Reginald and all, The assumption inherent in everyones belief that Intel will dominate the market forever is that the current increase in CPU speed will always be required by the business / home computer user. Is it possible that in the future (I won't guess when) we will have a CPU that does everything we need it to do, and that further advances won't be worth the investment? At that time, won't the CPU become a commodity that doesn't command large gross margins?
Many on this thread have used the automobile industry as an analogy for the computer industry. For many years, they built bigger engines (CPU's) for faster cars. At a certain point it became unprofitable to increase horsepower, a car that goes 200 mph has no added value on roads that will only allow you to go 75 mph.
I don't expect this "change" to happen for many years, but it will happen some day. I believe all product categories have a life cycle, at the early stages, when technological advances result in breakthrough performance, the product deserves a premium price. Later, it is effiencies that create / maintain market share, and profit margins naturally decline. To look at the last 10 years and competitors like AMD and say that predicts the future in this immature industry is most likly wrong.
I still believe that Intel is the best bet in the tech industry; but I'm not going on vacation for 5 years. At some point, Intel will have to expand into other categories to maintain their earnings growth and valuation.
John |
