Monday, October 31, 2005

Michael Dell: trick or treat?

It's Halloween time again, and DELL announced that it spent 300 million dollars repair some desktop PCes. Assuming $150 per repair, that is two million PC repairs.

Considering that DELL/HELL has been always reluctant to repair PCes and tends to hide from their customers, this massive repair is mysterious.

Any way, I reiterate my assessment that DELL is the next Enron. Two bucks of assets simply can't support a stock of ..$, now it's $31. (update 11/02/05, now $29)

Saturday, October 29, 2005

INTEL and DELL have become each other's liability

AMD view DELL as a victim of INTEL's monopolistic behaviour, this is a grand strategic misjudgement and can result in a fatal strategic blunder for AMD.

DELL is co-conspirator in INTEL's illegal control of the x86 market.

Today, with INTEL being a widely acknowledged second-class CPU maker, and DELL synonymous to dirt cheap commodity IT, INTEL and DELL have become each other's liability.

DELL's INTEL darling status is hurting INTEL in at least two ways:

1) With DELL getting Most favoured prices, other x86 makers found it near impossible to profit in INTEL market space and will be more inclined to use AMD. In the past, this was not a big concern due to AMD's small capacity and limited technological advantage. Now, with AMD64's 5 year technology lead and the impending flood of FAb36 and Chartered Opterons, Athlon64s and Turion64s, companies like HP, Lenovo and Acer will use AMD even more.

2) With DELL getting deep discounts, INTEL is essentially selling CPUs at lower ASPs. Since INTEL is losing market share to AMD anyway, the only way for it to maintain its revenue and profit level is by raising prices. With DELL being an major INTEL customer and getting special prices, INTEL is losing potential revenue.

DELL's INTEL exclusive stance is hurting DELL even more:

1) DELL was expected to translate its market share in cheap and low margin products into high profit margin enterprise products. That's why DELL has a 18x price/book ratio, Wall Street is counting on the dude to sweep the whole IT market, from PCes to servers. But INTEL's chips are too slow, too hot and too dumb to have a future. DELL has fallen too far behind, compared to SUN and HP.

2) Even in consumer space, AMD is taking over the high ground. When DELL found its $299 INTEL boxes aren't generating enough money, it cut free delivery and introduced higher end XPS boxes. But since AMD has a commanding performance lead, and high end users are smart, DELL's expensive boxes are not going to sell enough units to generate profit.

3) Because of the above, DELL will perpetually be marked as a cheap IT gear maker and permanently lose its chances in the premium markets.

Therefore, DELL is locked in razor thin margin business, and DELL relies solely on INTEL kickbacks to stay in black. Once the feeding tube is disconnected, it will dehydrate, degenerate and die.

DELL parasitic existence is draining INTEL's life blood. Without DELL, there is a level of survival that INTEL can tolerate. AMD's capacity is still limited, for a period, INTEL can still dictate a monoplistic price on the portion of CPUs that AMD can't supply. By cutting the special bonuses to DELL, INTEL can hope to keep others more interested in its mobile technology, which is still having a perceived lead over AMD on battery life and wireless connectivity.

It's therefore to the advantage of AMD to keep INTEL feeding DELL as long as possible.

For AMD, DELL is like a disease and plague. If AMD touches DELL, its actions will be viewed as betrayal by SUN and HP, who were eyeing DELL's market share, and it will lose credibility in the whole enterprise market forever.

Friday, October 28, 2005

DELL's layoff is the beginning of the end

Yesterday, DELL's boss in China quit his job, today, DELL silently laid off hundreds at its homeland base at Austin. Someone has to sacrifice for the greater "good", so hundreds lost their rice bowl or bread on the table.

Folks, DELL is gonna pull off an Enron on its investors sooner than I expected-- as long as AMD refuse to throw a feeding tube to the dude -- the dude's sugar daddy is sick. At the very end of the day, it's how much assets you have matters. The crash of 80 billion market cap onto 5 billion bookvalue won't be a pretty sight.

A so called IT company without R&D is like a dude without a brain.

A dude without a brain is dead, but it does not know it's dead because it does not have a brain.

Hector, I always admire your strategic wisdom, be firm now, have no mercy, AMD will have until 2010 to rule. You can kill two birds without a stone -- just keep pumping out Opterons and Athlon64s out of FAB30, FAb36 and Chartered and flood the market with Turion64s. Then we can all celebrate.

