Dear WatsonYouth,
Intel's losses in the Communications and Networking field is making you nervous.
However the Communication and Networking area is indeed the wave of the future. Intel is efficiently mining the "CPU Processor Gold Mine" , and is one of the most profitable companies ever! The Communication and Networking Area are where the future Gold Mines will be found. The present losses are the "exploration costs and the start up costs of the new mine fields".
Intel has done an efficient job of protecting its existing Gold Mine. It has protected the Gold Mine from ferocious predators, time and time again, from the RISC crowd, the Net PC, the Sub $1000 PC, the K-5, the K-6 etc. The latest threat from the AMD Athlon has not significantly hurt profits, despite the Coppermine delays and capacity shortfalls. Now that Willamette is imminent, the Athlon encroachment will be confined for good. Intel is extending its CPU domination into the workstation and servers too. Sun is the last significant bastion of the non-Intel CPU, but Sun's market share will shrink. And the powerful Intel Strong ARM product ensures that if the hand held CPU's ever become significant, Intel will dominate that market too. So Intel's hammerlock on the CPU business will continue for several years.
In the Communication and Networking area, the Intel effort is spread out all over the map. The first inning has only begun. In due time Intel will consolidate and drop the losers, and focus on the winners. Most new businesses inevitably lose money for the first few years, and the present losses are a normal part of any start up cost. Since Intel's new businesses are growing at an annual rate of 50% , these operations should be profitable soon. The Communication Business will provide the high growth rates for the future, and should be the next Gold Mine. |
