Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Greg Luke who wrote (43375)	1/3/1998 4:10:00 PM
From: stak	Read Replies (2) \| Respond to of 186894

#2 Hardware vs. SoftwareINFRASTRUCTURE COSTS Compared with Microsoft, Intel has a massively more expensive cost to get its product to market. First the cpu must be designed then the design must be taken from idea to a physical form in silicon(taping the chip out?). At the same time a fab must be built to make the chip. The fabs for pentiums cost around 1-2 billion$ US give or take a few dollars. Estimated cost for the merced fabs 5 billion$US. Or is that a tad high? Microsoft on the other hand will have much smaller costs to intro a new O/S for the merced chip. The 5billion$ difference could be used to promo the O/S as with WIN95. Or it could be used to beef up WIN NT or to beef up WIN CE or to buy a cable company or a content provider etc. The point is that Microsoft has a monstrous advantage in its cost of doing business. This will NEVER change. In fact it will get worse and worse with each new chip design. "The world is filled with the cadavers of dead software companies-far more than the cadavers of dead semiconductor companies. Software companies can disappear almost overnight." page186 FORTUNE July 7,1997. True. Well except for Microsoft which is AN O/S company which is a whole different beast than a regular software company. CPU DEVELOPMENT WILL GET MORE AND MORE COSTLY TO BRING TO MARKET.SOFTWARE AND O/S DEVELOPMENT WILL COST MORE BUT NOT PROHIBITIVELY SO. Edge definitely to Microsoft. There is no way Intel can change this. Not even if they were the only CPU maker in the world. Note: A similar example of the difference on return on investment is the Coke vs. Pepsi battle. Pepsi has far greater revenue through all its divisions but the bottom line is that Coke is much more profitable. They don't spend their resources on buying into restaurant franchises, which are tough to manage these days. Heck just ask MacDonalds.