaturisation. The devices all provide general computing facilities, but they get smaller and faster and use less power, while the UI becomes more accessible to non-expert users. I'm not seeing how that translates into wearables, because IoT and wearables aren't general purpose computing devices. They're more like embedded hardware and/or thin network clients. So I don't think that's where the disruption will happen. It's maybe more likely the disruption will happen in consumer AI, where the UI gets simpler still through speech recognition and NLP, and the screen/mouse/keyboard start to disappear. My guess is traditional processors will become front-ends and glue for hardware AI systems, and the companies to bet on are the ones producing the subsystems. The hardware will follow the same path as general purpose processors, but they'll move from "mainframe" to "SBC" much more quickly.
- touristtam 10y ago
  But isn't intel trying to cram the same technology in what is basically a smaller physical envelop, instead of looking at it with a different mindset?
a_imho 10y ago
Is there any new information on the 3DXP technology?
- touristtam 10y ago
  Do you mean this -> http://www.anandtech.com/show/9470/intel-and-micron-announce-3d-xpoint-nonvolatile-memory-technology-1000x-higher-performance-endurance-than-nand http://www.anandtech.com/show/9470/intel-and-micron-announce... ?
  - a_imho 10y ago
    yes, I know it is a bit OT, but there were other Intel related discussions, saw no harm in asking.
hinkley 10y ago
I think in the long run this is one of those mistakes that we will all benefit from. "Monopolist Missteps and Loses Monopoly Position"
peterclary 10y ago
Ironic, given that Intel's long-time leader famously said "Success breeds complacency. Complacency breeds failure. Only the paranoid survive."
skynetv2 10y ago
everyone is a pundit with the benefit of hindsight. Intel made the best decision with the available best information. Moreover, Apple is a notoriously difficult partner that will extract every penny from its suppliers. What if Intel did invest few billions to support Apple and then Apple went ahead and did their own chip, like they do now, leaving Intel with costs that cannot be recouped. Same pundit will say "Intel was stupid to spend so much on Apple." Love it or hate it, Intel still has the right technology and products to appeal to a broad market and make good money. One cannot expect to win every market, you can try if it makes sense and you should know when to walk away.
bobwaycott 10y ago
$2 billion in profits is a lot. 12K jobs cut is a lot. I can't help but find it a bit crazy that 12K people who helped make $2 billion in profits are suddenly extraneous. Are that many people really redundant within Intel?

163 points by molecule 10y ago

The article uses Clayton Christensen's theory of disruption to explain why Intel missed the mobile phone market and gave it away to ARM. I would just add that I think the same is happening in the Internet of Things.

zeeshanm 10y ago
Would be interested in hearing your analysis on IoT.
- woodandsteel 10y ago
  What I meant is I think that Intel is focused on producing high-profit margin chips, so it is missing the boat on IoT because its chips cost too much, and ARM is dominant. But I'm not an expert in this area, so I might be wrong.

hga 10y ago

Beware, for this article includes a gem like this: Instead, these companies turned to a standard called ARM. Created by a once-obscure British company, it was designed from the ground up for low-power mobile uses. Nope, their price budget required plastic instead of ceramic packaging, which had a 1 watt power budget. They were sufficiently conservative that it ended up dissipating 1/10 of a watt. The usefulness for mobile applications came later. On the other hand, if Intel turned down an offer from Apple to supply the iPhone CPU, well, that sounds like a mistake. Then again, it's such a different business that it's not clear it would have worked for them, especially given the opportunity cost. So different, their FPGA aquisition Alteria is still having their lower end more price sensitive chips fabricated by TSMC, apparently because Intel is just too expensive for that market. And Apple could well have changed to ARM later, Macs are now on their third CPU architecture.

bsder 10y ago
> The usefulness for mobile applications came later. True, but not quite the whole story. Some enterprising engineers wrote a cellular protocol stack in ARM assembly language that let everybody use a far cheaper core than anything else. Very quickly, ARM became entrenched in the feature phones. Then, the evolution occurred to smartphones, and ARM was already in the phone.
elcct 10y ago
Maybe it is good that Intel turned down that offer, because otherwise now we could have desktop sized iPhones with built in winter warmers.

