Sorry I should have clarified that for the flat revenue and 10% YoY drop on operating income I was referring to Data Center only, not all segments.
The days of a high volume, high priced processor market are basically over. This is a market Intel monopolized and made their billions from for decades, now Intel is going to have to re-imagine themselves and acclimate to a lower margin world.
Will not be surprising to see Intel's fabs become more and more idle, opening them up to 3rd parties is something they should have been transitioning to several quarters ago.
This is despite the Haswell launch, which normally would have given margins and sales an artificial boost.
The danger for intel is that the market will shrink another 6% of revenue (or more) over the next 12 months, and they will be unable to maintain their operating budgets and still be profitable (operating costs were mostly flat vs 2012).
At that point they will have to start to reorganize (read: downsize).
By no means are they the underdog, but they're behind the curve on mobile and not doing anything really compelling in their bread-and-butter desktop market.
This is what happens when companies don't innovate. We've been stuck at quad-cores on the desktop for HOW many years? (Since 2006-2007, and the release of the QX6700.)
Intel has basically completely stopped innovating in the desktop PC space. Overdone market segmentation means that their new ISA / opcodes released on their highest-end CPUs will never see any mainstream software support, because their mainstream CPU customers can't take advantage of them anyways.
Edit: "Intel inside" just doesn't have the shine it once did. Especially in mobile.
That would push Haswell but right now, people simply don't know. Every person that has come to me asking about laptop advice has no clue about Haswell.
There's some real truth to that.Somewhere deep within Intel's marketing somebody thought it would be great if they made their product portfolio byzantine and complex, combined with intentionally obfuscating product names like i7-4770K, but the reality is they completely turned off the mainstream consumer with it and now the mainstream consumer has just lost interest and isn't even trying to figure out Intel anymore.
Haswell was a step in the right direction. Intel needs to move mobile if they want to sell chips. Problem is people don't really understand how much of an improvement Haswell is. Intel needs to say "ask for a laptop with our new (insert cheesy marketing name here) for 50% more battery life!" That would push Haswell but right now, people simply don't know. Every person that has come to me asking about laptop advice has no clue about Haswell.
Capex >> depreciation despite pc industry declines. Not a fan of that program.
I absolutely agree with everything in your post but I quoted just this portion of it to say that not only is this true but in my case it is even worse.
In my personal sphere of purchasing influence across friends and family, they don't even know of "Intel" anymore.
To them it is just form-factor (desktop, laptop, tablet, phone)...and within those they either refer to it as an apple brand (tablets are either called ipads or kindles, but never tablets, for example) or they might know specific brand names like Samsung and HTC.
Somewhere deep within Intel's marketing somebody thought it would be great if they made their product portfolio byzantine and complex, combined with intentionally obfuscating product names like i7-4770K, but the reality is they completely turned off the mainstream consumer with it and now the mainstream consumer has just lost interest and isn't even trying to figure out Intel anymore.
So much easier to just buy an ipad, the numbering system is easier and more conventional (3rd gen is newer and better than 2nd gen, etc).
Ask my family what Intel does and they'll say "makes computers", ask them if they own a computer with an Intel chip inside and they'll say "I don't know, do I?"
There's some real truth to that.
Perhaps that's why the Nvidia "Titan" is selling so well, given the price. Because it was given a real product NAME, not just some jumbled-up code of letters and numbers. Granted, NV's product lineup is probably slightly more clear than Intel's, but only slightly.
Intel is really just shooting themselves in the foot more, with the introduction of Atom-based Celeron and Pentium chips. Rather than bring the Atom brand name up, I fear that it will simply drag the Celeron and Pentium names down (even further than they already are), and possibly tarnish Intel's core brand identity as well.
(Maybe in a couple of years, in the consumer, budget-minded segment, customers will see an Intel-branded laptop on the shelf, and go, oooh, Intel, isn't that "slow"? (Based on their experiences being duped by an Atom-as-Pentium branded laptop previously.)
Sorry, as a more average consumer on here and not as much as a tech buff, this isn't the reason why Intel isn't selling more chips. The reason is that what I have is fast enough. My Penryn processor does everything my 4770k does. It web browses, plays League of Legends, and watches movies/youtube.
If Intel "innovated" and sold an 8 core processor would I buy it? No. Being stuck at quadcores isn't why intel isn't making strides.
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That becomes a chicken and egg argument.
Ie, does Intel create more powerful CPUs first, then developers learn to use that power ( the proverbial killer app ) and thus drive hardware upgrades? Or does the killer app that demands more power from CPUs come first?
Historically it has been the former, just look at all the upgrading in the 90s centered around Quake, GLQuake, Quake 2. Recently it has been neither.
I would have agreed with you some 5 yrs ago, but Intel doesn't really seem to care much about the chicken-and-egg situation of hardware needing to be seeded first such that software can follow.
I would have agreed with you some 5 yrs ago, but Intel doesn't really seem to care much about the chicken-and-egg situation of hardware needing to be seeded first such that software can follow.
Look at how they intentionally cripple low-end CPUs (the high volume stuff, the stuff that is seeding the market) by castrating specific ISA extensions, as well as how they intentionally cripple the high-end CPUs (the "K" SKUs) by disabling key features like TSX.
Yes your argument has merit, but it is largely just academic at this point because Intel has stopped worrying about the reality of it in the market segments it is artificially and intentionally creating.
There are lots of indicators that their process tech lead, which really is their last bastion of strength, may not last much longer either.
There is no evidence of this.