Has Intel Scored A Spectacular Own Goal?
Has Intel scored the most spectacular own goal with its Atom microprocessor? After all, Intel and Microsoft did an amazing job in keeping PC prices high for about 25 years when Moore’s Law said the prices should have halved every eighteen months.
When you think what happened with digital watches and electronic calculators, where prices dropped to peanuts within five years, it was amazing that the desk-top PC price topped $1,000 for a quarter of a century.
Wintel’s Big Trick was to persuade people they wanted more and more processing power, and more and more functionality, and the customers kept buying that proposition and paying the price for it.
That meant Intel could charge lots for its processors, and Microsoft could charge lots for its operating systems.
Then, when Intel found the desk-top PC beginning to erode, it switched its focus to lap-tops where prices were still high.
Now, it seems that Intel, with Atom, have shot themselves in the foot and are saying: ‘If you want basic laptop functionality here it is for a peanuts price’ – so bringing about some 10 years of Moore’s Law price erosion in the lap-top sector in a matter of months.
When Freescale and Qualcomm get into this low-cost-processor-for-lap-tops business, they’re intending to cut the price of low-cost lap-tops by half – to around $200.
Of course Intel have tried to be clever by saying that these low-cost lap-tops are not really lap-tops, that they’re a separate category of product called ‘netbooks’ or ‘MIDs’, but AMD’s CEO Dirk Meyer is probably right when he says: ”The distinction between what is a Netbook and what is a notebook is going to go away.”
The name of the new game is going to be low-cost lap-tops – as Moore’s Law always said it should be.
After all in those Neanderthal Times before Intel went sole-source on its x86 processors, it was generally regarded as absurd to charge $1,000 for a microprocessor – only the military ever paid that.
In Neanderthal Times, chips might be introduced at $100, but they darn quickly went to $5 as Moore’s Law economics kicked in.
If Intel is now going to be locked into a Neanderthal Times market again, it’s going to have to do some very hard thinking about the edifice it has built on the back of the high-priced, high-margin, PC processor.
Because that particular animal may be about to become extinct.
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