In 4Q05, Intel had a revenue of $10.2 billion
. Intel released Conroe in 2Q06, and in 4Q06, its revenue is expected to be about $9.4 billion. Considering the world's CPU market has grown 10%, that's almost a 20% year/year drop. Still, I won't be surprised if Intel misses the mark by half a billion.
As I predicted, Conroe is the last straw that pushed DELL to AMD. With Conroe, Intel frags itself by 75%--overnite, 75% of Intel CPUs are sold at junk yard prices. George Ou used to tout a $125 Pentium D 805 as a SUV, recently, they were being sold at $88 and that was with a motherboard with Intel video
The entire Intel strategy is governed by an uninhibited "I HATE AMD" mentality
. I pointed out that such hatred has its roots in NAZI exclusivitism
. Hector Ruiz has taken Intel to the court, and Intel got a lot to hide
. Now that Intel can no longer coerce others not to AMD, it keeps cuttting itself in a vain effort to halt the rising power. But, the major batlle has alway been fought and AMD came out as the victor. The industry has set AMD64, HyperTransport and Torrenza as standards. Intel is expected to follow AMD's leadership this year. The question is whether Intel will continue to be around to follow AMD into the next year.
I have predicted Intel's BK time to be 2Q08, many don't believe me, some say it's crazy. But, folks, most of predictions came true and let's wait and see.
The situation for AMD now is that it sells every chip it can make. Since the world's PC market is nearly fixed in size[fn1]. With a declining ASP, Intel's BK time is merely a function of AMD's capacity ramp.
1) Almost all big OEMs are on board with AMD, no artificial restriction for AMD to gain market share.
2) AMD64 has become the standard.
3) 75% of Intel's CPU production is old junk. Almost 100% of Intel's IGPs are unsuitable for Vista premium.
4) The existence of Core 2 Duo further confirms that 75% of Intel's production is junk. Despite Intel's Core 2 Duo ramp in 2007, 75% of Intel will continue to be junk because of AMD's K8L ramp.
5) Given a choice, no one wants junk. Now people have a choice because of 1)
6) 75% of Intel is 60% of world demand (Intel has 77% of the market).
7) AMD's capacity is less than 60% of world demand but is quickly ramping to 55% by 4Q07.
8) Intel has about $4 billion net cash.
9) Once Intel's market share drops to 50%, it will BK in 2 quarters, due to losses in both CPU and chipset/IGP business.
10) Therefore, Intel will BK by 2Q08.
Intelers won't be able to argue on the merits. I predict them to counter the analysis above with "I hate AMD" talk just like what Patty did.
Footnote 1: Note that falling CPU prices will not boost PC sales by much. You have to remember a PC needs CPU+MB+RAM+HD+CASE. Even if CPUs are free, a PC would still cost about $300, more than a Nintendo Wii -- beyond the reach of 90% of the 3rd world.