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Can someone explain to me Intel's continued fascination with being a consumer company? From constant B2C advertising to their TV and wearable endeavors, they se

Can someone explain to me Intel's continued fascination with being a consumer company? From constant B2C advertising to their TV and wearable endeavors, they seem to be fixated on being something they're not. Is it corporate vanity? Is there a strategic motivation? If so, have any of their consumer endeavors ever actually borne fruit? I guess it's reminiscent of Microsoft, who don't seem to understand that Windows was not successful because consumers liked it, but because businesses bought it.

PhantomGremlin 13y ago
I think Intel's "strategic motivation" is simple. The US stock market demands ever increasing revenues and earnings from a company. In order to achieve that, often companies do something that the great Peter Lynch called "diworsification" [0]: The term was coined by legendary investor Peter Lynch in his book, "One Up Wall Street," where he suggested that a business that diversifies too widely, risks destroying their original business, because management time, energy and resources are diverted from the original investment. Without continuing earnings and revenue growth, a company is "dead" to much of Wall Street. I just posted another comment as to what IMO Intel should be doing instead. They should "stick to the knitting". E.g. they could try to become a world class foundry. They've got the fabs, they've got thousands of great engineers. I guess that's just not as sexy as a watch that also measures your perspiration. [0] http://www.investopedia.com/terms/d/diworsification.asp http://www.investopedia.com/terms/d/diworsification.asp
- webwielder 13y ago
  It's a shame that the one time event of going public dooms a company for perpetuity to being subject to the unreasonable demands of shareholders, so often ironically resulting in the downfall of the very value that was supposed to rise as a result of said demands.
  - zimpenfish 13y ago
    It's even more ironic that companies which make astounding profits (cf Apple) and largely ignore the whims of shareholders (cf Apple) are constantly berated for this.
  - bryanlarsen 13y ago
    The alternative to diworsification would be share buybacks. That's a way to increase your EPS without having to grow your earnings numbers. Intel's diversification probably has more to do with internalization of the mantra "if you're not growing, you're dying" than pressure from Wall Street.
    - PhantomGremlin 13y ago
      I'm in favor of diversification but not diworsification. E.g. when Apple already makes an iPod and an iPhone then it's smart diversification to make an iPad. That gets you growth without needing to resort to share buybacks. Apple's smart growth is much better than the flailing growth that many companies attempt. E.g. Google has search so Microsoft does Bing. Apple has the iPod so Microsoft does the Zune. New products are OK if they are clearly better than what is already out there, but in Microsoft's case they weren't. Contrast with the iPhone. It was IMO clearly better than what was already out there, if for no other reason than Apple refused to be the wireless carriers' bitch. But now even Apple is doing share buybacks, because they're running out of smart diversification ideas. An iWatch wouldn't be big enough to provide meaningful growth. I'm sure they'll eventually do it, but the law of large numbers is no longer on Apple's side. The example I gave of me wanting Intel to become a world class foundry is IMO smart diversification. TSM's market cap is about $93 billion. So, clearly, there's room for competition.
bjackman 13y ago
Im not a business analyst but possible explanation: Intel want their chips in embedded, low power devices, beating ARM chips to new markets. Nobody is building x86 wearables, so Intel want to start the ball rolling by doing it themselves. similar to how they subsidize x86 tablets.
jrockway 13y ago
Is any of this affecting their products? I can't think of any Intel product I've ever owned that wasn't extremely well-made. Their prices are also good. $350 for a 22nm 4-core chip with with 8M of cache? That's nothing. I also like their SSDs and Xeon processors. The Haswell integrated graphics are also very, very good. (My $600 NVidia card has major issues with MST DisplayPort monitors. The Intel chipset Just Works.) To me it just sounds like they hired a marketing firm to get people to pick Intel over AMD when they don't actually care what they're getting. Nothing wrong with that. (As for mobile, Intel is getting their lunch eaten by ARM, so I can see why they might want to put more skin in the mobile game. Although, as I understand it, Intel just sells ARM manufacturers time in their last-gen fabs, thus making ARM cheaper than current-gen Intel stuff, but with not as much raw power. ARM cores make up for lack of raw power with lots of special functionality on-die, like video decoders and encoders, which your x86 Intel chip will just do in software.)
- jsnell 13y ago
  I haven't heard anything about Intel selling ARM manufacturers fab time, even on obsolete processes. AFAIK Intel has not really been in the foundry business until very recently. And even that has been with extremely high margin products that don't compete with Intel, such as FPGAs. Even if they were fabbing some ARM chip, I don't think it could be one of the big players. For example Qualcomm, Nvidia, and TI use TSMC. Apple and Samsung use Samsung's fabs.
  - bryanlarsen 13y ago
    http://www.anandtech.com/show/7473/intel-to-fab-altera-fpgas-with-arm-ip http://www.anandtech.com/show/7473/intel-to-fab-altera-fpgas... You're mostly right about it not being one of the big players. Altera is a big player in the FPGA market, but not the ARM market. The chips in question cost thousands of dollars; the ARM core is a very small portion of the chip.
dbcooper 13y ago
They need to keep their fabs running at a reasonably high capacity to keep per chip production costs down. That enables them to keep the nice high margins on premium parts like server chips.
Edmond 13y ago
the key-word/phrase is "internet of things" http://www.nytimes.com/2014/02/16/technology/intels-sharp-eyed-social-scientist.html http://www.nytimes.com/2014/02/16/technology/intels-sharp-ey...
corresation 13y ago
Can someone explain to me Intel's continued fascination with being a consumer company? I suspect that Intel is buying companies and products like this for the same reason that Microsoft bought Nokia -- they see some markets moving away from them, and rather than convincing other manufacturers and fighting competing inertia, they're going to try to make the market themselves. That isn't to be dismissive of Intel at all -- they are a tremendous company, and their products are virtually always class leading (in capability and quality). But they were making so much money on the fat processor market they got lured into the classic fallacy of thinking that they were their own biggest competitor, and now the whole ARM ecosystem has turned into a remarkably capable foe.

