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Apparently the financial planning model Intel used to justify turning down Apple in that case had a math error (dividing by 1+X instead of multiplying by 1+X) t

by ETHisso2017 6y ago

Apparently the financial planning model Intel used to justify turning down Apple in that case had a math error (dividing by 1+X instead of multiplying by 1+X) that actually swung the analysis in the wrong direction. Given the resulting impact (Intel being far behind in the smartphone market), it might qualify as the costliest Excel error of all time.

vlovich123 6y ago
Source? That would be a fascinating read.
bigdict 6y ago
Do you have a source for that?
patmorgan23 6y ago
.... That's like literally trillion dollar mistake
- lumost 6y ago
  given Apple's near monopsomy power in the mobile market Intel may never have been able to produce high margin chips in that market.
  - reitzensteinm 6y ago
    Yeah, it never would have been that profitable to be an ARM vendor for Apple. I couldn't even remember who made the chips in the iPhone 1, I had to look up that it was Samsung. If Intel managed to convince Apple to go x86, and they had low power chips competitive with ARM at the time, then that would be a different story. You could even argue that it was a happy accident; Intel providing a high performance ARM core may have forced mobile competitors to react, producing high performance ARM chips of their own, and sped up the erosion of the x86 monopoly we're finally witnessing today by several years.
    - GeekyBear 6y ago
      Intel refusing Apple's business and not moving into handheld mobile devices put a whole lot of R&D money into the pockets of Intel's rivals. I doubt TSMC would have been able to afford to catch up to Intel without their current high volume business.
      - reitzensteinm 6y ago
        If they stayed with Intel for a very long time, I agree. But I don't think that would have happened. Apple pursued custom silicon very aggressively from the start, with the acquisition of PA Semi less than a year after the launch, and the first custom chip coming in the iPad in 2010. Although with an Intel chip they wouldn't have needed to do this for performance reasons, Intel's fat gross margins would have been equally compelling. If Intel was willing to design the chips and take TSMC sized margins on them, I guess they could have kept the iPhone business for years, but that isn't in their DNA. I can't see Intel ARM iPhone chips as anything other than a shortly lived oddity.
        GeekyBear 6y ago
        My assumption is that if Intel had gotten serious about mobile devices, Apple would not have been their only customer. By sending all that business to TSMC and Samsung, they were financing their rival's R&D.
        reitzensteinm 6y ago
        Getting serious about mobile devices means dropping their historic 60% gross margin target. If they were willing to do that, I totally buy in to your scenario. It would have been the right play with the benefit of hindsight. But it would have represented the biggest shift in their business model since they dropped DRAM. Just agreeing to fab the iPhone 1 CPU wouldn't have been nearly enough.
        GeekyBear 6y ago
  - deleted 6y ago
    [deleted]
colonwqbang 6y ago
Source?
- Ericson2314 6y ago
  Sounds to me like a joke based on https://en.wikipedia.org/wiki/Pentium_FDIV_bug https://en.wikipedia.org/wiki/Pentium_FDIV_bug
pankajdoharey 6y ago
I think it was mostly the greed of Business Development people at Intel who thought why build a chip with such low margins, what they didn't see was that mobile revolution was about to take place and billions upon billions of ARM chips would be shipped in mobile devices around the world.
- KMag 6y ago
  See also the rumoured refusal of DEC to drop margins on the Alpha when Apple was shopping around for a replacement for the m68k.
GeekyBear 6y ago
Otellini mentioned in one interview that Intel's projected cost was wrong, but I've never seen anyone at Intel go into specifics as to how it was wrong. >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." https://www.theatlantic.com/technology/archive/2013/05/paul-otellinis-intel-can-the-company-that-built-the-future-survive-it https://www.theatlantic.com/technology/archive/2013/05/paul-...

vlovich123 6y ago

Source? That would be a fascinating read.

bigdict 6y ago

Do you have a source for that?

patmorgan23 6y ago

.... That's like literally trillion dollar mistake

lumost 6y ago
given Apple's near monopsomy power in the mobile market Intel may never have been able to produce high margin chips in that market.
- reitzensteinm 6y ago
  Yeah, it never would have been that profitable to be an ARM vendor for Apple. I couldn't even remember who made the chips in the iPhone 1, I had to look up that it was Samsung. If Intel managed to convince Apple to go x86, and they had low power chips competitive with ARM at the time, then that would be a different story. You could even argue that it was a happy accident; Intel providing a high performance ARM core may have forced mobile competitors to react, producing high performance ARM chips of their own, and sped up the erosion of the x86 monopoly we're finally witnessing today by several years.
  - GeekyBear 6y ago
    Intel refusing Apple's business and not moving into handheld mobile devices put a whole lot of R&D money into the pockets of Intel's rivals. I doubt TSMC would have been able to afford to catch up to Intel without their current high volume business.
    - reitzensteinm 6y ago
      If they stayed with Intel for a very long time, I agree. But I don't think that would have happened. Apple pursued custom silicon very aggressively from the start, with the acquisition of PA Semi less than a year after the launch, and the first custom chip coming in the iPad in 2010. Although with an Intel chip they wouldn't have needed to do this for performance reasons, Intel's fat gross margins would have been equally compelling. If Intel was willing to design the chips and take TSMC sized margins on them, I guess they could have kept the iPhone business for years, but that isn't in their DNA. I can't see Intel ARM iPhone chips as anything other than a shortly lived oddity.
      - GeekyBear 6y ago
        My assumption is that if Intel had gotten serious about mobile devices, Apple would not have been their only customer. By sending all that business to TSMC and Samsung, they were financing their rival's R&D.
        reitzensteinm 6y ago
        Getting serious about mobile devices means dropping their historic 60% gross margin target. If they were willing to do that, I totally buy in to your scenario. It would have been the right play with the benefit of hindsight. But it would have represented the biggest shift in their business model since they dropped DRAM. Just agreeing to fab the iPhone 1 CPU wouldn't have been nearly enough.
        GeekyBear 6y ago
- deleted 6y ago
  [deleted]

colonwqbang 6y ago

Source?

Ericson2314 6y ago
Sounds to me like a joke based on https://en.wikipedia.org/wiki/Pentium_FDIV_bug https://en.wikipedia.org/wiki/Pentium_FDIV_bug

pankajdoharey 6y ago

I think it was mostly the greed of Business Development people at Intel who thought why build a chip with such low margins, what they didn't see was that mobile revolution was about to take place and billions upon billions of ARM chips would be shipped in mobile devices around the world.

KMag 6y ago
See also the rumoured refusal of DEC to drop margins on the Alpha when Apple was shopping around for a replacement for the m68k.

GeekyBear 6y ago

Otellini mentioned in one interview that Intel's projected cost was wrong, but I've never seen anyone at Intel go into specifics as to how it was wrong. >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." https://www.theatlantic.com/technology/archive/2013/05/paul-otellinis-intel-can-the-company-that-built-the-future-survive-it https://www.theatlantic.com/technology/archive/2013/05/paul-...