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587 post pubblicati dal 2006

Tag: wintel

  • The Resurrection of Wintel Part 2

    Unfortunately, I have to announce that this blog post will have more than two parts.  This part will deal with some important concepts that will inform some of the conclusions I will make later.

    First a recap of Part 1.

    Part 1 mostly dealt with the departure of Paul Otellini, the former CEO. I thought my post on this topic would be my last post about Intel but then I got the idea for the Resurrection of Intel and wrote a bit about the death of Wintel.  Wintel was the very successful informal alliance between Intel and Microsoft that was the driving force of the PC era.

    Computer Technology 101

    The first concept is Moore’s law which was first described by Gordon Moore, one of the founders of Intel, in a paper in 1965.  He said the number of components in integrated circuits would double every  year. He altered that in 1975 to a doubling every two years.  Most people think that Moorse’s law refers to the power/performance of such things as microprocessors and computer memory.  Clearly there is a strong correlation.

    When I was at Intel (1984-1999), we use to say we could either double the performance for the same dollars or offer the same performance for half the dollars.  Both are exponential functions.  If we are very conservative about the rate of doubling, we can say that the performance will increase by 20 times in ten years for the same dollars and will cost about about a 1/20th for the same performance.  Of course, there can be all kinds of combinations of cost/performance in between.   The actual  improvements have been greater than this for more than the last twenty years.  Moore’s law is expected to continue for at least another decade. It is really the fuel of the engine of change, not only in the computer industry, but any activity which is sensitive to the cost of computing.

    Not all factors that effect computers follow Moore’s Law.  For instance, the speed of our access to the Internet has improved very slowly over time.  This is partly due to the nature of communication technology which often requires human beings to dig up streets or erect towers.  It also has to do with the objectives of the industries that control our access to the Internet.  Some have referred to this as Moron’s law.  Just look at the size of your desk top monitor, laptop, tablet or phone and number of pixels they contain.  Clearly  monitors have not and cannot follow Moore’s law. Otherwise we would go from a 27 inch monitor on our desk to one that was 22 feet with the same number of pixels per inch square or the same size as now with 100 times the number of pixels per inch (something we could not see) or have the same product sold at a ten dollar price.

    One of the key factors that results from Moore’s law is the increase in device density, i.e. the amount of components in a given amount of space. This comes from the reduction in size to create elements like transistors.  This is often referred to as miniaturization.   This is most evident when we see devices like the iPhone.  Things that have to fit in our pockets and purses have limited size.  So the choice is really to provide more capabilities for the same price or the same capabilities for a high price. Companies like Apple choose the former strategy to keep their revenues and profits up.  Newer entrants like Samsung will choose to offer a product at a lower price to target customers that cannot  afford the Apple product or who would be attracted by price to change vendors.  Apple’s strategy can only work as long as they can keep adding capabilities to justify their higher price (there are also non performance considerations like brand, integration and service).  But eventually, it will become harder and harder to add capabilities to take advantage of the additional power.  For instance, given the form factor of a phone, it is hard to add more pixels once you have as many pixels as the eye can see. Companies like Apple can end up being primarily in a replacement business as customers replace their products with something only slightly better in order to avoid switching out costs.

    The Art of Partition

    Another very important factor in the design of computing devices is what I will call partitioning.  The engineers put different things together to create a product.  For instance, a processor, communications chips, battery, power supply, and display.  The architecture may not take into consideration the rate of change of all these different elements.  I think it is easiest to understand if we reference a desktop computer.  I think that an all in one approach is not good value.  Take an iMac.  The processor technology will follow Moore’s law but the display will not.  So two years later you are buying a new system even though you have a perfectly fine display.  That is why I have a mac mini, wireless keyboard, mouse and a Cinema Display.  I actually upgrade my mac mini every year.  I upgrade my display maybe every three years.

    We can also observe this phenomena when looking at flat panel displays.  Many consumer electronics companies are offering Flat Panel Displays with Internet abilities.  You can get youtube, Netflix, Hulu etc.  But the display is something you might keep 5-8 years.  Clearly, the internet function of the Display will not keep up with the changes and new options of the rapidly advancing Internet. I have an AppleTV connected to my big Display.  It is the third generation of Apple TV that I have bought  for under $100 but I have had the same display the whole time.

