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This sort of stuff is why I quit Intel and sold all my stock. In my opinion (and I haven’t been following post-Kersanich Intel closely) Intel should be focusing

This sort of stuff is why I quit Intel and sold all my stock. In my opinion (and I haven’t been following post-Kersanich Intel closely) Intel should be focusing on their process and processors, I don’t think the execs really have the will it would take to diversify. These acquisitions almost always end up being run into the ground because Intel is so used to turning the crank on their mature (read: awesomely ubiquitous software support) CPU architecture that they don’t want to spend much on R&D on things that aren’t proven money makers. But they keep trying to div diversify in a very half-assed way because they have such a high market share in CPUs (not that it is without legitimate threat from AMD) that to continue to grow they want to hit new markets.

azinman2 6y ago
I’m just wondering why they have a billion to spend on this. Clearly they can walk and chew gum at the same time, yet being so under fire directionally makes me think they should be more focused on getting their core business right instead of chasing extremely expensive pipe dreams. Those side distractions almost always get cut at Intel...
- toomuchtodo 6y ago
  The appearance of generating value in the short term until executive leadership parachutes out leaving shareholders holding the bag.
Traster 6y ago
I actually disagree with your analysis, my experience with Intel was from an acquisition. They decided they were going to do 'big bets' which involved massively massively investing in a few areas. What happened, was they acquired the company and told us to grow in certain areas enormously and quickly. So it's not that they acquired and then cut R&D. The opposite happened, they hugely increased R&D (sure they cut lots of other things that caused trouble), but it was like winning the lottery, suddenly everyone could hire for everything. So the message was "Get on and hire, because it won't be like this forever, and if you fail your hiring target, you'll be stuck delivering big projects with no staff". Immediately hiring became a mess, the weight of bringing on all this new staff massively slowed everything down. In most ways we ended up delivering less with twice the staff. Needless to say: this didn't produce the results they wanted. Fortunately for my team, Intel completely shitting the bed on 10nm meant that all these problems were barely noticed - who can blame you if the silicon isn't there. The thing is, that when you pay a premium, overinvest and under-deliver you end up with no choice in the exec team - and you end up 'cutting you losses' and doing a McAfee.
- dehrmann 6y ago
  > doing a McAfee Do you mean the person or the company? If you mean the person, this is going to pretty weird.
  - PaulHoule 6y ago
    Intel was big into antivirus in the early 2010s and bought the company https://en.wikipedia.org/wiki/McAfee#Acquisition_by_Intel_and_spin-off https://en.wikipedia.org/wiki/McAfee#Acquisition_by_Intel_an... at first they thought it would sell quad-core processors, but discriminating consumers learned that third-party antivirus makes your machine slow, unstable, hot and runs down the battery. Thus it damaged Intel's brand.
    - minot 6y ago
      > at first they thought it would sell quad-core processors, but discriminating consumers learned that third-party antivirus makes your machine slow, unstable, hot and runs down the battery. Thus it damaged Intel's brand. I don't get the anti-virus market at all. Granted all AV products are probably horrible and I haven't used a third party AV on a personal machine ever since about 2009-ish [0] but back in college I distinctly remember the consumer AV stuff was so much taxing on performance compared to "enterprise" stuff. I don't think there was ever a technical reason for this, was there? So, why? Now I do remember subversion checkouts or anything file intensive was pretty bad (and it still is if you don't have a decent SSD) but my impression is that the enterprise av was better than consumer? Am I misremembering this? [0] I think I switched to Microsoft Security Essentials or some variant of it if I recall correctly.
- hn_throwaway_99 6y ago
  It's amazing to me how often this story repeats itself in tech, yet the results are almost always the same: 1. Old, hugely successful company needs to find new growth areas. 2. Company acquires company in high growth area (sometimes innovative, sometimes not) 3. Taking from the MBA playbook that higher investment equals more growth, acquired company is given aggressive targets but also a huge budget to meet them. 4. Company goes on a massive, usually relatively untargeted hiring spree, things become a major shitshow, acquired leadership team is eventually canned. Instead of finding some realistic product targets and then setting a budget around what resources will be needed to attain those goals, the budget is allocated based solely on desired revenue and somehow hiring all these people without a clear plan will make that happen. I'm genuinely curious, has this ever worked?
dehrmann 6y ago
Around 2008, Intel really needed to become a player in mobile computing. Now they're a decade late, and this wasn't what I meant by "mobile."
