Intel's Sales Down, Current Gen of Products Weak

DoctorBit writes "According to an article in EETimes, Intel's processor sales dropped 52 percent this April as compared with April one year ago. Unit sales dropped 21 percent and prices dropped 40 percent. The article concludes with an industry analyst's assertion that 'Intel has obviously given up on making any money on their current generation of processors and has started a price war with AMD.' The San Jose Mercury News is reporting that Intel has just put several of its money-losing communications businesses up for sale and notes that 'it remains to be seen what Intel will do with its other money-losing businesses, Itanium microprocessors and flash memory chips.' The article quotes an industry analyst saying 'If you look at Intel today, it's hard to find a trace of the technology or the people that they spent more than $10 billion on.' Ouch."

Marketshare

[3p1ph4ny]

Although it's good that Intel has lost some of their marketshare, we'd better hope this Conroe thing turns out to be as good as promised. I hate to see AMD and Intel just switching places... competition is good for everyone.

Why April sales fell.

[DAldredge]

Sells in April fell thru the floor because Intel stuffed the channel in Feb and March.

Question - when did Intel hire SpongeBob and Patrick to start naming their processors?

Naming

[qw(name)]

Their naming convention needs to be more user friendly. The average consumer has no idea what a Pentium D processor is but they could understand that a Pentium 4 was better than a Pentium III. It's all about marketing to the masses in this over-saturated market.

Itanium

[BJZQ8]

Itanium exemplifies the "modern" Intel; a processor that looks great on paper, but fails to perform in the real world. Marketing pushes it for all it's worth, but of course it's a cart with no wheels. Perhaps they just underestimated how rapidly multi-core processors would overtake Itanium in processing power? I realize that for certain scientific applications it's still the processor to beat, but there's no chance of it pushing down to the consumer market like the Pentium Pro's did back in their day...and that's what would have made the difference. There never was a critical mass that made people switch, and pushed operating systems to keep up.

Intel is a victim of success

[tizzyD]

They got fat, dumb, and happy on their profits and the ubiquity of the WinTel platform. OTOH, AMD has stepped up, innovated, and in places leapfrogged Intel in design, performance, and price.

Sadly, this effect happens to all large companies. They stop innovating. They instead focus on shoring up their stock and capital to keep investors happy, lowering risk, and start focusing on acquisitions to bring in new ideas and new blood. Intel is no different than any other company.

There is a solution: skunkworks new ideas. Throw time, effort, money, and brainpower at innovation, with NO guarantee of returns. Then, when new products are created, don't squash them under a controlling corporate culture. Let them grow internally, with support. Intrapreneurship does not look at org charts or worry about the bottom line as much as the next 5 years.

Welcome to commoditization.

Waiting to pull the rug out?

[Sparagmei]

I've been thinking recently: what if Intel, realizing it had made serious errors in architecture and pricing from which it could not readily recover, decided to effectively feign death and allow its competitors to get hazardously cocky?

AMD overextending itself in an attempt to grab lots of market-share from Intel could prove very damaging when Intel 'gets it right again', such as with the Conroe exploding all expectations. An Intel offering that relies on sheer quality, rather than extortionate market dealing, could wreck AMD's edge and turn all their forward-thinking investment into a Sisyphean debt load.

If you look at Intel today...

[frankie]

...and I mean literally TODAY, you'll notice that they are presenting their brand new Core2 CPUs at Computex. I suppose it's true that you "won't find a trace" of them in the current retail channel, becuase Core2 starts shipping in 3 weeks.

That's where Intel is focusing, and that's where Intel wants their customers to focus. I bet 80486 sales dried up pretty badly right before the Pentium launched too.

Re:If you look at Intel today...

[llZENll]

Very good point. Anyone who has seen the Core2 benchmarks wouldn't think of buying a new computer in the last 3-6 months. Core2 will quite simply blow everything away. Besides an overclocked Pentium D at 4GHZ (see tomshardware), the Core2 will provide the biggest jump in performance released by anyone since the original Pentium.

AMD currently has a lot of momentum though, when the Core2 is a huge success, it will take some time for people to realize it, and perhaps give enough time for AMD to come back with a better chip.

Well Duh?

[TheSkepticalOptimist]

Actually, I am surprised it has taken this long for people to realize that the P4 generation of products suck. I mean, for the last 3 years it has been reported that Intel hit a brick wall with the Netburst architecture and they needed to revamp their architecture before they could become competitive again. Each new revision of the P4 architecture simply prove that point, where even the P4EE CPU's with their $1000+ price tags fail to outperform $300 CPU's from AMD. New chips based on the Pentium 3/M architecture proved only to be able to offer decent performance per watt, but still failed to outperform AMD in most benchmarks.

