When I read the story about the massive shellacking Intel® stock was taking I cannot say I was surprised. AMD® has been mopping the floor with them for years. It’s a case of management shooting itself in the foot, knee, and twice in the gut. Wall Street analysts have been trying to put a spin on it to claim they know what is causing it, they don’t. Intel ignore their market responsibilities.
You Have to Be Old to Have Seen This Movie Before
If you have already read LTS == 15 Years Not 5 then you understand much of the problem. Technology companies that focus on new stuff instead of supporting the old stuff fail. This is without exception.
Every company engaging in a subscription model for things people could once own and use forever will also fail. Yes, that means you Microsoft (MSFT). People who bought MS Word could use it for decades as long as their computer still ran. Now you want them to pay you for a “subscription” and if their Internet connection is down, well it sucks to be them. That’s why there is a groundswell of business for Textmaker and OnlyOffice.
Intel® cannot sell subscriptions. People who buy a computer tend to use it until it dies or until they have nothing else to spend money on. Many corporations are into leasing programs where they change machines out every 4-7 years. Like an automobile manufacturer, Intel® has to convince customers to upgrade every year or two. That’s a tough sell.
The Hardware Cycle
You really should read the entire LTS post, but here is the gist for those with ADD.
- New computers get sold/leased to first world countries. The really high end stuff can only go to businesses that need servers with ever increasing horsepower or gamers who have more money than brains.
- The off-lease and other still functioning computers from the first world countries have a few listed on eBay, etc. but most of them are put into containers and shipped to wholesalers/retailers in second world countries.
- After the owners in second world countries both tire of them and get enough disposable income to replace them, these used machines get shipped via container ships to third world countries.
- etc. As long as it is running you can find a country poor enough to want it. Countries with unstable power grids tend to fry a lot of computers if the owners can’t also purchase a UPS to put in front of them.
Chip vendors, like automobile manufacturers, have to support the entire cycle. Every new car dealership has a used car lot for this very reason. You can’t sell much new hardware unless you create and support a market for the used hardware.
Mistake of Focusing on New
Every big box store that has a computer section has computers running one application, “Explore this computer.” Microsoft, AMD, Intel, and God only knows who else, all have their own version and compete for that square footage. We call it “Explore this computer” but they call it a POS (Point of Sale) application because it is used to generate sales.
One of the many reasons Windows runs like a 3-legged Chiwawa in deep snow on so many computers is because it is generally built to run on the earliest 64-bit computers. (The 32-bit, if still being built, is compiled for the earliest 686 class machines, or at least it was.) With Windows 11 they are popping up that “this machine does not qualify” or whatever it is message trying to scare people into upgrading machines. It’s the first time they have tried to cut off a base. Expect MSFT stock to plunge soon as well.
Previously, Intel had their POS application built via the Microsoft philosophy. Run the best you can and look the best you can on all Intel hardware, don’t look so good or run so well on anything else. (They all do it so don’t dis them for shitting on a competitor’s machine. Compare how the Microsoft one looks on Surface vs. everything else some time.)
When the second world order (not the first and not the new world order one shipping today) the POS application only did its best on “new” Intel hardware which was defined as “still shipping.” This meant it didn’t look and run its best on everything else, including old Intel hardware. Hey, it’s marketing, everybody plays these games.
AMD started outselling Intel 2:1 and it appears is still doing such.
Lots of People Can’t Buy New
That’s a fact of life. You have to encourage them to buy the used ones. When a time comes that they can buy new, if they had a good experience with your used stuff, they will buy new from you.
Think about it. How many of you bought a car new that you had fantastic luck with? When it finally came time to trade what did you buy? I have a cousin that bought her first new car in her early twenties. She bought a Camry because it didn’t look bad and she could afford it. We are both in our fifties now and she has been buying new Camry cars ever since because she never got a bad one.
Picture yourself as a first time computer buyer without a lot of money to spend. You walk into a used/refurbished computer store. The POS application looks bad on everything but runs a little better on the AMD box for whatever reason, they buy that one. What if it is a shop running the AMD POS app and it runs the best it can on all the old AMD boxes? Which one do you walk out with? The AMD, correct?
Assuming you had no real trouble with that computer, when life improves and you have cash to burn, what are you going to buy for a new computer? AMD, right?
Constipated Sales
You need to look at the big picture here. If the leasing companies can’t unload your used computers and their buyers of used hardware are begging for AMD “because it sells!” what do they start leasing? That’s right, AMD. If they lease Intel it has no residual value for them. They might even have to pay to get rid of it. They can get a good buck for the stuff the second world countries actually want. Same goes for third world, on down the worlds.
The ARM Debacle
AMD got into ARM early, around 2012 or 2014, something like that. Got out of it because the servers weren’t selling that well. Wall Street beat them up. The industry trade rags basically threw rotten fruit at them. Then Cloudflare made the decision to abandoned x86 for ARM. Upper management made some chatter about being open to building ARM again. Unlike Intel, AMD had actual experience at building ARM by this point. Microsoft went to AMD for ARM in 2021.
The key thing to note in the above article about Microsoft and AMD is that AMD will be free to sell these same processors to other computer manufacturers. This is the 64-bit processor thing all over again. Intel said it couldn’t be done and AMD started shipping them. Linux distros refer to their 64-bit builds as amd64.
Intel is starting out waaaay behind here. They’ve ridden the one trick pony (x86) about as far as it will ever go. NVidia is mopping the floor on the graphics front and AMD on the ARM and used computer fronts.
Proof is in the Pudding
You don’t have to be an investment whiz to understand that $28 is a lot closer to zero than $83 so, if they are both going down at about the same pace, who’s going to get there first? Even Wall Street is taking notice.
