PC channel enters a critical period of change

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David slays Goliath - Gustave Doré (1832-1883)
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X86 times they are a changing

Digital technology is now so ubiquitous – largely thanks to smartphones and to a lesser extent to Apple tablets – that it is beginning to threaten the very foundation of what AMD’s ex-CEO Jerry Sanders once described as the unholy trinity: Microsoft, Intel and AMD itself.

Intel and The Atom
When the chip giant introduced the Atom microprocessor many analysts said it would cannibalise Intel’s far more profitable range of chips intended for notebooks. It found its niche in netbooks – they’ve had their day now, of course. The underpowered Atom struggles like a puffer train going up a hill.

Of course, Intel’s aim with the Atom was egregious. It was, perhaps you could say still is, greedy to snaffle up the mobile phone market but has struggled to produce meaningful wins in the face of a reluctance by handset makers to fall into Intel’s paws. More significantly, British firm ARM dominates the smartphone market, and for very good reasons, both commercial and technical.

ARM has recently been nibbling at Intel’s lucrative server business too – but they are just nibbles, not bites.

As we reported earlier this month on ChannelBiz UK, resellers are hardly over the moon about Intel’s Ultrabook thrust – the chip giant has had bad press from he original design manufacturers (ODMs), who are forced to attempt to obey reference platform guidelines which don’t end up making them feel happy at all. Anecdotally, sales of Ultrabooks haven’t been fantastic – they can’t compete on style or design with Apple iPads.

While no-one should ever underestimate Intel, it needs to recognise that it has reached a tipping point. From the outside, looking inside, I see no signs that it has quite got its head around the industry and channel changes.

Microsoft
It could be argued that Microsoft is in a far worse situation than Intel. Its strategy appears to be in tatters while its tactics are all over the place too. It faces strong criticism from the ODMs over its decision to introduce its own chunk of hardware, dubbed Surface; it faces harsh criticism from its channel for its decision to introduce Windows 8 in the form it has; it faces dark hard stares from its corporate customers, many of which have not yet switched to Windows 7, never mind Windows 8; and its phone tactics a la Nokia have backfired.

Like Intel, Microsoft is greedy to win smartphone business but it has been conspicuous by its lack of success over the years, despite ploughing unknown millions of dollars into an attempt to win over the hearts, minds and wallets of people.

It has been forced to react to Google incursions into its Office space by introducing cut down – that is to say cheaper – versions of its software suitable for the web. It has been forced to react to Apple success by introducing a Metro interface which is being largely met with indifference from industry and end users alike. Its attempt to match the Google search engine by introducing Bing has been not far short of disastrous.

Like Intel, Microsoft needs a refresh too. There are whispers, becoming increasingly louder, that it is high time new blood be brought in and current CEO Steve Ballmer put out to pasture.

The truth is, Microsoft has never been much good at introducing new products – it has always been good at marketing and locking people into its legacy operating systems and making sure its corporate customers be tied into its Office suite. For it to attempt to emulate Apple’s success with the iPad and the iPhone is feeble.

AMD
Very much on the back burner these days, AMD has suffered more than its former partners from the changes in the industry.

Product delays, job cuts, management changes and not exactly shining financial results have meant that this former doyen of the channel has such a low profile in the market today that it is almost invisible.

Its graphics board products are still performing pretty well but under the new management it seems that it doesn’t even want to be seen to be competing with Intel. Just a few years ago, its server chips gave Intel a run for its money but it has very little in the bag to give it the high profile an underdog necessarily needs.

More than any of the other two I have profiled here, AMD appears to have been left out in the cold and it’s difficult to even speculate on what its roadmap for the future is, or even what its future will be.

Conclusion
All three companies we’ve profiled here have been talking for years and years about convergence but none of them seems to have anticipated that at last that has now happened and their entire universes, all formerly linked to the X86 platform, have all changed.

Bold initiatives by Intel and its R&D team now appear to occur rarely when once it was at the forefront of technological initiatives. It doesn’t seem to want to be seen as a leader any more as far as technology goes. Microsoft has, perfectly honestly, never really been a leader but had enormous influence on the entire X86 family. And AMD, once able to challenge Intel and sometimes come up with rather stunning tech, no longer seems willing to take that role.

The goliaths have been slain by some unexpected Davids.

All have been affected by the rise and rise of Google, ARM and other contenders. This time of year was once the busiest for the channel in the run up to the “back to school” Q3 – beneficial in terms of sales and profitability. But it looks as though the seasonality model has also disappeared and we’re entering an era of digital sadness, not digital gladness.


Author: Mike Magee
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