FullyFunctional 10y ago

I would agree with the analysis, but I think it's missing an interesting fact: The ARM threat was non-existant until DEC Alpha engineers created StrongARM and showed the world that you could make a fast ARM. StrongARM was effectively renamed XScale around the time Intel got hold of the IP.

aidenn0 10y ago
Former DEC Alpha engineers also proved you could make a power-efficient PPC at P.A. Semi, and were involved in the early versions of the MIPS SoC line that is now owned by Broadcom. Really it's hard to find a platform that isn't from Intel from the last 20 or so years that doesn't show an influence from them.
- cm3 10y ago
  Precisely, and let's not forget AMD64, while Intel was pushing Itanium.
  - aidenn0 10y ago
    Oh, good point, I had forgotten about SledgeHammer and its descendants. Intel had to pull some shady stuff to not lose a lot of market-share while the extracted themselves from the NetBurst dead-end.
    - cm3 10y ago
      It's sad that many places call it x86_64 while it's actually amd64. If Itanium had been a success and AMD built such chips, they wouldn't call it aa64 but ia64 like the existing name. Hence, it would only be fair to keep calling it AMD64. I don't know if it's just Intel not being comfortable with selling CPUs that implement AMD64. Maybe that's why we have ARM64 and AArch64 for the same thing, one vendor neutral, one with ARM in it. I really don't understand what's so wrong with giving credit. It's not like Intel's shareholders would care.
      - 10y ago

Retric 10y ago

Intel's largest mistake was integrating graphics on their CPU. This cost them more than the entire cellphone CPU market is worth. This ate up valuable chip real estate, RAM bandwidth, thermal overhead etc. Worse it cemented the idea that Intel was crap at graphics while slowing down the PC upgrade cycle.

pervycreeper 10y ago
Could you elaborate on this?
- Retric 10y ago
  Graphics cards have a small amount of very high bandwidth dedicated RAM close to the GPU. PC ram is further from the CPU which increases latency due to the speed of light lag. CPU's get around this by using a lot of L2/3 cache. Which means PC's don't really care as much about RAM bandwidth. Instead they want lots of RAM. Thus main memory is much slower than GPU bandwidth. So, now your on chip GPU is memory starved and reducing the bandwidth avalabel to the CPU. There are some advantages if you want to pass stuff back and forth, but the standard rendering pipeline is designed for GPU's.
dragontamer 10y ago
What the hell else do you think Intel should put on those chips? Note that ~15% of Steam Players are gaming on Intel iGPUs, as awful as they are. http://store.steampowered.com/hwsurvey/ http://store.steampowered.com/hwsurvey/
- Retric 10y ago
  A pure blank space would work as they save on manufacturing costs and get faster CPU's due to heat limits and more RAM bandwidth.
  - chadgeidel 10y ago
    No, that's not how it works. Intel had the ability to put more transistors on the same die size with the same power requirements. This was long after they reached thermal/clockspeed limits (with the P4). They started putting additional cores in there and bumped up the L2 and L3 caches, but there was still space left on the die. What do you do with those extra transistors? It would be absurd to "leave them blank" as you are basically throwing money down the drain.

osweiller 10y ago

For the past decade plus, Intel has been their own biggest competitor. Atom processors aren't weak and built on an old process because Intel can't make them better, but rather because Intel's greatest fear is undercutting their more lucrative markets. Their very high profit markets. So if you go back ten years and say "what if Intel did this" (which in that case was making a processor for Apple that Apple was paying maybe $20 each for, estimating on the very high side), it is over simplified to just imagine that it's additive. Intel has been rolling on profit margins that the hyper-competitive ARM market can only dream about. It may be time for them to adapt (and arguably they have been), but those 12,000 didn't lose their job because Intel didn't do something different ten years ago. They, and thousands others, might never have had an Intel job in the first place if Intel made different choices.