I am also surprised that it has taken Intel so long to realize this. Even today, they are still flogging the P4 architecture. With the Duo Core CPU's out, you can't even buy this as a desktop system yet, and they are set to release the Duo Core 2 CPU's later this year. Intel should have scrubbed ALL products with the P4 architecture and simply moved forward to their Core architecture.

Anyways, I will once again be an interesting time in the CPU market as Intel releases their next generation products. Initial reviews seem positive that Intel has something that can compete against AMD, and this will only motivate AMD to produce new technology (AMD has been stuck in a rut as of late). A price war is necessary as CPU prices are staying far to high these days as neither company has really been in competitive form. AMD has locked the gaming market and Intel has the business market locked, these are two non-competing markets, and both companies have pretty much set their price lists accordingly.

I don't care who makes the next best CPU, I am neither an Intel nor AMD fanboy, I want a system that performs well for the money. Its been AMD for the last 5 years and if Intel finally puts their money where their mouth is and actually delivers a product that offers good price/performance/power features, I will switch back to the Intel platform. Just, its about time Intel started focusing on RELEASING their next generation architecture to the masses and stop talking about it.

Re:Marketshare

[Borland]

I doubt that they will simply "switch places". Even if they do switch marketplace positions then AMD has a long way to go in production capacity. Heh, I am a fan and a stockholder (very minor) of AMD, but it will take years to pull ahead of Intel in absolute terms.

Besides, useful competition simply means having someone nipping at your heels. One does not have to be neck and neck with a competitor to spur innovation.

they also made their customer the enemy

[backslashdot]

There is no reason for including their "trusted computing" crap on their processors/platform.

Objects telling their OWNERS they refuse (this is more than just software suggesting that an action may be a violation of law) to do something because they think it might be illegal and secretly send private info to a mothership. What kind of BS is that? Clearly only fools would buy such a device unless they hadn't other options. And intel misbetted that customers had other options.

It's basically untrusted computing ..customers untrusted .. intel telling it's customers "we can't trust what you'll do with our products so we are going to cripple functionality".

Unfortunately AMD is buying into this BS too.

I really hope it was Microsoft that pressured them to do it. Not that it's a worthy excuse.

I'm not going to be surprised when all software has expiry dates and hardware plain refuses to run it after it's "expired". And software will of course demand that the latest newest hardware be installed. You scratch my back, I'll scratch yours. For safety reasons, of course.

No, the problem is marketing chips

[PCM2]

Their naming convention needs to be more user friendly. The average consumer has no idea what a Pentium D processor is but they could understand that a Pentium 4 was better than a Pentium III. It's all about marketing to the masses in this over-saturated market.

No, the real problem is that Intel is accustomed to a market where you sell specific processor brands direct to consumers, which is crazy. In a world where a $500 PC is going to be able to do 99.9 percent of anything that the average home user wants to do, that home user doesn't give a rat's ass what kind of processor is in there. Pentium M, Celeron M, Core 38 Double-D ... who cares? If their friend tells them AMD is a little better, then fine, they're going to buy AMD. Either way, all the same. All the shiny Intel Inside stickers in the world aren't going to make a bit of difference.

People see an Intel commercial on TV and they tune it out. A guy in a weird space suit? OK, whatever.

Gamers still care what kind of chip is in there, but gamers also have the option of consoles. Plus, the CPU matters a lot but the video card is the really sexy component for them. On the other hand, people who run servers might care about CPUs, but those kind of people are going to want to see real-world benchmarks.

Intel needs to get over it ... and it is getting over it. Notice how Apple Macs all have Intel chips in them now. Dumb luck? I doubt it. Intel made the kind of deal it needs to keep making to stay on target, deals that are based on a simple old-fashioned idea: You're a component manufacturer. Sell components to manufacturers of consumer goods and let the consumer-goods manufacturers do the selling to consumers. If your product delivers the performance the manufacturer needs with a good integrated suite of products around it (e.g. chipsets, drivers, compilers) at a price point that the manufacturer can afford, then the manufacturer will buy your components.

In a way, the last thing Intel needs is semi-informed consumers starting flamewars over this component vs. that component, Brand X versus Brand Y. A lot of the engineering decisions that get made in the CPU world aren't things that can be easily explained to consumers, so what you end up with is a bunch of FUD and name-calling. Intel's better off receding into the background and letting its engineering do the talking (if it's still got it).

Re:No, the problem is marketing chips

[pezpunk]

ask any car salesman. in america, horsepower sells. sure a 75HP Geo would get Mr. Guy to work just fine, but you see a lot more 340HP Chrysler 300C's on the road than your theory would account for.

Re:No, the problem is marketing chips

[PCM2]

ask any car salesman. in america, horsepower sells.

So why have all the chip manufacturers quit citing performance specs and begun renaming their product lines around meaningless numbers, rather than processor speed? Not just Intel is doing this.

