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

To: Paul Engel who wrote (57436)	6/8/1998 11:23:00 AM
From: Mark Brophy	Read Replies (2) \| Respond to of 186894

Re: Switching costs, Samsung For companies planning to switch From Merced TO Alpha to fill a 6 month gap, I would expect very few to find any real payback in this because they would presumably have to switch back again from Alpha to Merced once it is available. These "switches" eat up enormous resources - management, engineering and capital. Most graphics and CAD companies such as Autodesk already support x86 and Alpha on NT. Nobody is going to discard a port that they already completed. A Merced port would take enormous resources compared to an Alpha port and many companies won't do it until Merced gains market share. It's relatively simple to port from x86 to Alpha, but it's very difficult to port from x86 to Merced, which would require a re-architect of the software for multitasking. A further problem is that for PC makers to support ALPHA, they will be funneling money to their DIRECT COMPETITOR Compaq, either through ALPHA purchases or license fees to SAMSUNG. How many PC makers want to help their main competition? You're living in the past. If you don't cannibalize your products, somebody else will. I don't consider this much of a problem for Samsung. Sun makes SPARC processors, but they still support Intel with an x86 version of Solaris. IBM competes with Microsoft on many fronts, but they also produce NT software. In general, the world has learned that every division of the company must support itself without subsidies from the rest of the company. DEC used to give their salesman a higher commission to sell Alpha to NT customers, but a couple of years ago they changed the policy and today the commission is the same regardless of whether an Intel or DEC processor is sold. There are several problems that Samsung faces with Alpha: 1) They don't have much capital. The subsidy from the U.S. government will help a lot, but it doesn't guarantee they will spend it wisely. I resent my tax dollars being used to hurt Intel and especially Micron. In addition, I resent the feds subsidizing Intel via Sematech. I appreciate Grove ending the practice, but when will I be repaid, if ever? 2) Their cost structure is high and they only know how to manufacture memory, not logic. 3) Korean foundries have a reputation for stealing the intellectual property of their customers and haven't refined the ability to develop their own IP. 4) Compaq appears to be giving Alpha only lip service, but that could change. 5) DEC has made a lot of improvements to Alpha, but Intel has improved the x86 architecture at the same rate. Alpha is stuck at 5-10% market share and isn't gaining share. 6) Alpha offers better price/performance in floating point for CAD and graphics, but Intel has a far lower price for integer performance for web and other servers. Hyundai recently alleviated their cash crunch by selling their crown logic jewel, Symbios Logic, at a fire sale price to Adaptec. I live down the street, my friends work there, and I'm thrilled to be a shareholder in their company. The U.S. government should force Samsung to sell their interest in the Intel-Samsung Texas DRAM partnership and equipment to operate it poste haste (according to rumors, negotiations were in effect for Intel to infuse Samsung with capital). Justice will be served when the inventor of the DRAM gets a second chance at the business. Times may be hard today, but fat years will return to the memory industry someday. I urge all Intel and Micron shareholders to lobby their reps to cut off the subsidy and abolish the IMF.