Linus Torvalds (torvalds@linux-foundation.org) on 1/13/11 wrote:
---------------------------
>
>And I do think that part of why Intel hasn't been doing
>a good job at Atom is exactly that "it's much easier
>to grow up than to grow down" thing. I doubt a lot of
>serious CPU architect brainpower is spent on Atom - simply
>because it's not "sexy" to grow down.
>
>Now, I really don't have any inside information, so this
>is pure speculation, but looking at Sandybridge and looking
>at Atom, I get the rather strong feeling that one of them
>had a great honking team of A-class engineers on it and got
>attention from every management level.
>
>And the other has had a small group of (probably smart, but
>still) people on it. Nothing like the Core "generation
>whatever" teams.
>
>And if Intel continues that, then I do think that ARM
>will grow up faster than x86 will grow down. Sure, Intel
>has the process advantage, but that's simply not nearly
>enough.
>
>And yes, it may be impossible to get over the problem of
>"growing down is hard".
>
The real problem here is not sexiness or even how hard it is to grow down. The real problem is that, from the point of view of gross margin, growing down just isn't worth a major league effort.

Intel just had its best Q4 ever, in spite of disappointing PC and laptop sales. How did that happen? Easy. All the sales growth was where Intel makes its best gross margin: in enterprise hardware.

Intel doesn't have an engineering problem. It has a business model problem, and it's just a scaled-down version of the business model problem IBM had. If IBM could, it would sell nothing but mainframes and, if Intel could, it would sell nothing but Xeons (and maybe Itanium). IBM and Intel tolerate low margin business only to the extent that it is necessary, and mobile devices are never going to be anything but a low margin business.

At the moment, though, Intel has its back to the wall. It has to enter and compete successfully in a low margin market. Whether and how well it succeeds is a marketing and management problem, not an engineering problem.

Robert.