Hacker News Reader

Comment by petra | Hacker News Reader

The main issue here is: Intel doesn't want to work on stuff with lower margin(even though it can make money and it's strategically valuable). That's common to many businesses.

Isn't there any financial engineering trick to enable companies to solve this dillema that often leads to their death?

View on HN

Every innovation eventually becomes commoditized. So if you want to remain high-margin you have to continually innovate.

(But to be fair to Intel they did, and do - they keep producing better and better CPUs. It's just that demand for that whole category has shifted)

Exactly. Intel invests ginormous amounts into R&D. If they had adopted ARM earlier, they could have captured the mobile market and .... then who knows what? Innovation is unpredictable, especially in tech.

They started our making DRAM's then moved to making microprocessors...I wonder why they didn't realize they couldn't rely on the same business model forever.

They did adopt ARM. Did you forget about StrongARM? (I believe they acquired it from their DEC acquisition.) They ran with that for a while, made an updated version called "XScale", made a bunch of mobile processors with it, and then sold it all off to Marvell when they decided to refocus and shed a lot of other things that weren't core to the business.

History is not the strong suit of this site's readers. Yes, Intel was selling ARM CPUs into the mobile market (Compaq IPAQ, Sharp Zaurus, etc) when Apple was still making pink iMacs.

They did adopt ARM earlier than most and had a license for it that would allow them to even make innovations of the ARM core like many of the current successful chip developers but they were not able to create great comms chips like they were able to do with PC chips. I believe this was due to there culture more than anything.

They produced incremental improvements of those CPUs. Sure, they got faster and had more cores, but there's not much in the past 20 years I'd call "innovation" on a fundamental level.

The problem with low margin for international company is the currency rates. If you have a 2-3% margin, a 5% inflation or fx change can put you in loss.

Some sort of solution... to the dilemma caused by innovation...

I think the advice is to create a fully isolated subsidiary and just enjoy it's increase in value an the control that would provide, with no decrease in margin. It can work when you're talking about blockbuster adding a netflix.

But if intel wanted to do that, it would need to sell a lot of fab services to said company, at a lower margin that it's used to, so it's not a solution.

Reply on news.ycombinator.com