Wednesday, April 24, 2013

Intel Q1 '13 - the pre-cursor of things to come

In spite of a dramatic 14% slow down in the PC market, Intel results came in on track. More importantly is their commentary on what's coming:

"Amidst market softness, Intel performed well in the first quarter and I'm excited about what lies ahead for the company," said Paul Otellini, Intel president and CEO. "We shipped our next generation PC microprocessors, introduced a new family of products for micro-servers and will ship our new tablet and smartphone microprocessors early this quarter. We are working with our customers to introduce innovative new products across multiple operating systems. The transition to 14nm technology this year will significantly increase the value provided by Intel architecture and process technology for our customers and in the marketplace."

With the arrival of Centerton for micro servers, Haswell for notebooks and desktops and Clovertrail + for phones - Intel is about to unleash a tidal wave of new products that are going to make them fiercely more competitive. Couple that with 14nm which puts them so far ahead of the other semiconductor manufacturers and they are on a trajectory that is going to make them an unreal phenomenon.

Follow that up with Baytrail for tablets later this year and they will have delivered a knock out punch to every one of their competitors. AMD is already talking about moving to ARM. Leaving Intel the sole contendor in the X86 business. Which makes their core business around PCs unassailable. And with RT looking like it's dying a quick and painful death, Microsoft will have to consider re-aligning themselves back to Intel. While Intel with their support for both Windows and Android will be sitting pretty.

Looks like while everyone else was playing checkers, Intel was playing chess!

Thursday, April 04, 2013

Dual Core Intel Clovertrail + crushes the Galaxy S IV's a nugget. The upcoming Lenovo K900 featuring the Intel Clovertrail + dual core CPU takes down the to be launched Samsung Galaxy S IV running a quad core ARM CPU.

For those of you who thought Intel didn't have the architecture to compete in the phone business...think again. They're just getting started. And when Merrifield arrives it's going to be very hard for the OEMs to resist building phones on Intel sillicon.

Couple that with the launch of Bay Trail for tablets this year and things are about to get very interesting for the ARM players. I anticipate by the time we exit 2014 Intel will have gone from 0 to double digit share in tablets and and at least 5-10% of the smartphone market.

Tuesday, April 02, 2013

Apple apologizes in China - getting ready for a world of low cost iPhones?

After being hounded by the Chinese media for discriminatory consumer practices in China, Tim Cook today apologized to the people of China.

Tim Cook apologizes to China

You gotta wonder why such a mighty giant whose guiding principle has been "consumers don't know what they want - Apple needs to tell them" is kowtowing to the People's Republic of China.

I tell you simply, they are running out of steam in the US and Western Europe and are looking to the next frontier...China.
But here's the rub. The entry level iPhone 5 in China is 850 USD.
And to succeed in China you cannot do it with one model starting at 850$.

Which is why why Samsung is #1 in China followed by Lenovo. Both have a range of smartphones but more importantly - can get into the volume market at 200-300$ smartphones.

So Apple is going to have to bring in a low cost iPhone if they want to win in China.
And that is going to hit their margins.

But clearly Tim Cook understands the need to bow before the largest consumer population in the world. Because if they don't take a bite of his apple - he's getting thrown out of the Garden of Eden.

Saturday, March 30, 2013

It's time for a change

It's been 3 years since I've been here. Much has changed. AMD is a spent force. Trying desperately to stay alive...forget being relevant.

However, a new challenger has arisen. ARM has created an alternative for Intel where none existed before. What Intel was to PCs - ARM is to the new world of tablets and phones.

However, the real threat to Intel is not merely ARM. It is the myriad of Operating Systems that are emerging in the tablet/phone space. iOS, Android, Windows 8, Tizen, Firefox - and who knows what else may happen.

Into this fractured world - comes the reality that scaling your architecture for 1 OS (Windows) on the PC business is vastly different from enabling it for 3-4-5 OSes. Specially when you are the challenger. And the risk of not supporting that OS fast enough is market share.

What should Intel's strategy be...? How do they create the scale they need to be a major player in phones and tablets?

Predictions I made - 3 years later


Things are too busy to get to the blog regularly. But I thought I'd go back and look at a couple of things I predicted and how they turned out.

The Apple effectThe first thing I wanted to touch on was my prediction of where Apple was heading and it's impact to the industry. Essentially I predicted that Apple would eventually generate significant revenues from content and user experience and would extend their hardware strategy to every touch point where they believed they could deliver connected content to the end user. And that unless other IT companies like Dell and HP had a strategy to own the end user experience and monetize it - they would be sucking lemons in the long run.

Here's what's happened.

1) Apple extended their business into phones and iPads. Adding 2 more crucial hardware touch points in the connected content consumption usage models. You now have the ability to own and use Apple hardware at any point of the day. Regardless of what you are doing.

