Up until 2010, the PC industry had been dominated by Intel and Microsoft. “Wintel”, (the words Win (dows) and Intel combined) was coined to describe that PC empire. There was a time when more than 80 percent of the PCs were powered by Intel chips and ran Windows software. In those days, Microsoft and Intel were the adorable bedfellows of the PC industry and most computers wore the badge “Intel inside”.
The PC industry itself is no longer as endearing and that throws both Intel and Microsoft away from being dominant benefactors of techie dollars. The days when “Intel inside” inscription was as ubiquitous as the precious oxygen we breathe are far gone. Both Intel and Microsoft missed the early morning mobile phone flight and by the time both wanted to catch the late afternoon flight, the thunder had already been stolen by Apple and Google.
Intel has just announced its Q1 2016 figures. Revenue tiptoed from US$12.8 billion to US$13.7 billion representing seven percent growth since Q1 2015. The gross margin is down from 60.5 percent to 59.3. The net income is almost flat at US$2 billion.
From these figures, Intel’s financial health remains robust; it is the growth rate that is undernourished. But you have not heard the shocker just as yet; the company has announced that it would fire 12,000 employees across the globe. This means the computer chip giant is going to shrink its payroll by 11 percent.
Let us put muscles around those bones; this is like dismissing the entire workforce at Intel’s competitor, AMD plus 2,000 more at Google.
Intel has also announced that it would change focus. While it will not surely depart from chips for personal computers, the company will redirect its vims towards cloud and smart connected devices (popularly known as Internet of Things or IoT).
Intel wants to have an early leap into the salacious aspects of near-future computing as a compensation for its late entry into the smartphone and tablet technologies. We are fast moving towards a world where the internet will host almost everything; the apps and data. People will only require portable computers that connect to the internet where servers will host the apps and data. Actually, we are almost there.
Intel wants to be the driving force behind cloud computing and the engine of Internet of Things. By designing chips to propel the cloud computing and IoT, Intel will open the taps of opportunity that will drive growth.
In 1981, IBM decided to outsource a computer chip and operating system software for its first personal computer. Intel supplied the 4004 chip and Microsoft supplied DOS operating system. From then on, Intel and Microsoft would ‘steal’ the trophy from IBM and run away with it for thirty years. Microsoft and Intel soon became engrossed in the PC industry and never noticed the change of techie weather; Apple and Google took advantage of that and snatched the trophy from the two. Intel wants to reclaim it. All I can say is, good luck!
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