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How do seemingly invincible forces in the market get killed by smaller foes? Back around 2009 I had a little visibility into Intel's mobile efforts. My informa

How do seemingly invincible forces in the market get killed by smaller foes? Back around 2009 I had a little visibility into Intel's mobile efforts. My information is way out of date, but unless Intel management changed drastically, my hunch is that this explanation is still valid. At the time Intel had already introduced some mobile silicon, but there was little uptake. So they were iterating; they wanted to improve for each succeeding generation. But they had a kind of design-by-committee process. One person or group wanted a certain feature, another group wanted something else, a third group though that yet another thing was important. And so on. Sorry if that sounds vague, I won't write anything more specific. The end result was a chipset that had a lot of features. A LOT OF FEATURES. Gold plated features. But that meant higher power consumption than the competition, higher cost, larger form factor, longer time to market. At the time, there was nobody like a Steve Jobs running Intel mobile. Nobody had the intuition and the gravitas to say: "we want A, B, C, but not D, E, F. Quit wasting time and build the fucking thing! I need something that's competitive!" This is similar to something that an Intel chip design manager told me about 30 years ago. His view was that there were really only two ways to motivate engineers: 1) show them a path to lots and lots of money. This is the path that startups take. Focus, build something quickly, get rich or die trying. or 2) engineers will "play in the sand", they will add in all sorts of neat features that they think are really cool, that they want to implement, that they are convinced are important. But all that crap isn't very useful to the average user, it just results in complex designs that miss their market window in so many ways. Intel probably continued to choose path 2 for their mobile efforts. Intel didn't fail because of any variation on The Innovator's Dilemma. They understood that mobile was the future, that it was very important. They expended tremendous amounts of capital trying to "win" in mobile. They just didn't have the organizational structure that let them execute.

_yosefk 11y ago
The thing is, it's not gonna help to have a "Steve Jobs" nor will any degree of understanding the competition help if you're used to ship an expensive high-margin product and along comes a low-margin competitor. Neither ARM nor TSMC attempt to make the kind of profit that Intel is used to making and this is the real problem for Intel; even if it wins 75% of the mobile market by shipping adequate chips at adequate prices, the profits won't be anywhere near what it gets in the PC market. (Of course this is just as true about Apple as it is about Intel, and I think their latest quarter results testify to it just as much as Intel's. Actually, the surprising thing about Intel (which is not true about Apple, Steve Jobs and all) is the degree of their dominance in the market for anything resembling a PC - a computer where you can get work done; one might expect both AMD and non-x86-based workstation products to do better, certainly Android is a bigger threat to iPhone/iPad than any competitor ever was to Intel in the PC space.)
- petra 11y ago
  Something about margins I don't get: Intel's Gross margin is about 80%. In the fabless ecosystem, the fab usually gets 50% and quallcom is usually above 50% , something even 65% . So the total combined margin is as high as Intel or more. So why does Intel fail?
  - _yosefk 11y ago
    All of these companies sell many different products and I'd guess that their reported overall gross margins will be different from the margins of any given product. For instance, I rather doubt that either TSMC or Samsung get 50% margins when making Apple's chips.
    - petra 11y ago
      In Apple's case it makes sense to lower margins to increase profits.Just common sense. But why not in general ? why does Wall Street hates that so much ?
  - Brakenshire 11y ago
    Benefits through competition? Intel is only one company, it's competing with a whole ecosystem of companies, who can all iterate and find efficiencies on chip design, and on manufacturing. And those improvements which are specific to the processor type will inevitably get passed around over time.
  - deleted 11y ago
    [deleted]
mtgx 11y ago
> Intel didn't fail because of any variation on The Innovator's Dilemma. Depends how you look at it. My understanding of the Innovator's Dilemma, is that when faced with disruption, which implies radical change within the organization, nobody in that organization really wants to do that, because it messes up too many of their processes/products, etc. So what do they do instead? They try to make their existing technology/product fit the new paradigm. This is what Nokia tried to do with "touch-enabled Symbian", instead of writing a new touch-focused OS from scratch (they did do that with Maemo actually, but also because of Innovator's Dilemma reasons, they failed to focus on it and invest in it). It's also what Intel did with Atom, and by the way, why they killed the ARM-based Xscale division as well a few years before the iPhone. Atom has too high cost to compete in mobile. This is mainly what killed Intel's mobile division. Intel even tried to license it out to cheap Chinese chip makers, but it was still not competitive in performance/price. And it's also why Microsoft failed for so long to conquer tablets, by retrofitting desktop Windows for them. Before you mention the Surface Pro, first off I don't consider it a major success, it's too expensive for most people, and 90% of the reason people get it is to use it as a PC, not as a tablet (other than perhaps designers, but that's not a mainstream market, and it's more inline with the Wacom tablet professional market). It's also why hybrid cars or regular cars being retrofitted as EVs will fail against pure EVs, too, etc, etc
- TheCondor 11y ago
  Is there a problem with Intel's technology? I think their technology is great, probably better than the competition. It's the licensing and packaging. Intel doesn't sell a core, doesn't license a core for you to mask your own SoC, doesn't let you graft on other parts, they decide and sell a SoC. A SoC that they fab
dumael 11y ago
> At the time Intel had already introduced some mobile silicon, but there was little uptake. So they were iterating; they wanted to improve for each succeeding generation. But they had a kind of design-by-committee process. One person or group wanted a certain feature, another group wanted something else, a third group though that yet another thing was important. And so on. Sorry if that sounds vague, I won't write anything more specific. > The end result was a chipset that had a lot of features. A LOT OF FEATURES. Gold plated features. But that meant higher power consumption than the competition, higher cost, larger form factor, longer time to market. I have some experience in this field, and this sounds utterly bizarre. Most of the customers are fairly selective in what bits they want, so provided everything (including the kitchen sink) in a product is useless. Being able to comfortably ship any variant of your SoC without certain parts is important.
williadc 11y ago
Path 2 is exactly what happened on Broxton. Source: I worked on it.