AceJohnny2 10y ago

TL;DR: Intel turned down the opportunity to make the iPhone's chip and gain a foothold in the mobile market. A more direct source, from Intel's own CEO (at the time): http://www.theinquirer.net/inquirer/news/2268985/outgoing-intel-ceo-paul-otellini-says-he-turned-down-apples-iphone-business http://www.theinquirer.net/inquirer/news/2268985/outgoing-in... Otellini said Intel passed on the opportunity to supply Apple because the economics did not make sense at the time given the forecast product cost and expected volume. He told The Atlantic, "The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do... At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it. "It wasn't one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought." But the thing I don't understand is why Intel gave up on XScale, their ARM-compatible effort (they held one of the few expensive ARM licenses that allowed them to expand the core architecture). How's Atom doing nowadays? Last I heard, Intel had partnered with Dell to make the Atom-powered Venue android tablets. Can't say they're grabbing headlines with them...

wmf 10y ago
Anything in Intel that's not x86 gets killed by internal politics. Somehow Intel didn't understand that when they bought it.
- alanh 10y ago
  Eh, don’t forget the external forces. Remember Itanium vs AMD’s x86_64?
  - dogma1138 10y ago
    Itanium died because it was a very niche architecture Intel was working on their desktop/common server x64 line when AMD came out with Athlon64 which more or less won because it's desktop performance over the Pentium 4. Itanium was a RISC-y endeavour by Intel and it had it's problems but you can't really say it died because of x86_64.

alanh 10y ago

A very long-winded article with a clickbait title saying… nothing more than that they missed the mobile revolution.

mkehrt 10y ago
I disagree. This is an interesting article explaining what is happening to Intel and why. But you're not the target audience if you know this already; every piece of information in this article would be novel and interesting to someone outside of tech.
chmaynard 10y ago
Another take on the same topic: http://appleinsider.com/articles/15/01/19/how-intel-lost-the-mobile-chip-business-to-apples-ax-arm-application-processors http://appleinsider.com/articles/15/01/19/how-intel-lost-the...
touristtam 10y ago
I actually think that other factors have not been mentioned in the article, like the contract lost to AMD in the video console market, or the long winded legal battle with Nvidia that didn't go the way intel had wished.

kristianp 10y ago

It's not just intel's (and ipads) fault that pc sales are down. I think the big mistake PC makers are making right now, is that the PCs they make aren't improving from generation to generation for their mass market products. Sure the processors aren't doubling in MHz like they used to, but the rest of the machine isn't improving either. If I go into a shop with $3-400 today and buy a laptop, the machine I get is the same as I would have gotten 3 years ago: 1. 768 line display 2. 5400 rpm hdd 3. 2 GB of ram (4 if I'm lucky) 4. Similar weight 5. Similar poor battery life 6. loads of crapware. The pc manufacturers aren't pushing hardware manufacturers to improve the cheapest spec. Why don't cheap new laptops have greater DPI on their LCDs than 3 years ago? Because manufacturers haven't changed their main production lines. They are saving money on retooling, but on the other hand their product isn't improving, and now they're paying the price. Apple is doing the same thing with their Air line, which is only improving the processor generation, it has the same body and screen as years ago. If manufacturers improved their cheapest line every 3 years, people would see enough of an improvement in their price range to buy a new machine every 3 years like they used to.

cm2187 10y ago
I'd be inclined to agree. I do not know anyone who doesn't also own a laptop, even the most extreme mobile junkies. They may keep their laptop for longer, and perhaps do not bring their laptop everywhere, which means less coffee spilled on it. But they won't work, refresh their CV, plan the design of their new kitchen or build their budget for the holidays on a mobile or a tablet. Are mobiles and tablet really substitutes for laptops? They probably become obsolete more quickly. But even that is not really the case anymore as the slow down in iPhone sales is showing.
ac29 10y ago
Exactly the same complaints could be made about the bottom of the smartphone market ($100-200 range). Higher end smartphones may have improved more than high end laptops over the past few years, but mid-range to high end laptops are definitely nicer than they were 3 years ago. You're also a bit disingenuous on your laptop complaints, the best selling laptop on Amazon in that price range has a 1080P screen, 4GB RAM, a decent i3 Broadwell (which is faster and uses less power than its equivalent Sandy/Ivy Bridge processor you would have gotten 3 years ago). Crapware is only a valid complaint if you choose to use Windows and are incapable of taking an hour to install a clean copy when you unbox it.