2) Apple's content business is thriving. More importantly, they create the App store and that is a huge reason for the success of the iPhone. That model is now being replicated by not only other phone players - but also Intel through App Up Centre.

3) Dell, HP and other's are unsuccessfully following Apple into devices. But are missing a key part - content and apps. They just don't get it. HP however through the acquisition of Palm have an opportunity through Palm OS as a foundation for a unique and satisfying experience. Let's see if they can capitalize.

4) Google develops Android and gives it away to the industry.

4) Intel and Nokia partner to develop MeeGo. Nokia is losing traction in the phone business. Intel is terrified that their hardware will become irrelevant because Windows is a lame duck in the world of phones and gadgets. And if They need their own software strategy.

Apple and Google on a collision course:

Back in December 2006 I wrote this article on how Apple and Google were heading to a collision or co-operation.

So here we are 3 years later. And guess what - they are heading to a collision.

Monday, January 04, 2010

It's been a long time since a rock 'n roll

It's been 2 years since I last posted. Much has happened for me professionally and personally that has kept me really busy.

But the real reasons the blog was in hiatus were:

1. Sharikou had become boring and predictable. It wasn't fun razzing with da man any more. In fact, my own last few posts were becoming slightly Sharikouesque in nature - simply attack without much fact.

2. The battle between the two giants had become non-existent. AMD was just looking for ways to stay alive and Intel for ways to grow their stock price.

However, some things have happened that have changed the game:

1. Recently. Intel paid AMD a LOT of money to settle the litigation. And this has given AMD a significant life line.

2. The inevitable collision of the netbook and the smartphone (read as computing performance with communication + portability) has Intel competing with guys like Broadcom to a signficant extent on their turf. This is new ground for Intel and Intel has not always been very good at growing lateral or new businesses.

3. Acer overtook Dell as the #2 PC manufacturer worldwide. They are growing at an incredible pace and obviously going after HP who is much ahead. But...they are doing it with much lower cost products which will challenge the chip industry for margins as they grow.

Wimax is starting to mature and become a real service in some markets. We will see if Intel's huge investments here will yield them the goodies.

In a couple of weeks Intel announces results...a good time to pick up the threads.

Tuesday, December 11, 2007

AMD - thermal consumption heading north

Read this - pretty self explanatory and not too shocking. After all why change from TDP to ACP after so many years. It's just deceptive marketing to hide the truth about a sad product line up.

In further evidence of their "head in the sand syndrome" - they hired a new high level VP when one would think they should be cutting costs till they stage some kind of recovery.

AMD is going down...

Friday, December 07, 2007

Why isn't it surprising

With everything else heading backward, it's not surprising AMD's roadmap is doing the same. AMD plans to bring more K8 models out while reducing it's K10 line up.

Well - why would anyone in their right mind do this? No reason actually. But remember, we're talking about someone who is not in their right mind currently. My Ruiz continues to be obsessed with unseating Intel and getting to 30% market share.

How does this help? It's clear that AMD is having problems ramping K10 in volume and at the bins they want. So now Hector is going to have a yard sale of K8s. He needs to keep his factories full. And since K10 is not competitive performance wise or manufacturing wise, he is trying to whip up the speeds on K8 in an effort to try and compete with this outdated technology. Undoubtedly, his next step will be to drop prices on these parts so he can sell in volume to keep all the excess capacity he has built full.

But this is going to be tough. Why - even people in emerging markets where price is more important will not buy yesterday's technology. So he's really going to have to drop prices and even then his customers will find it tough to sell this old technology.

Another desperate and not so smart move from the boys who wanted to be men too soon.

Thursday, December 06, 2007

AMD stock hits 52 week low

AMD stock is now $ 8.91 due to an analyst lowering his rating. If they deliver a fantastic quarter as defined by some combination of the following:

1. Revenue grows faster than the market (without a significant inventory bloat)
2. ASPs flat to up.
3. Gross margins increase
4. Net loss decreases significantly to the region of 100 million $ (due to an improvement in business conditions and not just cost reductions).
5. The forecast improved momentum into Q108.
6. They gain market share from Intel (and not just from the other miniscule x86 players).

At which point the stock may return to around 10-11$. If not, the stock is heading south of $8 and toward 7 bucks. And Hector will be "monster.comming" his way out soon after.

Intel stock today is $27.22...close to it's 52 week high.

Friday, November 30, 2007

Global semiconductor rankings

Alas - sad news for AMD and good news for Intel. iSuppli released it's preliminary results of the world's largest semiconductor companies and Intel outgrew the industry with 7.7% growth while AMD declined by 22.7% and also dropped out the top 10 after being in there for just one year.

