Hi NITT and Thread, RE: "Intel had to go vertical to move the market"
Intel's business model is based on horizontal markets and volume, volume, volume.
However, the server market isn't a volume market, but more of a vertical market.
Over the past one month, I've been reading up on Microsoft's future strategic thrusts and they are still very focused on volume, volume, volume. Windows, windows, windows on every device. .Net (which I just love), but no mentions about Windows residing on a few, large things, i.e. nothing about Servers mentioned anywhere in the published documents that generate a perception Gates is focused only on the tablet, devices, .Net (as it relates to devices), visual.net, and volume, volume, volume, not really servers.
While Intel is fabulous at doing volume, but Intel's business doesn't appear to have the margins to go after only volume, volume, volume.
My concern is Intel's future profits are more dependent upon an aspect of a business model that's not volume, and this would not exactly align with Microsoft's perceived business model of only volume, volume, volume.
Conceptually, I think Intel's business model is a square that's trying to fit into the circle of Microsoft's business model. To the extent that the Brian V's of the world are allowed to extend Microsoft's circle, or expand Microsoft's traditional focus beyond just volume, volume, volume kind of Balmer business model, to include the corners of Intel's business model, all is fine. But is that happening (i.e. being allowed?) and most importantly, at a pace that is acceptable for Intel's investors? As a Microsoft investor, which I am, one could argue that Microsoft needs to extend their circle of the business model to include the corners of Intel's square, if one believes that the corners of the square eventually get sucked into the circle, but when you read about Microsoft's strategies, you can't help but see, most certainly over the next upcoming few years, that there could be a lack of focus on Microsoft's part onto the edges of the square that is probably going to create a pacing problem when you consider Intel's margins today are already taking a hit. As an Intel investor, I'm not sure patience is the right approach for Intel - I think Intel needs to take some type of decisive action on their margins.
At the conference call, I would like to know what Intel is doing about improving their margins, short-term and long-term. ( I'd also like to know exactly why they took such a huge margin hit. At the last CC, the answer was, it's due to one of two reasons, and we'll know which of the two at the next CC. )
I think answering questions on margins would be the most important thing for Tue's CC. I'd like to see the analysts prove to the investor community that they indeed work for investors by grilling hard on short-term margin questions during the CC.
On a related note, Thread, Elmer, what is the state of Intel's processes and why are the margins so poor nowadays, they're at 49% down from 63%, a huge drop. Can't Intel do better? Improve the process or cut costs somehow? The margins and profits need to be improved.
Regards,
Amy J |
