By: anon (anon.delete@this.anon.com), February 1, 2013 9:36 am
Room: Moderated Discussions
Richard Cownie (tich.delete@this.pobox.com) on February 1, 2013 8:49 am wrote:
> anon (anon.delete@this.anon.com) on February 1, 2013 8:08 am wrote:
>
[hey, how about the rest you snipped??]
> > Intel's dominance is manufacturing. If there is money to be made in ARM market, then
> > in my opinion they have easy opportunities to sell silicon into that market. There
> > is a good chance they will be able to do it better than anybody else, too.
>
> I think you don't understand Intel's business very well. They have great manufacturing,
> to be sure, but they also have exceptional margins in the x86 business (especially
> the server business) because a) network effects have made x86 the dominant ISA
> for desktop/laptop clients; b) x86 is protected by patents and legal constraints
> which raise high barriers to competition; c) on the occasions when Intel's x86 business
> was threatened, they used their market power ruthlessly (notably against AMD).
Well I believe it is you who do not understand. Their dominance is in manufacturing. They achieved that dominance in logic mfg with their x86 market, certainly. From there, they have been able to plunder much of the RISC and Unix server markets, which were absolutely not x86 dominated, and are actually notoriously adverse to change.
>
> Outside the desktop/laptop business - which is now shrinking - points a/b/c don't
> apply. I don't think manufacturing excellence alone will allow Intel to dominate
> other markets. You have a different opinion, evidently. We'll see.
Neither did they apply in the server market.
The key is that the volume of silicon, and the revenue, needs to be large enough that it suits Intel's manufacturing model. That is: high spending on fixed costs in order to reduce the variable costs. Server market has this property.
If a market does not have that property, then it won't be profitable for Intel to get into, certainly. But the converse should also be true: a manufacturer who makes profit in this market will not use that manufacturing capacity to do well in Intel's domain.
> anon (anon.delete@this.anon.com) on February 1, 2013 8:08 am wrote:
>
[hey, how about the rest you snipped??]
> > Intel's dominance is manufacturing. If there is money to be made in ARM market, then
> > in my opinion they have easy opportunities to sell silicon into that market. There
> > is a good chance they will be able to do it better than anybody else, too.
>
> I think you don't understand Intel's business very well. They have great manufacturing,
> to be sure, but they also have exceptional margins in the x86 business (especially
> the server business) because a) network effects have made x86 the dominant ISA
> for desktop/laptop clients; b) x86 is protected by patents and legal constraints
> which raise high barriers to competition; c) on the occasions when Intel's x86 business
> was threatened, they used their market power ruthlessly (notably against AMD).
Well I believe it is you who do not understand. Their dominance is in manufacturing. They achieved that dominance in logic mfg with their x86 market, certainly. From there, they have been able to plunder much of the RISC and Unix server markets, which were absolutely not x86 dominated, and are actually notoriously adverse to change.
>
> Outside the desktop/laptop business - which is now shrinking - points a/b/c don't
> apply. I don't think manufacturing excellence alone will allow Intel to dominate
> other markets. You have a different opinion, evidently. We'll see.
Neither did they apply in the server market.
The key is that the volume of silicon, and the revenue, needs to be large enough that it suits Intel's manufacturing model. That is: high spending on fixed costs in order to reduce the variable costs. Server market has this property.
If a market does not have that property, then it won't be profitable for Intel to get into, certainly. But the converse should also be true: a manufacturer who makes profit in this market will not use that manufacturing capacity to do well in Intel's domain.