    Computing moves to the Cloud 

    Ok, why am I going through all this?  It is because of the change from client-based computing to cloud-based computing which as been enabled by broadband internet access that has reached a critical point in speed, responsiveness and reliability.  At the same time we are going from one device  such as a desk top computer, to multiple devices including our phone, TV, and even our appliances greatly increasing the complexity of our personal computing environment.   Since computing in the cloud is not constrained by form factor it can follow Moore’s law.  Voice on mobile devices is a great demonstration of this.  The voice recognition for  Apple’s Siri and Google’s Now happen in the cloud.  Voice is a very computational and data driven process.  It would be hard to achieve a high degree of accuracy in today’s smart phone, so the Smart Phone just collects the voice and sends it to the Cloud.  That means that as the software in the cloud processes my voice it will learn and improve.  Now when I go to another device such as my TV, I can use my voice.  I believe over time more and more of computing will happen in the cloud.

    What will that mean to our devices?  Form factor will be dictated by their use.  A phone has to fit into our pocket (or at least what we think is a phone today).  A electronic book, game device and tablet have certain constraints.  Our TV’s have others.  But if the computing moves to the cloud, the capabilities of the devices will not be able to increase fast enough to follow Moore’s Law.  That means they will be come cheaper.  They will become so cheap that every form factor from a watch to a refrigerator will become intelligent gateway to the cloud. Also the size of devices will reduce.  Phones will be come thinner, TV’s will become flatter, and new devices like smart watches will appear.  This results from  the increased density of components. We are seeing a major movement on mobile devices to Apps.  I think that we will continue to see Apps but in reality they will just be simple front ends to Cloud based applications.

    But it is Cloudy 

    But there is not just one cloud.  Google has their cloud as does Apple, Microsoft and even Facebook.

    Apple understands that truly open systems collapse from complexity.  Apple is trying to create an ecosystem where all the devices can connect to their cloud and live in harmony.  They problem is that Apple has no idea about what to do in the cloud.  Siri is their only example of Cloud computing that I know of.  Steve Jobs thought of the cloud as a place where data lives.  He apparently did not understand that the cloud is where computing will take place.  Since his death, there has been no indication that his successor, Tim Cook, understands this any better.

    Google, gets the cloud much better and has a good chance to be the leader in the next generation of computing  but their implementations are often poor and mediocre (although I have just started using Google Hangout and it is pretty impressive). Google is not really in charge of the design of most  devices using their Android OS which results is a very fragmented market.  Google will most likely extend their direct presence in hardware but if GoogleTV is any indication, they will not do very well. The Google Glass thing is a big fake out in my opinion although it was probably the best way for Larry to get Sergy our of his hair. Googles deployment of fiber optic broadband networks could create a major disruption but it would take a decade to build out national fiber network in the USA for instance.

    Part 3 

    In Part 3 I will discuss what Microsoft and Intel can do to Resurrect Wintel and dominate the next phase of computing.

  • The Resurrection of Wintel Part 1.

    I never imagined I would be writing this post.  I was planing on writing what I thought would be my last post about Intel. It was to deal with the departure of Paul Otellini the former CEO  and a recent article about him published by the Atlantic.  I will do an abbreviated comment on that and then begin to get into the meat  of the Wintel Resurrection.

