by Zain Jaffer
As far as I could remember when I started programming or using computers in my teens and even up to now, I have often used a Wintel (Microsoft Windows and Intel) personal computer (PC). Although I also like Apple Macs, for developers they often like to use Intel based PCs because of its open architecture. Macs computers are closed architecture PCs, as Apple does not want outsiders to fiddle with their operating system or build apps directly the way you can do with Intel based PCs. It is important to note that for a time, Apple did shift to Intel processors, but have since replaced these with their own M-series processors.
Intel and Microsoft were the darling of the tech world during the Eighties, when NASDAQ was starting to become popular as an alternative to the NYSE. They have been tech bellwethers of the US stock market, and many portfolios contain these stocks. [Author’s note: I do hold these stocks as part of my mutual funds]
Intel is of course known mostly for their microprocessors, and alongside their partner Microsoft run most of the world’s PCs. Recently though they have been caught off guard by AI, because companies like Nvidia and to some extent Amazon and Google, have built (or are prototyping) processors optimized not for Office software, but for Artificial Intelligence (AI).
Computer engineers know that Intel architecture, commonly referred to as x86, runs a complex set of instructions to execute a command like printing or screen grabbing. Contrast that with the ARM processor architecture used by most mobile phones globally, as well as Apple’s M-series processors, that use simple reduced instructions for computing.
Although Microsoft has pivoted well to AI with investments in Chat GPT and their own Copilot, Intel has not. Their x86 complex instruction set architecture is fine for office applications and even some games because of multithreading and multicore enhancements, but still not optimized for training AI. Using traditional Intel chips for training would result in even more power consumption, which is already a problem. Although Intel has been looking at AI recently, Nvidia has already grabbed mind share for this particular niche market [https://www.intel.com/content/www/us/en/learn/ai-hardware.html].
This is just one reason out of several why Intel CEO Pat Gelsinger is stepping down from his perch. Intel has made money off the x86 architecture for decades, but that success has blinded them to the opportunities that Nvidia and others grabbed. In earlier years, Intel also missed the low power mobile chip wave for smartphones, because they wanted to stay with client server architectures for the web, enterprise and home market. Others include their floundering foundry business, which is dominated by Taiwan Semiconductor Manufacturing Corporation (TSMC).
Intel follows a long line of companies like Blockbuster, Nokia, Motorola, Sony Ericsson, and others who because of their massive success, failed to pivot to keep leading the pack. Ironically Intel did not heed the advice of the late Intel CEO Andrew “Andy” Grove, who wrote a book Only the Paranoid Survive, which became a must read business book. Grove detailed the time when Intel pivoted and gave up their very successful EPROM memory business to move to microprocessors.
In addition, Microsoft and Intel were the beneficiaries of IBM’s newly launched personal computer in the 80s, taking away most of the profit for that business. Now Intel finds itself in the shoes of former tech giants who have faded into obscurity.
It is the job of a Company management team and its Board to see disruptive forces that could reshape and decimate their business, and pivot to where it makes sense to strike new growth.
Is it too late for them? Maybe not. If they find the right CEO and direction to take, and execute, they can become like Microsoft, a new reenergized company. Unfortunately, when you are extremely successful, it becomes very easy to become comfortable with your status quo and think that your good fortunes will last forever.
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