spiritomb 10y ago

don't forget that Intel also made a big bet at a critical time on a partnership with Nokia. that was another couple of years wasted .. further behind Intel fell.

rasz_pl 10y ago
Intel? What about Nokia making miserable 'smartphones' running 24MHz i386???

deleted 10y ago

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btilly 10y ago

The most important part of the article is easily missed unless you've read The Innovator's Solution. Which is the follow up book and spends a lot of time looking inside of organizations to see why it is so darned hard to catch the disruptive train. A company with a profitable niche and a profitable technology will wind up with high internal costs. That's fine in their main business because they have a profit margin to play with. But it is surprisingly hard to trim back that "fat" to go after much lower margin revenue with a cheaper technology. (Fat is in quotes because it isn't really fat. It is necessary for the high margin business.) It is common to try, and to conclude that it is a failure. That is why Intel made this mistake.

bsder 10y ago
Until Intel isn't producing chips with way more profit margin than an ARM at 100% capacity, it's not a mistake. ARM has volume, but x86 has profit.
- btilly 10y ago
  It can be a good business decision to run a business for maximum profit and a quick exit. However when you do that with a major corporation like Intel, it tends to make people unhappy. Intel will continue with the high profit margin right until the chips don't sell. And then Intel gets to go out of business.
  - coldtea 10y ago
    So, just like Apple, with the same "high margin" strategy, their 19th year of record revenues and $600 billion in store? And how exactly would them (Intel in this case) selling commoditized, low margin, products make it better for them? Isn't it even worse, even quicker, for low margin players when their stuff doesn't sell?
    - nhaehnle 10y ago
      Apple isn't selling technology, though, they're selling a brand. There are different dynamics in play.

corford 10y ago

Early on, Microsoft missed the internet revolution but were big enough and good enough to survive that early misstep. Intel is big enough and good enough to survive their mobile blunder (though, admittedly, they're taking more time than MS did to get back on the horse).

twoodfin 10y ago
Early on, Microsoft missed the internet revolution but were big enough and good enough to survive that early misstep. This has become popular myth, but I don't think it's true. Sure, Microsoft wasn't far ahead of the curve on the internet, or they wouldn't have been developing proprietary online services designed to compete with AOL and CompuServe. But the Bill Gates "Tidal Wave" internet memo was sent in May of 1995! Netscape's IPO was still months in the future, Amazon had maybe a few million $ worth of revenue, and essentially every other web-based company still in business today hadn't been founded yet. IMHO, billg's memo should be seen as an example of great prescience, rather than a belated corrective maneuver.
- corford 10y ago
  I guess I'm looking at it from where I was back then (a spotty young teenager). I remember Windows 3.1 needed Trumpet Winsock, then came IE 1,2,3 and they were awful, when IIS appeared it took about a decade to become any good versus Apache. From my point of view things started changing with IE4 and then Windows 98 getting automatic updates. For me that's when MS turned it around (i.e. ~4 years after Mosaic).

asah 10y ago

Sigh, the author forgets that Intel tried to leave x86 with Itanium, which was an expensive disaster, and they vowed to never make that mistake again.

asah 10y ago

Sigh, the author forgets that Intel tried to leave x86 with Itanium, which was an expensive disaster, and they vowed to never make that mistake again.

tdsamardzhiev 10y ago

Ugh, in 2005 AMD X2's were wiping the floor with any desktop processor Intel had. The only reason Intel stayed in business was that being much, much bigger company than AMD, so they could 1) outsell AMD on availability basis and 2) ditch NetBurst and come up with newer architecture (which was a glorified version of their mobile/older architecture).

