Intel Corp (INTC)

[fastpathguru]

Surface is not ever going to be a large part of their business, because their business model is in scaling out development. The benefit served by Surface is that it gives PC OEM's a bar to meet, in terms of innovation. The PC market is nearly becoming a commodity business, except for a few remaining premium designs. Just look at the $199 Chromebooks out there, and you will see decent build quality and experience for a third to a fifth of the price of a quality Windows product. Microsoft and Intel should very much be concerned about these, but I think the answer needs to be in continuing to innovate at $699 and above, so that the $199 model continues to only address the cost-sensitive segments of the market, and not lure down people who would have spent more, but haven't seen the value.

I agree with everything you wrote here.

But Intel can't cede the low end market, lest they get squeezed into a shrinking boutique market like digital cameras are.

Intel requires both margins and volumes. Their formula doesn't work with just one or the other.

fpg