I was surprised by the drop in the capex forecast. With all Intel has going, I think a lot of people hoped it would hold steady or go the other way. It's a big blow to the equipment industry that Intel is taking $1 billion off the table.
Remarkably, Intel shares have been in the same trading range (give or take $5) since the recession began. They're now back at 2009 levels, in the middle of that range. That's dead money for investors and the challenges facing the company are widely known. Still, one has to look at the broader tech sector to gain a full appreciation for that is happening. Here's a tweet this afternoon from Trish Regan over at MarketWatch.com. It's a good question she asks:
"fast growing ultra-mobile market segment": I see the statistics on the growing mobile/tablet market all the time. But, it is becoming very evident in my highly techie family. Both parents have moved exclusively to laptops/smartphones and both teenagers are using tablets. The desktop workhorses in our home/office seem to only be used for gaming now...The importance of this market really can no longer be ignored.
It looks like, its kind of a zero sum game for Intel... If intel wins the 30$ mobile CPU race by competing with ARM in speed, it will lose its 300$ notebook/desktop CPU business as people will have no/less reason to buy a notebook, which makes much higher margins for Intel.
Intel's best option is to compete with ARM only in power consumption, by keeping its mobile CPU performance at the same level as of ARM's topline. Thisway if the competition becomes mostly about power consumption, then there will be a safe gap between performance of a mobile device and notebook that people will still feel the need for a more powerful notebook/desktop.
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