Wednesday, October 01, 2014 11:00:40 AM
I'm not ignorant of what Intel has done. I'm making a different point. It's true that not every company can make a product more viable by throwing money at it, and it's also true that investors should demand total return on investment, rather than MSS gains that cost a billion dollars every quarter to achieve. But here's what's unique about this situation:
First, Intel's cost problem is temporary. According to the company, they have already closed most of the BOM issues in Bay Trail, and follow-on products such as Cherry Trail and Broxton won't have a BOM cost disadvantage at all.
Second, if Intel spends the contra-revenue to equalize the BOM disparity, then all of the other parts of the platform must succeed of their own merit - which includes power, performance, features, and pricing. I heard others on this forum speculate huge pricing discounts in addition to the contra-revenue, but reaching 19% revenue share while beating Qualcomm in revenue MSS would rather suggest that Intel's pricing must be quite good.
So in conclusion, I am not ignorant of what it took for Intel to get a foothold in the market while Bay Trail had its cost issues. However, my point is that future earnings from mobile sales should see significant gains, because 1) Intel will fix the cost issue such that contra-revenue won't be needed, and 2) the data already shows that the Intel platform is competitive enough to get sizable revenue share, when BOM isn't an issue.
It shouldn't take this long of an explanation to connect the dots, but I figured it wouldn't hurt for me to spell it out for you.
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