Friday, March 31, 2006

Investment

I have just read a very nice article:
http://www.geek.com/news/geeknews/2006Mar/bch20060331035576.htm

Although the author makes the mistake of not understanding how investments are accounted, his point holds.

He compares all the hardships AMD has experienced along these years to the family that struggled to put through college all the children, and got to the graduation year in very good shape. The oldest of the family is already having a top-flight job, and this is just the beginning of the new situation of prosperity.

The miracle is that this family believed so much on the kids. Not everyone was born to go to college. But AMD's competitive advantages deserved full support. Since the days of the Athlon, in 1998, it has been a constant investment in a set of principles that didn't pay off perhaps until last year.

One of those principles is to respect the market.

I very well remember my days at the University when I was full of admiration for Intel. In those Pentium days, Intel was perhaps at its zenith, it was a company that innovated with vigor, it was an open company, it had an inviting attitude toward its products, and you could perceive a technical excellence not present in previous generations (which lasted only until the Pentium Pro, as was later proved). But of course, Intel has always been greedy. In any case, we reached the years of the incoming Pentium III with Intel being the undisputed leader of the computing necessities of the world, when my great dissapointment happened: Intel started to promote the Pentium III as "optimized for a fast internet experience". That is, it was not enough to supply everything that the market asked for, greed pushed them to *lie* [there is no connection between any of the features present in a Pentium III and a fast internet experience, if anything, it would be the MMX (the integer SIMD extension) already present in the Pentium II, SSE (floating point SIMD extensions) was something different aimed towards computing that didn't have to do with "Fast Internet Experience"].

Then, AMD put in the market the Athlon, and because it had superior architectural features, it took the performance lead from the Pentium III. Intel, who apparently succeeded in fooling the market, decided that they were not going to do actually superior processors to those AMD was doing, but that they were going to do inferior processors that they could sell as if they were superior by lying and deceiving the market. So, what I call the "gigahertz obsession", was born.

The gigahertz obsession was simply to do processors with ever increasing switching speeds, regardless of how much useful computation (real performance) the processor could deliver, and later on, regardless of how much power it would consume.

By this antics, deceiving the market, Intel substantially helped AMD to have a close encounter with bankruptcy.

Then it came the transition to 64 bits, when, because of greed, Intel wanted the whole world to go their propietary architecture route (Itanium) and didn't do an extension to x86.

But AMD got in their way again, it did the extension, with striking simplicity and elegance, so AMD64 was born.

What has done AMD about AMD64? has it fooled the market telling it that it is imprescindible? no, of course not.

What is Intel doing with V//V nowadays? V//V == snake oil

Live! is an entirely different approach.

That's how Intel's credibility decays exponentially under AMD's respectability pressure.

Engineering:

Intel got to where it is because it actually had very good products. But in an indeterminate moment, marketing took charge at Intel. Perhaps with the Pentium III they were convinced of the fallacy that you can fool the market, so, marketing at Intel began to think that the products sold not because they provided value to the customers, but because they, the salesmen, could find all these clever lies to misled the public to buy their products.

So, they lost the technical focus and were unable to do something even remotely worthy ever since.

The promotion of merit: Current CEO, and current President are people with undoubted merits to have arrived to their positions, and this culture is very evident at the different levels of management.

But Intel is a different story. The fact that a young Israeli team, operating so far from the corporate power center, was the one who received the challenge and responsibility to design and develop the flagship products for the next two years means that top management is not focused nor concerned about providing the absolute best products. It is evident that top management concerns itself with politics and financial manipulations.

AMD was nearly bankrupt, but stood on the principles. And demonstrated, beyond any doubt, that that is the way to succeed.

Right now, we are in the harvesting season, all of what AMD sawn has grown and is ready to be turned into profits. The neighbor doesn't have anything but weeds. There is still a lot of people who has faith in the gigantic neighbor, he says that in the remote corner it has the greatest grain ever grown in these fields, but that just seems to be him once again bragging about what he doesn't have. If his harvest were good, he would be very busy, as we are.

Intel is not even aware of when or why it went wrong. They are just awakening to the fact that they went wrong.

Wall Street is even more pathetic. Wall Street is just complaining that it doesn't have anymore the cash cow it used to milk

2 comments:

George said...

Great Post

Eddie said...

Thank you, George