    Paul Otellini Regrets
    The Atlantic Monthly had a major article on the retirement of Paul Otellini the former CEO of Intel. Frankly, I think the article was very kind to Paul. Paul probably did a very good job of being the caretaker of the strategy that his predecessors Barrett and Grove had established.  We called that, The PC is iT strategy.  But the world changed from the 90s when we realized the power of the PC and Intel did not change.  While  Intel’s business grew significantly, it stock price pretty much stayed flat during Paul’s eight years as CEO.  Wall street evidently felt that Intel was not in a position to take advantage of the growth of the Internet and especially of new devices such as the iPhone and they have been largely correct in that assessment.  Paul showed no leadership in this area which is a bit strange since he served on the board of Google since 2004.  He of course profited from the options he received as a board member.  Too bad he did not influence Google to consider quality control as an important attribute of a successful company.
    I should probably say that for many years, I considered Paul a friend.  We first met up when he was the Technical Assistant to Andy Grove.  This was a very important position in terms of advancement in the company because it provided the opportunity to learn how the CEO actually operated. But most of the work really had to do with creating presentations.  Paul would refer to himself as “Andy’s foil slave” (this was before powerpoint and we used overhead projectors).  Paul and I would often have lunch together.  My personal experience with Paul until I left Intel was very good. He is really a nice person, fair and dedicated. But was not a risk taker at a time when risks were needed.  I still like him and feel bit bad about making a few negative comments about Pau over the years.  I hope now that he has left Intel he will use his skills and significant wealth to make the world a better place.
    So in the article, Paul laments about not getting the design win for the iPhone.  According to the article Intel lost the order because of price.  Frankly, while price may have something to do with it, power requirements may have also played a role.  Paul says that his gut told him that Intel should do what ever it took to get the design win but the data argued the opposite.  Intel believed that  the market for smart phones was about 1/1,000th of its current size.  Had they gotten the “Design Win”, they would have been able to ramp up their manufacturing capability to the point that they could have made money on the chips but maybe not “PC money” which continues to be Intel’s problem in pursuing  new markets.
    I know first hand what Paul is saying. In my early years at Intel, I would get beaten down with “data”.  I learned never to say “my gut tells me we should do this” even though it was my intuition that drove me.  After a while, I would make up data and/or get reports at major newspapers to say what I could not say at Intel and then I could reference their reports.  Paul’s background was in Finance and Sales. My background was more in technology, marketing and science.  During Paul’s tenure, the few intuitive people left or were driven out.  Now they have a CEO who came from manufacturing.  Paul was worked for Intel for 40 years.  The new CEO Brian Krzanich joined Intel in 1982 and worked in manufacturing until he became COO in 2012. His first job at Intel was in Process Control. In that position he was responsible for making sure nothing changed.  How about that for a visionary CEO?  This last remark may not be fair since I never meet Kranich even though he was at the company the whole time I worked there.
    I spoke about the importance of intuition to FastCompany Magazine in 1999.  Here is some of the things I said that might have changed Intel had Paul read and acted on the article.

    “Today, when Intel builds a new factory, it’s investing $2 billion in products it hasn’t yet designed for markets that don’t yet exist. This is hard for American businessmen, and I say “men” because in order to do this, you have to give up control — and giving up control makes guys really miserable. Control is an illusion. I don’t think that it ever existed, but now even the illusion is gone. As a result, we’re experiencing the rebirth of intuition.

    In our society, we often don’t want to admit that we know something if we don’t know why we know it. At Intel, I used to have a horrible problem. I’d go into a meeting, and I’d be very convinced about something, and people would say, “What evidence do you have for it?” And I’d say, “I don’t have any evidence.” They’d expect me to be analytical about it, and I wouldn’t be. Over the years, I learned to make up some bullshit story to convince them, but it had nothing to do with why I thought it would work. I just knew.

    In Hollywood, you’re expected to be intuitive. In the entertainment industry, you have people who have intuition and people who imitate. Nobody there analyzes. But for the most part, in our society, if you know and you don’t know why you know, then obviously whatever you know doesn’t matter — which is stupid. If you have been right about things for 20 years, then you should be able to say, “I don’t know why I know, but I know.” If I’m hiring people, I don’t want to know how they know, I just want to know that they have a good record of being right.

    So I had pretty much written off Intel until yesterday.  Yesterday, I went for a walk with a former colleague at Intel who is both a mentor and friend to me.  We spoke of Intel, Apple, Google and Microsoft.  Out that conversation came the rest of this blog post.