INTEL's rushed introduction of Paxville was a foolish move

Under educated idiot got rich overnite can never be relied on providing good advice. INTEL is a technology company, INTEL is not fundamentally a manufacturing company. You need to get that positioning right. INTEL might have been forced to release 400 watt Paxville under the urging of some idiot who knew zip about CPU design. It was really a silly move, it only showed how far INTEL is really behind. Before Paxville, people say, OK, AMD uses dual core to beat up INTEL single core, that is unfair, INTEL's dual core will frogleap. But with Paxville dual core Xeon, people start saying INTEL is really dumb, FSB is really dead, and AMD is really good, HyperTransport is the future and INTEL doesn't have it.

The Paxville situation is really pathetic. INTEL announced the launch of this chip one day before AMD's blow out Q3 2005 earnings report. But as of today, it's apparent that major hardware reveiew sites (such as Anandtech and Tomshardware) can't get their hands on a couple of these chips to benchmark them. The DELL dude celebrated Paxville, in his usual AMD insulting fashion, but requires people to sign NDAs to buy one. Disgusted by DELL's behaviour, INQ, a site with 30 million page views a day, insulted back. HP is honest as usual, and says Opteron rulez INTEL. IBM, still tweaking their Hurricane chip to work with paxville and is probably busy designing bigger heatsinks and fans. Then, unsurprisingly, DELL dude found that it can't find a good enough Voltage Regulator to handle the Paxville power -- 400 watts that is.

Then INTEL came out with slew of cancellations, and people finally realized that INTEL is indeed 6 years behind -- as I pointed out all along. Experts are now saying INTEL won't be able to compete till 2009.

UBS, which dumped 20% of their INTC holdings in June, upgraded INTC from $23 to a $37 target price on Paxville news, claiming INTEL was probably leapfrogging AMD. Now they know, the frog leaps allright, but it can't catch the antelope.

Tom Yager revealed some secret: AMD is adding some core instructions to Opteron and Athlon64, while INTEL hasn't completed its copying of x86_64 yet. I proposed to AMD long ago that AMD should add instructions that are specific to AMD64 architecture and hard to implement in any efficient way on other architectures, guess AMD folks had this in mind all along.

I said before that DELL is the next Enron. Its $2 bookvalue won't be able to support the $32 stock price no matter how you look at it(It was $38 last time I said it last time). Face it, what DELL has besides being INTEL's favourite darling??? Direct sale model? Everyone is doing it now...what else? a bunch of warehouses, a pile of screw drivers and a brand...? those worth near 0. How about the big revenue? Enron had bigger revenue, but it is the value you added that counts. DELL sells millions of PCes at rock bottom prices, that push the revenue numbers up, but DELL's added value is only the labor to use screw drivers to assemble the third party OEM parts. Now INTEL is tumbling, DELL's feeding tube is in danger of being disconnected, and without a brain (DELL's R&D is so tiny compared to its market cap), it will be declared clinically dead sooner or later.

Now look at SUN, SUN has more net assets than DELL, and they have vast amount of technology and a grand vision. SUN's technology is simply too much to listed here -- what they need to figure out is how to focus and monetize the technology, and the $750 Galaxy server is a good start to make SUN's enterprise expertise available to the masses that can't afford the million dollar machines. The Solaris 10 is the only enterprise class OS and SUN is also making it available to the masses too. But now, Solaris 10 is inapproachable. I am a UNIX person, I used Solaris for years and I use Linux daily, but I am scared by Solaris 10 despite my utmost respect for it. How do I start creating containers, how do I create partitions on ZFS, how do I start sshd? It must be an all new set of command line options again, and I will have to start from zero with "man man"... Once usability is improved, Solaris 10 has the potential to unseat Linux in the data centers. My suggestion to SUN is to make Solaris 10 as easy as Windows Server 2003, with integrated GUI control panel and configure tools to perform most basic system adminitration tasks. This is actually not trivial and requires some deep level of integration. But, if SUN can spend less effort on looking class, but more on Solaris 10 Control Panel, and make every dummy capable of running Solaris 10 server, packed with exotic features such as ZFS and 8000 Containers -- now imagine tha impact of that ---on Windows Server and Linux.

