"Now, let’s look at reputation inflation. I have long believed that Intel is not the technological powerhouse that most folks think. Rather, I think it’s predominantly a marketing organization.
Last year, I spilled a lot of ink about the competitive threat posed by Advanced Micro Devices (AMD, news, msgs). I said its new Athlon and Opteron processors were going to be quite successful, at Intel's expense. We have seen no shortage of supercomputer builders using AMD parts. Sun Microsystems and Hewlett-Packard are using the parts. In fact, Intel has had to scramble to attempt to rescue its Itanic, née Itanium, due to the success of the new AMD processors.
Athlon bodes ill for Intel Pressure from AMD also has led to a slightly more subtle, but I think perhaps more important, development:
Intel has been forced to abandon its marketing hype about clock speed -- as though clock speed really told you anything about throughput, anyway.
Over the last few days, some very tech-savvy readers of my daily column have sent e-mails on this subject. I'd like to share the most recent one in its entirety, as I think it will provide folks with important and useful food for thought:
The reader began that Intel's "entire company has been oriented around cranking the clock speed for years now (real performance be damned, we want ‘clock speed!’). The marketers took over the company, and their whole campaign has been: (a) You want Intel Inside, and (b) clock speed is all that matters. Their engineering focus, everything, has been around cranking up that clock speed. Problem is, their manufacturing prowess isn't keeping up with their clock speed demands, and, judging from how hot the most recent Pentium 4 Prescott processors are running (75C in an air-cooled system!), I think they're hitting the wall."
He continued: "They are shifting to a very, very confusing system of labeling. I can't even tell you what it was, from memory, and considering that I'm a tech guy, I think that's important. It's something to do with numbering their processors in three different lines........... IMO, they have marketed themselves into a really serious problem."
He concluded: "AMD is becoming a very powerful competitor. The A64 is fast and very reasonably priced. Intel has to basically 'cheat' to stay on top of the benchmarks, by releasing their Pentium 4-EE, at something over $1,200, to compete with $300 AMD-64 chips. I think it's almost impossible to buy that chip, anyway. It's just a paper tiger."
Chunky chip faces low-carb multiple I believe that Intel faces a potential double whammy to the downside: - First, the pressure from AMD will impact its earnings.
- Second, as it becomes clearer to people that AMD has won the battle -- illuminating the marketing machine behind this "technological powerhouse" -- that will impact Intel's multiple of 30 times earnings......."
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