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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Amy J who wrote (123972)	1/2/2001 2:46:13 AM
From: Ibexx	Read Replies (1) \| Respond to of 186894

Amy, Re. I believe Intel is still a chip company, and unlike the article implied, I believe that's still their focus. I fully agree. Same can be said about Intel's efforts in the networking areas - simply broadening or creating more ramps leading to the information highway. Regards, Ibexx

To: Amy J who wrote (123972)	1/3/2001 5:17:08 PM
From: Saturn V	Read Replies (1) \| Respond to of 186894

Hi Amy, Intel's entry in the consumer market raises interesting questions as you imply. It obviously increases revenue, but Intel may not reap significant profits because consumer markets typically have lower margins. The consumer product typically has a lot of cost of materials which are not chip related, like the display, the case, speakers etc. So the opportunity to leverage Intel' chip technology is low. This is should be painfully obvious to Intel, which pioneered digital wrist watches in the early 70's, but was forced to exit, when the chip costs decined to a tiny fraction of the cost of the watch. Furthermore Intel will also antagonize the potential users of its chips, who will be Intel's competitors. The ideal situation is like the CPU motherboard business.This is also a low margin business where Intel also ends up competing for a while with its customers, and then eventually drops out. Here Intel establishes a new market, which others enter and then Intel drops out of that market, and ends up selling components to the motherboard supplier, when the motherboards become a low margin business. This strategy has been sucessfully implemented by Intel with memory systems in the 70's,microprocessor systems in the 70 and 80's, and motherboards in the 90's.It remains to be seen how Intel can execute such a strategy sucessfully in the consumer space. Ideally the "system business should be a packing crate for Intel chips". That implies that Intel should just pioneer the concept, and then license the technology to others and become a chip supplier only. But since Intel has been keen to enter new businesses, Intel may have other plans. We will have to wait and see what happens.