Tim,
re: "But the lumping-together of all sorts of products and divisions which are not explicity PC-related under the umbrella term "communications" is not at all a major gamble. Put another way, probably every company in Silicon Valley is pursuing "communications.""
The three important elements of a "gamble" are the size of the wager, the risk or odds of success, and the potential gain.
Yesterday's WSJ estimated that the Itanium project cost Intel between $1B and $2B (using "analysts" as a source). Intel has invested $12B in communications companies over the last two years, somewhere between 6X and 12X the Itanium gamble. Put another way, Intel's "other" businesses lost over $1B last quarter, somewhere between 50% and 100% of the Itanium gamble's total cost. Intel monetary wager on the new communications businesses are certainly more than on Itanium.
Although Itanium is risky, it's still in the realm of Intel's traditional marketplace expertise. This, I believe, raises the opportunity for success. So from the perspective of risk, IMHO the Itanium wager is less risky.
From the perspective of potential reward, I don't know. I would guess that the potential reward from the communications division could be higher.
re: ""Communications" is a catch-all term for products and divisions which deal with routers, data center servers, wireless standards, cellphone chipsets, the X-Scale/Strongarm microcontrollers, and (maybe) forays into optical subsystems."
I know that it's incorrect to lump all those initiatives into one basket, but it's difficult to separate because Intel doesn't in it's reporting. You can only judge a company on the information it gives you, and the only thing we have from Intel is the Networking and Communications Group residing within "other businesses". So as a stockholder I'm stuck evaluating this stuff as a group.
All in all, I would say that in the new communications businesses the wager is much higher, the risk is higher, and the reward is probably higher. I think most would accept that as a bigger gamble, betting more money on the long shot vs. less money on the horse with better odds.
John |