mrpippy 10y ago
Don't forget the giant (possibly illegal) payouts to keep big customers (Dell in particular) Intel-only. $4.3 billion to Dell between 2003 and 2006. http://money.cnn.com/2010/07/23/technology/dell_intel/ http://money.cnn.com/2010/07/23/technology/dell_intel/

pj_mukh 10y ago

Doesn't this mean Qualcomm should be doing splendidly? But its not[1] :(. What gives? [1] http://www.sandiegouniontribune.com/news/2015/sep/17/Qualcomm-layoffs-workers-samsung-cost-cutting/ http://www.sandiegouniontribune.com/news/2015/sep/17/Qualcom...

wmf 10y ago
Disruption theory predicts that mobile SoCs will be more profitable than PC processors at some point in the future and by that point it will be too late for Intel/AMD to start the transition. But it's hard to predict when that point will be and it may never happen because disruption theory isn't always right.
mtgx 10y ago
Qualcomm did poorly last year, because of its failed Snapdragon 810 chip. It lost a ton of sales. Otherwise Qualcomm was and still is dominant in the mobile chip market with close to 50% market share.
- deleted 10y ago
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- Grazester 10y ago
  Yep, those things were throttling like mad due to heat issues and performance was not on par with its competition, the A9 and the Exynos processors.

ChuckMcM 10y ago

Waaaaay back when I worked at Intel it was pretty clear they didn't stop doing things that worked. And when the going got tough they stuck with what worked. In the 80's Intel had a really remarkable set of of computing products, from high integration "soc" type x86 chips (80186), high end graphics chips, (8276x), embedded chips (8051), and "server" chips (431 series). Plus a memory business and a whole passel of support chips. But the chips in the PC had the best margin by far. So the more of those they made, the more profitable they became, and when the chip recession was in full swing in the late 80's and early 90's that is what they kept, shedding all the rest. In the early 2000's when Moore's law ran right smack into the power wall, Intel was betting they could have an "enterprise" line (Itanium) and a "desktop" line (Pentium), and an embedded line (8051). They guessed wrong and for a brief time AMD's Opteron was kicking their butt. But once they realized the writing on the wall they realigned around 64 bit in the Pentium line and got back on track. The problem with the ARM assault is that unlike AMD, which could be killed by messing with other users of the chipset and patent attacks and contract shennanigans, killing off someone making an ARM chip does nothing but make the other ARM chip vendors stronger. And they can't kill all of them at once. And worse, to compete with them they have to sacrifice margin on their x86 line and that is something they have never done, it breaks their business model. Its a real conundrum for them, they don't have a low power, reasonable performance SOC architecture to compete with these guys. And that is driving volumes these days. Further, the A53 (ARM 64 bit) killed off the chance of trying to use 32 bit only ATOM microarchitecture chips in that niche without impacting the value of the higher end Pentiums. One of the things Web2.0 taught us was that it doesn't matter how "big" the implementation of a node is if your going to put 50,000 of them in a data center to run your "cloud." Ethernet as an interconnect is fast enough for a lot of things. It definitely makes for an interesting future.

flamedoge 10y ago
> if your going to put 50,000 of them in a data center to run your "cloud." And therein lies Intel's quest to become relevant again. Make more bloated languages so more processors can be sold to servers :/
- pjmlp 10y ago

amist 10y ago

>Now 12,000 workers are paying the price I guess there are 12,000 other workers somewhere else in the world that now have a job because they get to create what Intel doesn't. BTW, according to past statistics, most of the workers that are now "paying the price", wasn't even Intel's employees 10 years ago.

xiphias 10y ago

I don't think 10000 people have problems finding jobs..if you worked at Intel, I'm pretty sure that sounds good in your resumé

ricksplat 10y ago

I think the culture of Intel is such that they'll turn this around - sadly it had to come to job losses first. But it was the same (if less severe) in the late 90s when AMD nearly stole their lunch.

jbb555 10y ago

" The PC era was about to end." Not bothering to read the rest. This is entirely 100% wrong. The PC era has not "ended". It's just that we only upgrade every few years instead of every year. And grandma now reads her email on a tablet instead but that was never what PCs were really for. PCs are still just as much used as ever. We just use other things too, and don't buy a new one every year. If they can't get this basic fact right then I have no hope for the rest of the article.