AMD should never deal with DELL. AMD capacity is limited and can only supply HP and SUN. Having DELL using AMD damages the system integrity underlies the AMD brand. AMD selling to DELL would be betrayal to SUN and HP, who are looking to grab DELL's customers. Craig Barret once said if you are one generation behind you are dead. I remember these words well, and I think it should be declared as Craig's Law, no less important than Moore's law. Craig's law is universal and of course applicable to INTEL as well.

The future is indeed bright. Technology can win .

Carly Fiorina saved Hewlett-Packard

There is a huge negative sentiment against Carly Fiorina, former CEO of HP. The feeling against her is so strong that it is hard to understand. In a male dominated world of high execs, a woman running a 80 billion dollar company is probably difficult to accept by many. But, as you look at the HP today, it's Fiorina's vision that gave HP a future.

Want to see the proof?

Just go to, and look at their products besides the printers, pay attention to the enterprise products. What do you see?

Compaq! The ProLiant x86 servers, the NonStop servers, the Integrity Servers, even Tru64 Unix and VMS. They are all Compaq know-how.

Those who don't have a clue think Compaq is just a cheap PC company selling $399 celeron desktops like the DELL dudes, what they don't know is Compaq had acquired many enterprise level companies, including Tandem and DEC.

The former DEC folks are running the show all over the IT world now. Windows NT and up was designed by a DEC guy, and AMD's Opteron--world's fastest CPU--was designed by former DEC folks. Opteron looks very similar to Alpha EV7 on many aspects.

No wonder HP ProLiant servers are using Opterons heavily, and HP is keep bragging their Opteron servers' 2X performance lead over their own Xeon servers.

The HP(Compaq) ProLiant server is #1 in x86 server units and revenue. DELL's x86 server revenue is only a fraction of HP's x86 server revenue.

The world's server market is $50 billion per year, and HP rakes in almost 30% of that, in a close tie with IBM.

Folks, we are talking about very profitable enterprise equipment here, DELL dudes probably have to sell 500 PowerEdge celerons at $399 to make the same money as a single HP DL585 with 4 Opteron 880s.

HP becomes a giant in enterprise computing because of one person--Carly Fiorina.

Her decision to purchase Compaq lifted HP from a printer shop to an enterprise behemoth.

Thursday, October 27, 2005

We will see INTEL and DELL blaming each other soon

read this:

Mike: I can't find a suitable voltage regulator for Paxville...

Paul: That's not our problem, dude. Our CPU works fine, 50% faster than Xeon SC, you danced on the spec scores yourself, so did HP and IBM folks.

Mike: The thing is 400 watts, hard to for me to fit this much heat in 1U.

Paul: read the spec, Paxville needs a bigger hole to hold a bigger heatsink, stop whining and learn to use a drill.

Mike: That sucks, I have only screw drivers...

Paul: but you idiot kept asking for it, now get to work.

Monday, October 24, 2005

Why isn't DOE imposing power consumption limits on CPUs?

We are having a global energy crisis. Energy as a strategic resource is getting more precious than ever.

A week ago, Department of Energy issued an order that says appliance makers must reduce use of energy. The new DOE regulation is imposed on appliacnes such as ceilng fans.

How much power does a ceiling fan need? The page has a lot of information. At the bottom, it gave total power of a ceiling fan +a light, it's only 104 watts, much less than the power usage of a single Paxville or P4. The P4 and Xeon uses 150 watts, this is for the CPU alone. There are 50 million p4 and xeons sold in US each year. The Xeons run 24x7x365, and the P4s run 10+ hours a day.

I also found this link which listed the power and energy consumption of various appliances. It gives a 240 watt power consumption figure for computers:

If you look at the energy figure, a computer uses 10 times more energy than a 1500 watt microwave oven --as Microwaves are not running all the time. Jonathan demoed an application that computes the power needs and energy cost for rack servers during Sun's Galaxy launch, and said to release the program open source. It is a very interesting idea. The program can be extended to all sorts of equipment and make people more aware of the cost of energy.

AMD and SUN should lobby DOE or congress to impose power cap on CPU wattage or impose taxes on CPUs that uses more than 120 watts, such as the 150 watt Paxville processor and the 151 watt Pentium 4 processor. AMD and SUN should increase awareness of the heat problem of INTEL P4, Xeon, Itanium and IBM Power5 CPUs. The INTEL CPUs uses far more power than ceiling fans and DELL's 1500 watt PowerEdge 6850 servers is 2 big microwave ovens running all day long all year, such energy wasting products harm the national interest.

There are better alternatives that are more power efficient and almost 100% faster.