Re: Portents of Itanium death

From: Tsk, Tsk (tsktsk_at_shameon.you)
Date: 06/09/03 

Date: Mon, 09 Jun 2003 15:24:37 -0400

Fred Kleinsorge wrote:
> Come on. The "analysts" here in c.o.v. seldom disclose their names, or what
> their financial interest is in spreading FUD.

I would say that the majority of the pundits here have real names. Those
without fake names are in the minority. And if J Q public makes a statement
here, it isn't under the name of a large Wall Street Brokerage firm, and there
is usually a disclaimer that he doesn't speak for his employer.

But when an "analyst" speaks on behalf of his wall street employer, it is
quite different in terms of what one *should* expect. But trust in those
"analysts from wall street" is very very low because of conflicts of interests.

> We know your POV, so ofcourse you would make this type of statement - but
> let stand all the Opteron "hype".

In all frankness, I don't see "opteron hype". I see warnings that Opteron
*might* take off and I do personally feel that the 64 bit 8086 has a far
greater chance of becoming commodity than IA64 which has lost its chance.

> Analysts don't care how much money was spent in the past. They care about
> the bottom line ROI of the company via stock price increase, or dividends.

Short term stuff, yes, that si what you expect from a wall street analysts.
Will the company meet its revenue goals this quarter. Often not even asking
"will the company meet its dividend goal (which si what should really matter
to an investor).

> What they see is Intels revenues, their profits, and their predictions
> against financial performance - not R&D costs in past years that was long
> ago written off on their taxes.

But a good analyst would have to comment on a corporation's continued sinking
of money into unprofitable products because that reflects on a bad management
philosophy. Lets take an example at Digital. ALL-In-1 was very profitable, and
had evolved with the times. Yet, Palmer chose to abandon it in favour of a
competitor's product which yielded little to no profits to Digital. Was this a
wise management decision from shareholder's perspective ? Yet, Analysts
applauded Digital's move to abandon profitable products in favour of
Microsoft's unprofitable products.

Could it be because analysts had a stake in Microsoft and it was to their
advantage to see MSFT's stock price rise ?

If a shareholder had invested in Digital, would they be happy to see Digital
management essentially taking Digital's profits and handing them to Microsoft
instead of handing them to Digital shareholders ?

> Itanium will *not* be measured by them by
> how much was invested in it, but by it's current and potential contribution
> to revenue and profits.

But analysts *should* question a company who continues to sink money into
unprofitable products because that reduces profitability.

What this means is that Intel is far more profitable than alaysts are seing,
but Intel squanders a good deal of profits on projects such as IA64. It is
good to spend on R&D. And if the R&D yields something interesting, you can
then commercialise it.

The problem with IA64 is that Intel commercialised it before it had developped
it (selling the skin before you kill the bear). And The commitment has costed
Intel a lot of money that should have otherwise gone to shareholders.

> benchmarks. It has several major system makers lined up to sell systems
> based on the chip - from Dell, to HP, to IBM.

Except for HP, all other vendors have token "yeah, we'll sell IA64 systems if
a customer really asks" type of commitments. They are not betting their whole
business on IA64.

> It has OS support or
> committed plans for Windows, Linux, various UNIXes, NSK, and yes - VMS.

Alpha had the same. Yet, someone was able to break those "committed plans" one
day by concucting whatever reason they wanted.

Lets face it. The minute Intel launches a 64 bit 8086, you'll find all those
other vendors quietly widthdrawing from IA64 and focusing on their core
"wintel" products. HP will be the lone vendor stuck to IA64.

> is making current investments to get software libraries and applications
> available on the Itanium systems.

The minute Intel agreed that its IA64 woudln't become commodity on desktops,
it sealed the fate of IA64. It is not an interesting platform to adopt, unless
you are big enough that Intel gives you lots of goodies if you help it out of
its IA64 quagmire.

> There is almost NO risk of the "64 bit desktop" taking off in any near term
> future. Opteron isn't a risk there.

You underestimate the power or marketing. My 11 year old newphew now wants a
wintel for his birthday with all the bells and whistles to play his fancy
games. And if he learns that there is one PC with 64 bit chip that is bigger
and better than a 32 bit chip, he will "demand" to have that PC. (even if it
won't bring him much initially).

But for the comsumer market, it will remain a race for MHz (or I should now
say GHz) because that is how consumers compare machines. So the big question
is whether AMD can producd its chips with impressive MHz ratings.

> What does this matter? Intel is making an investment in the future.

But if it is the wrong investment for Intel to make, do you think it is wise
to continue to sink money into it ?

> You are supposing such a thing happened, and I have no knowledge of it. Nor
> do I know of any report of it, or internal rumor of it.

It seemed very clear to me on June 25 2001 that Intel would help fund the port
of VMS to IA64. However, the details of the agreement (how much money etc etc)
were never made public. However, every indications from the wording of the
announcement swas that Intel was sending money to Compaq in excahnge for
Compaq killing Alpha and donating its employees/compilers to Intel.

Relevant Pages

  • Re: Time to revive Emerald?
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  • Re: Portents of Itanium death
    ... > greater chance of becoming commodity than IA64 which has lost its chance. ... > of money into unprofitable products because that reflects on a bad ... > competitor's product which yielded little to no profits to Digital. ... > but Intel squanders a good deal of profits on projects such as IA64. ...
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