    The resurrection of Wintel
    The death of Wintel
    For over ten years, Intel and Microsoft have been drifting.  While their revenues increase, their stock prices stayed flat.  It seemed that both companies had missed the next generation of the internet.  With the exception of the Xbox, both companies revenues came from the PC industry.  The  Informal”  alliance that Microsoft and Intel had  which the Industry called by the somewhat derisive term, “Wintel”  was no more.  It had become irreverent and especially after Intel embraced  Apple and went from being Microsoft bitch to being Apple’s bitch.  But both companies are still incredibly strong.   Both have significant cash, Microsoft way more than Intel, and technical resources.  What they have been missing is a strategy.
    For Wintel to resurrect, the world of computing has to change once again and in ways that create disadvantages for companies such as Apple and Google and advantages for Intel and Microsoft.  I will explore that next.
    I should also say that I am not impressed with Larry/ Sergy or Mark (does using their first name make me hip?).  Google may be more mediocre than Microsoft ever was.  Facebook is the DOS of social networks.  But these are the guys who got started on the new cycle while the old guys tried to keep the old cycle going (always a losing strategy).  Jeff Bezos is the only one that has made the transition.  I think he is brilliant, but thankfully I never had to work with him.
    Multiple Devices meet Multiple Clouds
    We are going through a major transition in personal computing (I did not say personal computers).  Many of us have multiple devices- a smart phone, a tablet, desktops or notebooks, game machines, and DVRs etc.  We are also begining to see what is called the internet of things which really means special purpose devices like lights, appliances, autos, etc that communicate with us and other systems via the internet  This has necessitated the movement to the cloud which in a way creates a hierarchical architecture.  It is just too hard for each device to communicate directly with each device so rather, we have devices communicating with the cloud and an synchronizing with data that way.  But there is not just one cloud there is a storm.  Apple has one, Google has one, Microsoft has one just to name a few.
    Capabilities are increasing dramatically but so is complexity.   Application development is also increasing in complexity to deal with multiple eco systems.  The power of “The PC is It” was that there was a homogenious environment for developers and users.  It also had it inherent problems. Microsoft tried to develop an operating system that could scale from the smallest device to the largest computer.  It was a very difficult task and they failed at it a number of times.  The only thing that is harder is to try to support multiple operating systems. Apple is struggling with that with OSX and iOS.
    This model of computing has a very limited life span.  In my next blog, I will discuss what I think might be the next generation of computing and why it is even possible that it will be lead by Wintel.
    To be Continued

  • Why companies fail to make transitions

    Here  is a pretty interesting link to an article on the future of Microsoft.  Frankly, the only thing that surprises me about the prediction that Microsoft will decline into insignificance is that it will take this long.  I have seen this movie before and I will probably see it again.
    I have personally watch and participated in  the first two of the major waves of computing which I describe below.
    • The first one was proprietary   vertical  computing represented by mainframe companies like IBM and mini Computer Companies like Digital Equipment.  These companies did everything themselves (hardware and system software and some application software).  Apple is the only contemporary company that resembles this structure.  IBM is still around but mainly a systems integrator.  Digital was acquired by Compaq in 1998.
    • The second one was the age of the personal computer.  It was a horizontal structure where a few companies dominated the various hardware and software layers (Intel had more than 80% of the microprocessor business and close to 100% of the profits while Microsoft had about the same in the OS and dominated some of the application layers with their office products.  At one time both Intel and Microsoft were the most valuable companies in the world. Now Wintel, once the most feared force in computing is no longer relevant.
    • The third one is network computing and is led by Google although we have to deal with Apple a bit later.  In this wave, the value has moved to the network and expanded encroach on the media industries.  Much of the value is created by the consumers themselves.  Advertising plays a key part in the monetization of this wave.
    • The fourth wave will surly come even if I for one can not yet imagine what it is (although I try).  And Google and the other companies riding the crest of the networking world will suffer the same faith as their predecessors.
    Apple is amazing in that it has survived the first two waves and is dealing extremely well in the third wave.  I will write more about Apple another time.
    So why can companies not make it through these transitions?  It is pretty simple:  They would have to take the lead in destroying their own business.  And if they were successful, they would see a reduction in profits at least at first.  I know that if you give an CEO  two choices, 1) continue as is with the knowledge that eventually your business will decline significantly and even fail or 2) take a hit now with the possibility that your business will recover in the long-term, they will choose 3) continue as it is and believe that you will figure out  how to maintain the business. In other words they can not accept the future as it will be.  This is not only true for businesses but also sadly for countries.  The USA is  Microsoft I am afraid (but further along in its decline).

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