- samfisher83 6y ago
  Lets look at least the Highend cellphone space you have Qcom and apple.Even Samsung doesn't really compete with Qcom. Qcom has a moat for their mobile business which is their radio patents. Even apple uses the Qcom radio chips, but they can because they have their insane margins.Lets look at the biggest semiconductor company in the world tsmc they generated about 4bil in Free cash flow. Intel generated about 18, and going after the low cost market is not a good idea. The best option would be for intel is just to return money back to the shareholders.
- bsder 6y ago
  "Hey, we should start selling ARM CPUs. I know that the profit margin is two orders of magnitude less than x86 processors, but we'll sell an order of magnitude more chips." The only question would be whether they would let that guy leave through the door under his own power. The logical solution is to ride the gravy train until it tanks completely. A dinosaur can take a VERY long time to fall.
  - kevin_thibedeau 6y ago
    It's better than that. Intel was an ARM licensee for a brief period after they acquired StrongARM from DEC and developed Xscale. If they had any vision that could have been leveraged into a best in class low power mobile platform.
    - srcmap 6y ago
      Intel can sell x86 with 50-80% margin + 80-90% market share. Or sell arm compete with TW, China ARM licensee at 10-25% margin for 5-15% market share. And you don't have any competitive advantage like Qualcom with IP on CP. If you're Intel CEO, how are you going to choose?
eldavido 6y ago
Completely agree. Had a friend start a career at Intel, moved to Apple because he saw it coming. In case anyone isn't totally clear on why Intel is in such trouble: they made a lot of money selling high-end CPUs for desktops, and even higher-margin parts to datacenter operators. On the PC front, when I was in high school (late 90s/early 2000s) it was common to have the computers on a "3 year replacement cycle" where they'd replace 1/3 or 1/4 of the computers every single year. Compare that to today where "2009 era" iMacs (!!) are floating around, ready for purchase at 200-300 dollars. There's no growth here. On the mobile side, Intel had the chance to make chips for Apple but said no. They couldn't make the numbers work volume-wise. It's an interesting story, read it if you haven't. Then comes datacenters. High-performance, high-power has been an Intel stronghold for 10-20 years but the whole industry is consolidating into AWS/Amazon/Azure who will probably make their own CPUs at some point, if not their entire own PCs. Either way this is bad for Intel: they face either someone who doesn't want their product, or a much larger buyer with much more purchasing leverage than a corporate IT department buying in small quantities. Same deal with storage -- the larger operators aren't paying the crazy EMC/NetApp margins those guys could cram down corporate IT's throats. Amazon has already announced plans to make ARM EC2 instances for reasons of both power and not paying Intel's crazy margins. The thing Intel still does have is world-leading fab capabilities. I remember back in the 90s Intel always outperfomred AMD by running at much higher clockspeeds, and they could do it because of their superior process technology. But that allowed AMD to run laps around them in microarchitecture, which is showing with Ryzen. I don't see Intel becoming a contract manufacturer soon but I'm sure they've discussed it internally.
- gniv 6y ago
  I've been hearing this "Intel is in trouble" story for many years now. Yet their stock doubled in the last 5 years. What gives?
  - justapassenger 6y ago
    Stock price is very often disconnected from reality.
  - lotsofpulp 6y ago
Zenst 6y ago
Agreed, Intel seems to buy companies and then destroy or borg only small bits leaving everything else to rot. But such purchases are good PR for the shareholder perception and almost gets down to churning purches thru the books on the surface, look good at that level of perception. Agreed, They should focus upon what they have and with that, perish the thought they focused upon there FPGA with toolchains and support that could drive it into that and many markets. If Intel added a small FPGA to their CPU's and they could - that could drive a whole new market of development and one in which they are placed to capitlise upon what IP they do have. Certainly an FPGA would make for a good mix with AI, if Intel would make such tools and open up FPGA's more to users and get that adoption going. Then the whole CPU/GPU race may well change into their favour.
ksec 6y ago
Those acquisition that are in terms of actual silicon production are at least still running, because that is part of Intel's expertise. Those that has absolutely nothing to do with Silicon production are all being run to the ground. They should have diversify into either into more silicon products or Custom Fabs, instead their Custom Foundry was a complete mess. What Intel dont realise was their competitor isn't actually AMD or Nvidia, but TSMC and Samsung. The market has no problem paying premium for leading edge node, leading edge processor design and software support. The problem is Intel lost on the first two and lost the third with respect to CUDA. At least the new CEO seems to understand the problem better.