PhantomGremlin 13y ago

I think Intel's "strategic motivation" is simple. The US stock market demands ever increasing revenues and earnings from a company. In order to achieve that, often companies do something that the great Peter Lynch called "diworsification" [0]: The term was coined by legendary investor Peter Lynch in his book, "One Up Wall Street," where he suggested that a business that diversifies too widely, risks destroying their original business, because management time, energy and resources are diverted from the original investment. Without continuing earnings and revenue growth, a company is "dead" to much of Wall Street. I just posted another comment as to what IMO Intel should be doing instead. They should "stick to the knitting". E.g. they could try to become a world class foundry. They've got the fabs, they've got thousands of great engineers. I guess that's just not as sexy as a watch that also measures your perspiration. [0] http://www.investopedia.com/terms/d/diworsification.asp http://www.investopedia.com/terms/d/diworsification.asp

webwielder 13y ago
It's a shame that the one time event of going public dooms a company for perpetuity to being subject to the unreasonable demands of shareholders, so often ironically resulting in the downfall of the very value that was supposed to rise as a result of said demands.
- zimpenfish 13y ago
  It's even more ironic that companies which make astounding profits (cf Apple) and largely ignore the whims of shareholders (cf Apple) are constantly berated for this.
- bryanlarsen 13y ago
  The alternative to diworsification would be share buybacks. That's a way to increase your EPS without having to grow your earnings numbers. Intel's diversification probably has more to do with internalization of the mantra "if you're not growing, you're dying" than pressure from Wall Street.
  - PhantomGremlin 13y ago
    I'm in favor of diversification but not diworsification. E.g. when Apple already makes an iPod and an iPhone then it's smart diversification to make an iPad. That gets you growth without needing to resort to share buybacks. Apple's smart growth is much better than the flailing growth that many companies attempt. E.g. Google has search so Microsoft does Bing. Apple has the iPod so Microsoft does the Zune. New products are OK if they are clearly better than what is already out there, but in Microsoft's case they weren't. Contrast with the iPhone. It was IMO clearly better than what was already out there, if for no other reason than Apple refused to be the wireless carriers' bitch. But now even Apple is doing share buybacks, because they're running out of smart diversification ideas. An iWatch wouldn't be big enough to provide meaningful growth. I'm sure they'll eventually do it, but the law of large numbers is no longer on Apple's side. The example I gave of me wanting Intel to become a world class foundry is IMO smart diversification. TSM's market cap is about $93 billion. So, clearly, there's room for competition.

bjackman 13y ago

Im not a business analyst but possible explanation: Intel want their chips in embedded, low power devices, beating ARM chips to new markets. Nobody is building x86 wearables, so Intel want to start the ball rolling by doing it themselves. similar to how they subsidize x86 tablets.

jrockway 13y ago

Is any of this affecting their products? I can't think of any Intel product I've ever owned that wasn't extremely well-made. Their prices are also good. $350 for a 22nm 4-core chip with with 8M of cache? That's nothing. I also like their SSDs and Xeon processors. The Haswell integrated graphics are also very, very good. (My $600 NVidia card has major issues with MST DisplayPort monitors. The Intel chipset Just Works.) To me it just sounds like they hired a marketing firm to get people to pick Intel over AMD when they don't actually care what they're getting. Nothing wrong with that. (As for mobile, Intel is getting their lunch eaten by ARM, so I can see why they might want to put more skin in the mobile game. Although, as I understand it, Intel just sells ARM manufacturers time in their last-gen fabs, thus making ARM cheaper than current-gen Intel stuff, but with not as much raw power. ARM cores make up for lack of raw power with lots of special functionality on-die, like video decoders and encoders, which your x86 Intel chip will just do in software.)

jsnell 13y ago
I haven't heard anything about Intel selling ARM manufacturers fab time, even on obsolete processes. AFAIK Intel has not really been in the foundry business until very recently. And even that has been with extremely high margin products that don't compete with Intel, such as FPGAs. Even if they were fabbing some ARM chip, I don't think it could be one of the big players. For example Qualcomm, Nvidia, and TI use TSMC. Apple and Samsung use Samsung's fabs.
- bryanlarsen 13y ago
  http://www.anandtech.com/show/7473/intel-to-fab-altera-fpgas-with-arm-ip http://www.anandtech.com/show/7473/intel-to-fab-altera-fpgas... You're mostly right about it not being one of the big players. Altera is a big player in the FPGA market, but not the ARM market. The chips in question cost thousands of dollars; the ARM core is a very small portion of the chip.

dbcooper 13y ago

They need to keep their fabs running at a reasonably high capacity to keep per chip production costs down. That enables them to keep the nice high margins on premium parts like server chips.

Edmond 13y ago

the key-word/phrase is "internet of things" http://www.nytimes.com/2014/02/16/technology/intels-sharp-eyed-social-scientist.html http://www.nytimes.com/2014/02/16/technology/intels-sharp-ey...

corresation 13y ago

Can someone explain to me Intel's continued fascination with being a consumer company? I suspect that Intel is buying companies and products like this for the same reason that Microsoft bought Nokia -- they see some markets moving away from them, and rather than convincing other manufacturers and fighting competing inertia, they're going to try to make the market themselves. That isn't to be dismissive of Intel at all -- they are a tremendous company, and their products are virtually always class leading (in capability and quality). But they were making so much money on the fat processor market they got lured into the classic fallacy of thinking that they were their own biggest competitor, and now the whole ARM ecosystem has turned into a remarkably capable foe.