Probably not a price war, more likely fire sale

[MoJoJoeJoe]

If sales were unexpectedly slack in April, Intel would have built up excess inventory. With Core2 impending, they would need to bleed excessive previous generation parts off in hurry. Excluding coercive tactics, the one of the best ways to get sales quick is price cuts.

The price cuts probably have little to do with competitve reasons and are more likely operational.

Oops, just relized the pun. Funny anyway.

Why Buy Now

[Nom du Keyboard]

Intel's processor sales dropped 52 percent this April as compared with April one year ago.

And seriously folks, why would you buy a 32-bit only, non-VT enabled, hot running, substantially slower Intel chip today if you can possibly delay until Conroe comes out?

Heck, even if you don't want a Conroe Core 2 Duo 64-bit VT chip, the prices on the old stuff are going to drop through the floor. Golly, they're already through the floor. How about drop to the center of the Earth.

An Intel PC -- including all Macs -- is just not a good buy today with the next generation so close at hand.

Re:This will change

[0racle]

Why would it? A P4 or even a P3 is still more then enough for the majority of people. Unlike going from a 386->486->Pentium, when you upgrade from a P4 to whatever is current you get very little tangible results. That is the current problem, several generations ago they had chips that did what is needed well enough for some time. They have to enter a price war with AMD because AMD is the current favorite among people who are silly enough to upgrade every time there is a 5% increase in performance. Intel has a hold on the market of people that only upgrade when needed, which is bad for companies that rely on selling pretty much the same thing over and over with little more change then a new name and box.

Re:Intel is a victim of success

[demachina]

" They stop innovating."

Actually I think the problem at Intel was they innovated too much and in the wrong direction. They poured billions in to Itanium and its horrible for any volume market, its really only good in the tiny supercomputing niche. They really took their eye of the commodity market, where their profits come from, fiddling with that monster.

They also innovated too much on Pentium 4 and it ended up with an excessively complex, hot expensive processor that didn't perform well, and its not good for most things people need CPU's for today.

AMD focused on adding 64 bit support, without breaking IA32 support like Itanium did, and building fast, simple, cheap CPU's and thats what people want. A number of AMD's generations of are incremental improvements and refinements of a fairly old design and not really that innovative aside from the x86_64 instruction set.

I think Intel's problem in recent years, like the last 10 years on Itanium, was just bad strategic direction and the blame falls ultimately on their chief executive during that period, though he no doubt received some bad advice from the people under him.

Its not like Intel's huge missteps permanently damaged them though. The beauty of being a monopoly is you can completely screw the pooch and still make money hand over fist for a long time.

Re:Intel is a victim of success

[ednopantz]

>Ever heard of the Turion 64 X2?

No. And that is part of the problem.

I for one am enjoying it.

[CCFreak2K]

What with processors like the Pentium D 805 costing a mere $130. It might not be the kind of competition I want, but it makes CPUs damn cheap.

Ah intel

[MemoryDragon]

Processor strategies straight out of the applied idiocy. Intel has excellent processor designers, but up until recently their roadmap sucked. They overlooked the point where pushing the GHz boundary did not make sense anymore. AMD basically gave them the first kick in their butt by extending the x86 architecture top 64 bit. The second kick was when AMD dropped out of the real GHz game, by limiting their clock speed but still bringing out faster processors. Intel could have coped with both. First dont play the deny everything game in case of AMD64 and then bring out the same under your own name because we fucked up big time. Second, their israeli design team gave them the biggest kick ass processor of its generation, the pentium-m, yet intel needed another 2 years to recognize what gem they had at their hands, low power consumtion, beating their fastest ghz monsters left and right and only due to excellent design. They pushed those processors into the notebooks while they could have been AMD killers on the desktop and servers left and right. It took them another two years to recognize that while everyone was telling them openly, to give up the P4 line and go for the -M line in the desktop as well. Well their roadmap now shows sanity with going for extended -M processors with multiple cores, but since around 2000 until recently Intels road maps and plans were as idiotic as Sonys handling of the PS3 currently is. It is a wonder that Intel did not get kicked more than it already has.

Re:No, the problem is marketing chips

[cypherz]

"...most people just need web, e-mail, chat, word processing, and BASIC DVD/Web video capacities, all which you can get on a 100 dollar used p.c."

As an aside to this, most companies I've work for would get a better return on their investment if they spent (more) money on training people in basic computer skills, than on buying shiny new computers. I think over the years Joe Sixpack has acquired a little more computer savvy, but not in proportion to the power of today's hardware. Alas, hardware is sexy and training is not!

Intel's processor sales DID NOT drop 52%

[edxwelch]

The artical says processor sales overall dropped 52%:

"After Intel stuffed the channels with chips in February and March, the floor fell out in April, and [PC processor] sales dropped 52 percent year-on-year," he added.

So, this looks bad for AMD as well