azinman2 6y ago

I’m just wondering why they have a billion to spend on this. Clearly they can walk and chew gum at the same time, yet being so under fire directionally makes me think they should be more focused on getting their core business right instead of chasing extremely expensive pipe dreams. Those side distractions almost always get cut at Intel...

toomuchtodo 6y ago
The appearance of generating value in the short term until executive leadership parachutes out leaving shareholders holding the bag.

Traster 6y ago

I actually disagree with your analysis, my experience with Intel was from an acquisition. They decided they were going to do 'big bets' which involved massively massively investing in a few areas. What happened, was they acquired the company and told us to grow in certain areas enormously and quickly. So it's not that they acquired and then cut R&D. The opposite happened, they hugely increased R&D (sure they cut lots of other things that caused trouble), but it was like winning the lottery, suddenly everyone could hire for everything. So the message was "Get on and hire, because it won't be like this forever, and if you fail your hiring target, you'll be stuck delivering big projects with no staff". Immediately hiring became a mess, the weight of bringing on all this new staff massively slowed everything down. In most ways we ended up delivering less with twice the staff. Needless to say: this didn't produce the results they wanted. Fortunately for my team, Intel completely shitting the bed on 10nm meant that all these problems were barely noticed - who can blame you if the silicon isn't there. The thing is, that when you pay a premium, overinvest and under-deliver you end up with no choice in the exec team - and you end up 'cutting you losses' and doing a McAfee.

dehrmann 6y ago
> doing a McAfee Do you mean the person or the company? If you mean the person, this is going to pretty weird.
- PaulHoule 6y ago
  Intel was big into antivirus in the early 2010s and bought the company https://en.wikipedia.org/wiki/McAfee#Acquisition_by_Intel_and_spin-off https://en.wikipedia.org/wiki/McAfee#Acquisition_by_Intel_an... at first they thought it would sell quad-core processors, but discriminating consumers learned that third-party antivirus makes your machine slow, unstable, hot and runs down the battery. Thus it damaged Intel's brand.
  - minot 6y ago
    > at first they thought it would sell quad-core processors, but discriminating consumers learned that third-party antivirus makes your machine slow, unstable, hot and runs down the battery. Thus it damaged Intel's brand. I don't get the anti-virus market at all. Granted all AV products are probably horrible and I haven't used a third party AV on a personal machine ever since about 2009-ish [0] but back in college I distinctly remember the consumer AV stuff was so much taxing on performance compared to "enterprise" stuff. I don't think there was ever a technical reason for this, was there? So, why? Now I do remember subversion checkouts or anything file intensive was pretty bad (and it still is if you don't have a decent SSD) but my impression is that the enterprise av was better than consumer? Am I misremembering this? [0] I think I switched to Microsoft Security Essentials or some variant of it if I recall correctly.
hn_throwaway_99 6y ago
It's amazing to me how often this story repeats itself in tech, yet the results are almost always the same: 1. Old, hugely successful company needs to find new growth areas. 2. Company acquires company in high growth area (sometimes innovative, sometimes not) 3. Taking from the MBA playbook that higher investment equals more growth, acquired company is given aggressive targets but also a huge budget to meet them. 4. Company goes on a massive, usually relatively untargeted hiring spree, things become a major shitshow, acquired leadership team is eventually canned. Instead of finding some realistic product targets and then setting a budget around what resources will be needed to attain those goals, the budget is allocated based solely on desired revenue and somehow hiring all these people without a clear plan will make that happen. I'm genuinely curious, has this ever worked?

dehrmann 6y ago

Around 2008, Intel really needed to become a player in mobile computing. Now they're a decade late, and this wasn't what I meant by "mobile."

