Microsoft abandons PC-centric view but what about Intel?

By Tom Foremski - November 9, 2005

By Tom Foremski, Silicon Valley Watcher.com

Today's "leaked" Gates and Ozzie memos show that Microsoft finally "gets it" that the world has shifted towards the Big Computer in the Cloud.

Gates' Copernicus-like revelation that we no longer live in a PC-centric world is late but significant for Microsoft. But has MSFT's PC partner Intel realized the world has changed?

The last time I looked, Intel was quite happily promoting its latest and greatest PC microprocessors, vowing to make them ever more powerful and complex.

But with the Big Computer approach, for most tasks, you don't need super-smart PC clients, because the Big Computer can do the processing far faster than the client.

You just need a client that can render video/graphic/audio bits really fast and needs only a little bit of local smarts. And there are plenty of chips out there than can do this, and that don't cost several hundred dollars, as Intel's top of the line PC chips and chipsets.

Yes, there are many professional tasks that require a powerful PC client system, but for most of us, the Big Computer in the Cloud will do just fine once we get ubiquitous broadband--which isn't far away.

Take a look at my recent post-The Coming PC Crunch:

Like a universe that finally feels the pull of its dark matter gravity and starts to pull back towards its singular moment of creation, the massive PC market could be facing the same pull on its further expansion.

The onward rise of the PC microprocessor, more powerful and complex than ever, won't be stopped by Moore's Law. It will much more likely be stopped by the fact that it becomes cheaper, and better to do the processing on a large computer system, rather than on a PC, no matter how fast the PC microprocessor.



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By Tom Foremski - November 9, 2005 | Permalink | Comment | Category: Disruptive
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Comments (5)

Mohit Mahendra:

Like that description...the Big Computer in the Cloud. Interesting thought about the impact on Intel. My guess about the scenario the cloud is going to lead to for Intel is the commoditization of silicon based PC CPU's. Ultimately its going to erode CPU chip pricing & Intel margins - less demand and market capacity to absorb new chip generations, more chips will need to be sold for each chip generation at lower prices to break-even on investments in fabs; giving more catch-up time for competitors who'll get the opportunity to build similar silicon designs at lower cost (in low cost design & manufacturing centers..). Things will settle into that commodity rut for a while like they have for memory chips. Until someone figures out how to deliver the same kind of computing with some disruptive non-silicon technology that is far cheaper to produce in large scale than plain design and manufacturing cost savings can afford.

Posted: November 9, 2005 3:09 PM

Tom Foremski - Silicon Valley Watcher [TypeKey Profile Page]:

I think Intel can make very good money on its server microprocessors, which carry hefty margins. But it will lose much of the volume it gets on desktop/notebook microprocessors which help keep its huge chip factories humming. It can fill part of the the gap caused by a thin client PC by producing the chipsets for it...but Intel has to first acknowledge and understand that something has definately changed before it can change its strategy. I think it will change and both MSFT and INTC will face a transition period that will be challenging.

Posted: November 9, 2005 5:02 PM

Anil Bhat:

Why do you think Intel doesn't get it? Is it because they have not "leaked" their strategy? or, is it because there is no "Mini-Intel" just like "Mini-Microsoft?" Intel's current promotions are only the front-end that everyone sees.

Posted: November 10, 2005 12:16 PM

jesus henry christos:

intel does do (or at least has done) research in the 'small iron' world. for an extreme example, see this 2003 wired article on their involvement with motes.

also, their xscale processors seem to be getting more and more traction these days in the highend handheld/mobile world (although that is just an impression of mine).

Posted: November 18, 2005 6:37 PM

Mike:

As someone else pointed out, this is actually good for Intel -- they make much higher margins on server processors than on PC processors.

Assuming there's a need for server processors to take over the big computer in the sky processing tasks, there's room for chip manufacturers to sell high end systems.

The problem then becomes competition with AMD, IBM, et al.

Posted: November 21, 2005 9:42 AM

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