seanmcdirmid 10y ago
Post PC never meant "no PC," it just meant the end of the PC as a growth market. There is still money to be had in the market, but it is all rather predictable and boring now. When you are a company looking at getting your profits and stock price up, that is important, especially for Intel.
lovemenot 10y ago
I disagree. The PC era ended when the PC was no longer the dominant computing platform. We can argue on dates specific markets etc. Eras are ill-defined, but if you can assert that we once were in a PC era, you must also accept a definition that allows, in principle, for an end to an era. The dominant platform of its era is the one with the greatest user and developer person hours, sales volume, zeitgeist and so on. We are in the mobile era.
- arielb1 10y ago
  PCs are still used more than mobile. It's just that the average person had bought a Pentium 4 PC running XP a decade ago and is not going to upgrade it until it breaks. PCs are now a mature technology, just like cars, and have the resulting long lifecycle. Smartphones are also getting into this stage.

fauria 10y ago

According to the article, back in the 1990s DEC was forced out of business because they underestimated the imapact that PCs would later make on the market, leaving Intel as a leader. In the 2000s smartphones and mobile devices outnumber PCs. Intel missed that and so ARM dominates the business. Maybe that same pattern will repeat again with the rising of IoT and wearables, where smaller and cheaper chips become ubiquitous. The development of Edison and Curie processors might indicate that Intel is betting on this, gearing up for the next "disruptive innovation".

TheOtherHobbes 10y ago
In which case we should all buy shares in Broadcom and learn to program Raspberry Pis. Or possibly more likely - the next transition which will be much messier, with no single winner. The mainframe -> mini -> desktop -> laptop -> mobile -> SBC path was about miniaturisation. The devices all provide general computing facilities, but they get smaller and faster and use less power, while the UI becomes more accessible to non-expert users. I'm not seeing how that translates into wearables, because IoT and wearables aren't general purpose computing devices. They're more like embedded hardware and/or thin network clients. So I don't think that's where the disruption will happen. It's maybe more likely the disruption will happen in consumer AI, where the UI gets simpler still through speech recognition and NLP, and the screen/mouse/keyboard start to disappear. My guess is traditional processors will become front-ends and glue for hardware AI systems, and the companies to bet on are the ones producing the subsystems. The hardware will follow the same path as general purpose processors, but they'll move from "mainframe" to "SBC" much more quickly.
touristtam 10y ago
But isn't intel trying to cram the same technology in what is basically a smaller physical envelop, instead of looking at it with a different mindset?

a_imho 10y ago

Is there any new information on the 3DXP technology?

touristtam 10y ago
Do you mean this -> http://www.anandtech.com/show/9470/intel-and-micron-announce-3d-xpoint-nonvolatile-memory-technology-1000x-higher-performance-endurance-than-nand http://www.anandtech.com/show/9470/intel-and-micron-announce... ?
- a_imho 10y ago
  yes, I know it is a bit OT, but there were other Intel related discussions, saw no harm in asking.

hinkley 10y ago

I think in the long run this is one of those mistakes that we will all benefit from. "Monopolist Missteps and Loses Monopoly Position"

peterclary 10y ago

Ironic, given that Intel's long-time leader famously said "Success breeds complacency. Complacency breeds failure. Only the paranoid survive."

skynetv2 10y ago

everyone is a pundit with the benefit of hindsight. Intel made the best decision with the available best information. Moreover, Apple is a notoriously difficult partner that will extract every penny from its suppliers. What if Intel did invest few billions to support Apple and then Apple went ahead and did their own chip, like they do now, leaving Intel with costs that cannot be recouped. Same pundit will say "Intel was stupid to spend so much on Apple." Love it or hate it, Intel still has the right technology and products to appeal to a broad market and make good money. One cannot expect to win every market, you can try if it makes sense and you should know when to walk away.

bobwaycott 10y ago

$2 billion in profits is a lot. 12K jobs cut is a lot. I can't help but find it a bit crazy that 12K people who helped make $2 billion in profits are suddenly extraneous. Are that many people really redundant within Intel?