samfisher83 6y ago
Lets look at least the Highend cellphone space you have Qcom and apple.Even Samsung doesn't really compete with Qcom. Qcom has a moat for their mobile business which is their radio patents. Even apple uses the Qcom radio chips, but they can because they have their insane margins.Lets look at the biggest semiconductor company in the world tsmc they generated about 4bil in Free cash flow. Intel generated about 18, and going after the low cost market is not a good idea. The best option would be for intel is just to return money back to the shareholders.
bsder 6y ago
"Hey, we should start selling ARM CPUs. I know that the profit margin is two orders of magnitude less than x86 processors, but we'll sell an order of magnitude more chips." The only question would be whether they would let that guy leave through the door under his own power. The logical solution is to ride the gravy train until it tanks completely. A dinosaur can take a VERY long time to fall.
- kevin_thibedeau 6y ago
  It's better than that. Intel was an ARM licensee for a brief period after they acquired StrongARM from DEC and developed Xscale. If they had any vision that could have been leveraged into a best in class low power mobile platform.
  - srcmap 6y ago
    Intel can sell x86 with 50-80% margin + 80-90% market share. Or sell arm compete with TW, China ARM licensee at 10-25% margin for 5-15% market share. And you don't have any competitive advantage like Qualcom with IP on CP. If you're Intel CEO, how are you going to choose?

eldavido 6y ago

Completely agree. Had a friend start a career at Intel, moved to Apple because he saw it coming. In case anyone isn't totally clear on why Intel is in such trouble: they made a lot of money selling high-end CPUs for desktops, and even higher-margin parts to datacenter operators. On the PC front, when I was in high school (late 90s/early 2000s) it was common to have the computers on a "3 year replacement cycle" where they'd replace 1/3 or 1/4 of the computers every single year. Compare that to today where "2009 era" iMacs (!!) are floating around, ready for purchase at 200-300 dollars. There's no growth here. On the mobile side, Intel had the chance to make chips for Apple but said no. They couldn't make the numbers work volume-wise. It's an interesting story, read it if you haven't. Then comes datacenters. High-performance, high-power has been an Intel stronghold for 10-20 years but the whole industry is consolidating into AWS/Amazon/Azure who will probably make their own CPUs at some point, if not their entire own PCs. Either way this is bad for Intel: they face either someone who doesn't want their product, or a much larger buyer with much more purchasing leverage than a corporate IT department buying in small quantities. Same deal with storage -- the larger operators aren't paying the crazy EMC/NetApp margins those guys could cram down corporate IT's throats. Amazon has already announced plans to make ARM EC2 instances for reasons of both power and not paying Intel's crazy margins. The thing Intel still does have is world-leading fab capabilities. I remember back in the 90s Intel always outperfomred AMD by running at much higher clockspeeds, and they could do it because of their superior process technology. But that allowed AMD to run laps around them in microarchitecture, which is showing with Ryzen. I don't see Intel becoming a contract manufacturer soon but I'm sure they've discussed it internally.

gniv 6y ago
I've been hearing this "Intel is in trouble" story for many years now. Yet their stock doubled in the last 5 years. What gives?
- justapassenger 6y ago
  Stock price is very often disconnected from reality.
- lotsofpulp 6y ago

Zenst 6y ago

Agreed, Intel seems to buy companies and then destroy or borg only small bits leaving everything else to rot. But such purchases are good PR for the shareholder perception and almost gets down to churning purches thru the books on the surface, look good at that level of perception. Agreed, They should focus upon what they have and with that, perish the thought they focused upon there FPGA with toolchains and support that could drive it into that and many markets. If Intel added a small FPGA to their CPU's and they could - that could drive a whole new market of development and one in which they are placed to capitlise upon what IP they do have. Certainly an FPGA would make for a good mix with AI, if Intel would make such tools and open up FPGA's more to users and get that adoption going. Then the whole CPU/GPU race may well change into their favour.

ksec 6y ago

Those acquisition that are in terms of actual silicon production are at least still running, because that is part of Intel's expertise. Those that has absolutely nothing to do with Silicon production are all being run to the ground. They should have diversify into either into more silicon products or Custom Fabs, instead their Custom Foundry was a complete mess. What Intel dont realise was their competitor isn't actually AMD or Nvidia, but TSMC and Samsung. The market has no problem paying premium for leading edge node, leading edge processor design and software support. The problem is Intel lost on the first two and lost the third with respect to CUDA. At least the new CEO seems to understand the problem better.