_yosefk 11y ago

The thing is, it's not gonna help to have a "Steve Jobs" nor will any degree of understanding the competition help if you're used to ship an expensive high-margin product and along comes a low-margin competitor. Neither ARM nor TSMC attempt to make the kind of profit that Intel is used to making and this is the real problem for Intel; even if it wins 75% of the mobile market by shipping adequate chips at adequate prices, the profits won't be anywhere near what it gets in the PC market. (Of course this is just as true about Apple as it is about Intel, and I think their latest quarter results testify to it just as much as Intel's. Actually, the surprising thing about Intel (which is not true about Apple, Steve Jobs and all) is the degree of their dominance in the market for anything resembling a PC - a computer where you can get work done; one might expect both AMD and non-x86-based workstation products to do better, certainly Android is a bigger threat to iPhone/iPad than any competitor ever was to Intel in the PC space.)

petra 11y ago
Something about margins I don't get: Intel's Gross margin is about 80%. In the fabless ecosystem, the fab usually gets 50% and quallcom is usually above 50% , something even 65% . So the total combined margin is as high as Intel or more. So why does Intel fail?
- _yosefk 11y ago
  All of these companies sell many different products and I'd guess that their reported overall gross margins will be different from the margins of any given product. For instance, I rather doubt that either TSMC or Samsung get 50% margins when making Apple's chips.
  - petra 11y ago
    In Apple's case it makes sense to lower margins to increase profits.Just common sense. But why not in general ? why does Wall Street hates that so much ?
- Brakenshire 11y ago
  Benefits through competition? Intel is only one company, it's competing with a whole ecosystem of companies, who can all iterate and find efficiencies on chip design, and on manufacturing. And those improvements which are specific to the processor type will inevitably get passed around over time.
- deleted 11y ago
  [deleted]

mtgx 11y ago

> Intel didn't fail because of any variation on The Innovator's Dilemma. Depends how you look at it. My understanding of the Innovator's Dilemma, is that when faced with disruption, which implies radical change within the organization, nobody in that organization really wants to do that, because it messes up too many of their processes/products, etc. So what do they do instead? They try to make their existing technology/product fit the new paradigm. This is what Nokia tried to do with "touch-enabled Symbian", instead of writing a new touch-focused OS from scratch (they did do that with Maemo actually, but also because of Innovator's Dilemma reasons, they failed to focus on it and invest in it). It's also what Intel did with Atom, and by the way, why they killed the ARM-based Xscale division as well a few years before the iPhone. Atom has too high cost to compete in mobile. This is mainly what killed Intel's mobile division. Intel even tried to license it out to cheap Chinese chip makers, but it was still not competitive in performance/price. And it's also why Microsoft failed for so long to conquer tablets, by retrofitting desktop Windows for them. Before you mention the Surface Pro, first off I don't consider it a major success, it's too expensive for most people, and 90% of the reason people get it is to use it as a PC, not as a tablet (other than perhaps designers, but that's not a mainstream market, and it's more inline with the Wacom tablet professional market). It's also why hybrid cars or regular cars being retrofitted as EVs will fail against pure EVs, too, etc, etc

TheCondor 11y ago
Is there a problem with Intel's technology? I think their technology is great, probably better than the competition. It's the licensing and packaging. Intel doesn't sell a core, doesn't license a core for you to mask your own SoC, doesn't let you graft on other parts, they decide and sell a SoC. A SoC that they fab

dumael 11y ago

> At the time Intel had already introduced some mobile silicon, but there was little uptake. So they were iterating; they wanted to improve for each succeeding generation. But they had a kind of design-by-committee process. One person or group wanted a certain feature, another group wanted something else, a third group though that yet another thing was important. And so on. Sorry if that sounds vague, I won't write anything more specific. > The end result was a chipset that had a lot of features. A LOT OF FEATURES. Gold plated features. But that meant higher power consumption than the competition, higher cost, larger form factor, longer time to market. I have some experience in this field, and this sounds utterly bizarre. Most of the customers are fairly selective in what bits they want, so provided everything (including the kitchen sink) in a product is useless. Being able to comfortably ship any variant of your SoC without certain parts is important.

williadc 11y ago

Path 2 is exactly what happened on Broxton. Source: I worked on it.