This is yet another catalyst for a change at the top at AMD. Hector was apparently in Bangalore opening a new R&D centre. If I were him, I would be making sales calls 24x7 on his biggest customers.

Wednesday, November 28, 2007

And in the news today...

AMD is apparently pondering the purchase of Aegia.

This of course is a smart use of executive time when you have no cash in your pocket and a competitor who is coming at you like speeding train. But heck - let's sell out the company completely to acquire whatever we need because we're all so fixated on getting 30% market share.

It's no wonder AMD's stock hit a 1 year low all the way down to $9.80 a share. When you have them publicly contemplating folly like the above, of course investors are going to get spooked.

And my final whinge is Doug Freedman from ATR who downgraded the AMD stock. Saying there are no positive catalysts...

I contniue to laugh at how blase some folks on Wall Street can be as I point you to these post I had written some time ago chronicling how the gurus on Wall Street get to call the market with little impact:

Post 1

Post 2

I had vented when Mr Freedman called a Buy on AMD at 14 odd $ back in May. So read the posts and now think about how much money you would have made or lost had you followed the recommendations.

The primary fall out of AMD's stock going sub 10$ is the board will have to consider replacing Hector. Now don't get me wrong. I like Hector. I think he has cojones and he took on Intel and gave them a fight that must have scared them half to death. But he let it go to his head. He got to focussed on breaking Intel's market share and getting to 30% which he must have though is the tipping point. What he should have done is focussed on building a profitable and sustainable business and the market would have rewarded him with the market share.

Alas, it is human nature to want to touch something shiny...specially when you think it's soooooo close. But if you over extend yourself, you topple over and that is what you should never forget. The laws of physics still apply - so work within them.

Sunday, November 25, 2007

Intel increases dividend

Intel raised their cash dividend by 13% effective quarter 1 2008.

I had mentioned earlier they may increase their stock buy back to have a blow out Q407. This looks like an alternative route to having the same effect. Basically signalling to the market that the board believe the fundamentals are incredibly strong. Personally, I prefer stock buy backs because reducing the outstanding shares nudges up the EPS which is what many investors keep their eye on.

Dividends are great for long term investors but many tend to overlook this.

Thursday, November 22, 2007

AMD stock south of $11

I'm going to say I told you so...because I did.

Now I'm not trying to gloat even though it's gratifying to be right. However, the problem here is AMD continues to pile on the debt and dilute shareholder value/equity as Hector blindly chases 30% market share in a bid to topple Intel.

The wise man would run away to fight again another day. But Hector is not behaving wisely at all. And it is a matter of time before he is no longer the man in charge. First they'll replace his CEO responsibilities with Dirk Meyer. And then they will quietly ease him out a few months later. And this is going to happen within a couple of months. Specially if Hector cannot deliver a kick @$$ Q4 coupled with a stroke of genius in terms of their asset lite strategy.

The EEE PC - the future is nigh

Back here I had written a post on the EEE PC.

The EEE PC is selling like hot-cakes. This is the future my friends. A low cost, reasonable performance, ultra portable PC. And this will only get better with SIlverthorne and some of other Intel's products on their roadmap. Imagine what a killing they're going to make with a 25$ CPU on which they can still make 50-60% margins. AMD is about to miss out on a big new profitable market. Kind of the way the other MP3 guys watched Apple seduce the world with the iPod. Notebook switches the world over will get accelerated. Governments will want this technology inside their versions of OLPC or whatever thing they're buying for mass education.

This is a game that AMD is not even in. The market is going away from them once again.

Wednesday, November 21, 2007

AMD sells stake to Abu Dhabi

AMD heads back to the market for more cash. This time Abu Dhabi buys an 8.1% stake.

Interestingly, AMD only got 12.70 $ per share so there really wasn't any premium. Which is interesting and a telling sign. The positive of this transaction is that they now have a vested interest from backer who has unlimited funding at his disposal. So should they need to secure more cash, they know where to go. The down-side seems to be that this backer isn't paying a premium so it's shareholder equity to which they must say "ta ta".

In other news, anyone seen wide availability of Barcelona yet. Very very disappointing launch and Phenom isn't that much better either. Anandtech has a review. Core 2 Quad whoops the Phenom's ass and when Penryn comes out, AMD will need to churn out faster Phenoms at lower prices. There is only one way for AMD to win in this environment. Cut your prices and trash your margins. Not good for business though.

And all this while Intel is developing low cost high margin products like Silverthorne. When Otellini displayed this some months ago, I said this is a game changing product. If the reviews of the EEE PC are and indicator of what a reasonable performance low cost part can do, AMD needs to seriously re-consider it's strategy. Because Hector is nowhere close to 30% market share and better forget that dream.

In fact, I'd be pleasantly surprised if he stays in his job for another 30 weeks.