INTEL’s Profit Drops, but are we Really Surprised?
It seems like every other day, there is another story surfacing on websites like Forex Academy that’s letting us know PC sales are slipping and the latest iteration of this is that INTEL’s profits are down. I can’t say that any of us would be surprised about this, but the fun part is trying to place our finger on exactly what’s going on. The most obvious reason is that no matter how anybody wants to slice it, the world economies have been doing terribly in the recent months. Economy will certainly hurt the ability of a company to grow, but at the same time, said companies can’t just sit there and point the proverbial finger at government regulations without noticing the three pointing back at them. I’m not going to analyze every fiscal decision INTEL has made, but I do believe that their design process on their architecture is not helping with their current woes.
Many of us know about the Tick, Tock cycle that INTEL uses. One cycle brings out a new manufacturing process, then the next improves on that process via architecture. This concept in and of itself is a bit lame for consumers. It essentially guarantees that you’re out of date with in a year of purchasing a new product. Now most of us know that performance will hold up for a quite a bit longer, but it always leaves consumers feeling slightly afraid of pulling the trigger on a new product because something better could be just around the corner. This leaves us with the feeling that INTEL is trying to squeeze every penny out of us rather than having enough integrity to simply release a well thought out, finished product. It’s important to realize that this is very likely far from the truth of what’s actually going on, but it’s still incredibly hard to shake that feeling.
However, the cycle isn’t the biggest issue right now. The real issue this year is the fact that INTEL screwed up their own Tick, Tock cycle with the release of Broadwell and Skylake. Broadwell was sort of a Tick and a Tock. It shrunk the die to the 14 nm manufacturing process, and it added eDram to the architecture. What ended up happening is, as always, the die shrink helped with power efficiency, but the interesting thing about the eDram was the level of gaming performance it brought. This was intriguing to reviewers, but rather than create a whole line-up of Broadwell CPUs, they only threw out a couple of desktop variants since community backlash was pretty high after finding out Broadwell was meant to be a laptop piece. The desktop chip was not much better in overall performance from Haswell, and Skylake was on the horizon.
Skylake was supposed to be the One. It was the chip that was brining INTEL back to the enthusiasts club (not that it really ever left) and had a new architecture design to give performance boosts. I was actually pretty excited about Skylake myself, especially from the new chipset angle of everything. After the release, overclocking seemed to be working very well for Skylake as well. All was great, but then it wasn’t that great. The first problem was that INTEL only released a limited supply of Skylake CPUs. They were almost instantly out of stock as soon as they released which lead to weeks of waiting for the chips to come into stock. The other problem is that, in spite of Broadwell showing some huge promise with the eDram cache, INTEL decided not to use that in Skylake. I’m still scratching my head at that decision, and it was ultimately the reason why I shied away from upgrading my system and deciding to hold out a bit longer (I have an FX-8350!). The end result is we have two CPUs on the market that find a way to skimp on a small area of performance, and that’s not what encourages a consumer to fork over the cash.
Ultimately, these practices don’t feel like they should be coming from a technological leader in the industry. They feel like cheap used car salesman tricks. Rather than take the extra time to really bring a solid 20-30% increase in performance from a previous generation, INTEL keeps trying to slam minor 5-10% increases down our throats all while retaining some pretty hefty price premiums for each release. It’s any wonder consumers aren’t buying what INTEL is selling anymore. The performance gains are too minor, the price premiums are too hefty, and the overall feel of the process leaves a lot to be desired in the integrity department. When INTEL gets serious about trying to release cutting edge technology to the market AND it doesn’t feel like they’re trying to hold out some of there innovations for the “cycle”, I wouldn’t be surprised if the profits started making their way up again.