I pulled this out of the wall street journal. I'm looking to buy lsi
tomorrow. Have any reputable analysis given
any 98 stock price prediction for lsi?
Thanks Anybody!
WSJ: How Competition Got Ahead of Intel In Making Cheap Chips
Dow Jones Newswires
One answer is that Intel is increasingly aware of the limits to Dr. Grove's plan to "make the PC it" in the home. PC penetration in the U.S. is stuck at about 40%, compared with 98% for TV sets. Many people, perhaps a majority, are apt to prefer rival devices such as digital-TV sets for entertainment, electronic mail and Internet access. Nearly half of the nation's households could have digital televisions or set-top boxes in a decade, according to a report by Forrester Research, Cambridge, Mass. Such innovations can "extend the market or become the market," observes Mr. Otellini.
Even more important, Intel has to master the art of making low-cost, customized microprocessors to fend off a threat to its core business of making more-powerful microprocessors. Intel has already had to adjust to the success of sub-$1,000 computers, which account for as much as 40% of retail sales in the U.S., and to the corporate demand for network computers, which are low-cost devices that obtain their applications or processing power from host computers. In the future, even more-specialized devices could absorb PC functions, such as Internet-ready phones that would perform some of the chores of laptop computers.
Right now, the company is selling older, cheaper Pentium microprocessors for sub-$1000 PCs, but rivals Advanced Micro Devices Inc. and National Semiconductor Corp. have taken 22.8% of that market segment, according to Mercury Research. Mr. Otellini says Intel has to start streamlining its chips and putting more functions on them, in order to prepare for a future of $600 PCs. "Information appliances," which will cost even less, will come next, continuing to challenge the low-end of Intel's PC business.
By Dean Takahashi
Staff Reporter of The Wall Street Journal
SANTA CLARA, Calif. -- For the first time in many years, Intel Corp. is an underdog.
The chip giant has reaped a long-running bonanza from its near-monopoly in providing the microprocessors that are the brains of personal computers. Intel has raced ahead of competitors and made huge bets on future computer demand to become one of the richest and most powerful companies in the world, driven by Chief Executive Andrew Grove's twin mantras: "Only the paranoid survive!" and "Make the PC it!"
But Intel wasn't paranoid enough -- ironically, because it focused so much on the PC. It has missed, or is at least very tardy in recognizing, a fundamental change in the market, one driven by advances in the chip industry it dominates: The ability of Intel's competitors to create much cheaper microprocessors and place more of the functions of a machine on a single chip is igniting a boom in consumer electronics.
Markets for non-PC devices such as smart identification cards, Internet-ready telephones, hand-held computers, digital cameras, advanced video-game players and the like are already burgeoning, and new applications such as digital television and computers in car dashboards are on the horizon. The "convergence" of computing and consumer gadgets is the talk of both industries' trade shows.
"We're going through a new threshold where the microprocessor is getting cheap enough to get into new devices," says Craig Mundie, senior vice president for consumer products at Intel's fellow PC kingpin, Microsoft Corp.
Not only is Intel late to this party; also, no one wants to dance with it. Most makers of hand-held computers or digital telephones have shunned Intel microprocessors because they are at least several times more expensive than competitors' comparable chips. Chips from NEC Corp. and LSI Logic Inc. run the world's two most popular video-game players. The most glaring example of Intel's plight is the all-out bidding to supply chips for TeleCommunications Inc.'s order for five million digital set-top boxes, aimed at launching the age of interactive television.
"They are behind in designing products specifically for the cable set-top market," says David Robinson, a vice president at General Instrument Inc., which is making the boxes for TCI. One cable official is more succinct: "Intel is running dead last."
The chip contract, which could eventually be for as many as 15 million machines, will be awarded in several weeks, but Michael Aymar, vice president of Intel's new consumer-products division, concedes that "I don't have high hopes we will get that business."
In his recent book "Only the Paranoid Survive," Dr. Grove wrote at length about the dangers of being caught flat-footed by a major technological change, or "strategic inflection point." In an interview, he said the shift to digital consumer electronics is such a change. Dr. Grove acknowledged that Intel isn't a leader in this market, but added that it will have to become one.
"We see the traffic light going from blinking red to a bright green," he says. "We have to go in there and try to participate as best we can."
Dr. Grove declined to comment on the TCI contract, but said: "Anytime we go after a design and lose, we're disappointed. But history shows we stick in there and make things right."
One answer is that Intel is increasingly aware of the limits to Dr. Grove's plan to "make the PC it" in the home. PC penetration in the U.S. is stuck at about 40%, compared with 98% for TV sets. Many people, perhaps a majority, are apt to prefer rival devices such as digital-TV sets for entertainment, electronic mail and Internet access. Nearly half of the nation's households could have digital televisions or set-top boxes in a decade, according to a report by Forrester Research, Cambridge, Mass. Such innovations can "extend the market or become the market," observes Mr. Otellini.
Even more important, Intel has to master the art of making low-cost, customized microprocessors to fend off a threat to its core business of making more-powerful microprocessors. Intel has already had to adjust to the success of sub-$1,000 computers, which account for as much as 40% of retail sales in the U.S., and to the corporate demand for network computers, which are low-cost devices that obtain their applications or processing power from host computers. In the future, even more-specialized devices could absorb PC functions, such as Internet-ready phones that would perform some of the chores of laptop computers.
Right now, the company is selling older, cheaper Pentium microprocessors for sub-$1000 PCs, but rivals Advanced Micro Devices Inc. and National Semiconductor Corp. have taken 22.8% of that market segment, according to Mercury Research. Mr. Otellini says Intel has to start streamlining its chips and putting more functions on them, in order to prepare for a future of $600 PCs. "Information appliances," which will cost even less, will come next, continuing to challenge the low-end of Intel's PC business.
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