Although not many people realize, tech is a _mature_ sector of the U.S. economy now - it grows at about 3% a year, pretty much in line with GDP. But the perception is different - just ask your friends - and the reason for this is that there are highly visible _pockets of growth_, like Uber/SpaceX/name-your-favorite-unicorn, and people often extrapolate their growth to the rest of the industry.

Now what happens with many tech companies is that they often have a product with exceptional margins and double-digit growth rate, and it makes sense to invest all the available resources into it - better from ROIC perspective - ignoring all the alternatives which either lack volume or high margin to look attractive. This inevitably leads to problems once your exceptional product stops growing, and you realize you have barely invested in anything else.

Just much like Intel with x86 and ARM chips, or Qualcomm, or EMC, or RIM, ... - the list goes on and on.

Even when you look at Google, most of their resources are invested into search/ad business, so when that's stops growing - or, rather, they got all the share from the TV and start growing at a GDP rate - they will be in the same boat.

Edit: typos.

Intentionally limiting Atom performance, selling of their ARM division, etc. was all done in order to not harm their main cash cow. By the time they woke up and really tried to push for x86 on Android it was too little too late.

Just from an engineering perspective it was always going to be a monumental task. Because guess what, that small dev shop with the hit-of-the-month mobile game is not going to bother cross-compiling or testing on the 1% of non-ARM devices. And if "Ridiculous Fishing" or whatever doesn't work flawlessly, your device is broken from the consumer perspective.

But what should really have Intel pissing their pants is the recent AMD x86 license deal with Chinese manufacturer's to pump out x86 server class chips. I'l love to hear if they're taking it seriously at all, or dismissing it as usual.

http://marketrealist.com/2016/04/qualcomms-chipset-margin-hi...

QCT’s operating margin fell from 16.9% in fiscal 1Q16 to 5% in fiscal 2Q16. The margin was on the higher end of the low- to mid-single-digit guidance as the ASP (average selling price) of 3G and 4G handsets equipped with Qualcomm chipsets rose by 6% YoY to $205–$211. The price rose due to a favorable product mix and higher content per device.

The Margins on cell phone chips are terrible. QCT made 2.5 bil on 17bil in revenue.

http://investor.qualcomm.com/secfiling.cfm?filingID=1234452-...

Would it really make sense to invest in Cellphone business when every dollar you put in gets you less ROI compared to what you have now. From a finance perspective it would make more sense to return it to the shareholders and let them invest in QCOM if they want to.

“I couldn’t see it. It wasn’t one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought.”

…and, perhaps more importantly:

“The lesson I took away from that was, while we like to speak with data around here, so many times in my career I’ve ended up making decisions with my gut, and I should have followed my gut. My gut told me to say yes.”

I personally love data,facts,hard science, but I find too often many can ignore gut feelings. I almost always follow my gut instinct, It has proven itself to me over and over again even while taking what is often perceived as long shots but somehow my gut tells me "you got this".

In particular I would say gather your own data on how often or not your gut instinct is correct and use that as a data point in addition to the hard science, facts etc.

Instinct evolved to keep you alive, it is often wise to not ignore it.

Organizations continue to evolve and change direction. I am not saying leadership has not failed spectacularly in mobile, but some of the 12,000 jobs are a natural progression of acquisitions.

Things have been getting very efficient both on the client and the server side. With Cloud, they will have some momentum behind - but long term, I think the glory days are gone where they can just produce chips and someone would take it.

At one point at the height of the bubble, Intel was involved in mobile devices.

I worked for a company that developed secure, efficient wireless communication middleware for that space. Our client hardware was mainly Pocket PC and Windows CE at that time.

We partnered with Intel to port our stack to the Linux device they were developing (codenamed "PAWS"). This was around 2000-2001, if I recall.

Thing were going very well, when practically overnight, Intel decided to pull out of this market entirely. They shut down the project and that was that.

It didn't bode very well for that little company; we gambled on this Intel partnership and put a lot of resource into that project in hopes that there would be revenue, of course. Oops!

Here is the google cache link for quick access : http://webcache.googleusercontent.com/search?q=cache:https:/...

And here is the raw text(without any links) : http://pastebin.com/e10Yw0zi

Back when the PPro was launched there was a low double-digits percentage of the die taken up with the x86 translation hardware (for turning x86 instructions into internal, RISC-like micro-ops). Now that number is some small fraction of a percent. It kills me that I still read this nonsense.

The reason that Intel didn't get into cell phone chips is because margins were (and are) crap, and Intel is addicted to margins. The reason everyone else went ARM is because a) licenses are dirt cheap, and b) everyone knows that Intel is addicted to margins, and they know about all of Intel's dirty tricks and the way Intel leveraged Windows to keep its margins up in the PC space and screw other component vendors, so everyone has seen what happens when you tie yourself to x86 and was like "no thanks".

Of course Intel didn't want to make ARM chips for Apple (or anyone else), because even if they had correctly forecast the volume they'd have no control over the margins because ARM gives them no leverage the way x86 does. If Intel decides it wants to make more money per chip and it starts trying to squeeze Apple, Apple can just bail and go to another ARM vendor. But if Apple went x86 in the iPhone, then Intel could start ratcheting up the unit cost per CPU and all of the other ICs in that phone would have to get cheaper (i.e. shrink their margins) for Apple to keep its own overall unit cost the same (either that or give up its own margin to Intel). Again, this is what Intel did with the PC and how they screwed Nvidia, ATI, etc. -- they just ask for a bigger share of the overall PC unit cost by jacking up their CPU price, and they get it because while you can always pit GPU vendors against each other to see who will take less money, you're stuck with Intel.

(What about AMD? Hahaha... Intel would actually share some of that money back with you via a little kickback scheme called the "Intel Inside" program. So Intel gives up a little margin back to the PC vendor, but they still get to starve their competitors anyway while keeping AMD locked out. So the game was, "jack up the cost of the CPU, all the other PC components take a hit, and then share some of the loot back with the PC vendor in exchange for exclusivity.")

Anyway, the mobile guys had seen this whole movie before, and weren't eager to see the sequel play out in the phone space. So, ARM it was.

The only mystery to me was why Intel never just sucked it up and made a low-margin x86 chip to compete directly with ARM. I assure you there was no technical or ISA-related reason that this didn't happen, because as I said above that is flat-earth nonsense. More likely Intel didn't just didn't want to get into a low-margin business at all (Wall St. would clobber them, and low-margin x86 would cannibalize high-margin x86), and by the time it was clear that they had missed the smartphone boat ARM was so entrenched that there was no clear route to enough volume to make it worthwhile, again, especially given that any phone maker that Intel approaches with a x86 phone chip is going to run the other way because they don't want x86 lock-in.

Isn't there any financial engineering trick to enable companies to solve this dillema that often leads to their death?

When I voiced the words, "mobile CPU" to anyone there, people were oblivious and silent. The company was just out of touch, thinking everyone was going to keep buying tower PCs and laptops. It seemed the only variable they thought customers cared about was performance. People would buy AMD if it was just a little faster. They didn't realize it was simply the wrong product/market. Performance wasn't nearly as important, sigh.

I do think that ChromeOS (or whatever it's called) offers a distinct difference to most users from what Windows is. That changes things up a lot.

I feel that within 4 years, Intel will have some competative x86 offerings compared to ARM... On the flip side, by then, ARM will be competitive in the server/desktop space much more than today. It's kind of weird, but it will be another round of competition between different vendors all around. I'm not sure what other competitors will come around again.

That's not even mentioning AMD's work at their hybrid CPUs... also, some more competition in the GPU space would be nice.

It really reminds me of the mid-late 90's when you had half a dozen choices for server/workstation architectures to target. These days, thanks to Linux's dominance on the server, and flexibility and even MS's Windows refactoring, it's easy to target different platforms in higher-level languages.

There will be some very interesting times in the next few years.

That should be 2005.

When the margins on x86 cross below that of ARM chips, Intel will come in and destroy all the ARM manufacturers.

Intel's comment about IoT makes me wonder: do they think they just lost the first mover advantage for mobile & the industry got hooked on ARM ISAs? Do they still believe the story that their chips will become cheaper and more powerful than ARM if they change nothing?

Well, I'd guess fundamentally it was about tying yourself to the Microsoft sociopath mothership.

Intel could have taken Linux by the reigns and made an OSX-equivalent and certainly windows-beating decades ago.

But they didn't.

So they missed the boat.

They has this handheld touch screen device that resembled a modern smart phone that was driven by voice recognition. This was 1999 way before the iphone came around.

In my opinion, it is the internal politics and the leadership that has caused them to lose out.

Chip design books in academia were already moving in the direction of low power designs during the late 90s. They just did not take any action.

  Maemo/Meego
  WebOS
  Firefox OS

Killer, for us fans of rational strategy.

The article contains the sentence "Jobs asked Intel to fabricate the processor" and "Intel styled itself as a designer of microprocessors, not mere fabricator".

Question: according to your own experience, is it common in English to use "fabricate" and "fabricator" as synonyms of "manufacture" and "maker"?

I am much more familiar with the negative meaning (e.g. "fabricated lies") but since I'm not a native speaker my vocabulary might be limited.

Intel didn't miss anything, they sell the hardware that powers the infrastructure behind these new, always-connected devices.