Once again I am forced to write another negative article about Intel. I certainly don't want to, but the articles can't help but reflect what is going on right now. After reading an article from Tom's Hardware, my suspicions are starting to be confirmed that Intel management is not at its best right now.

Thomas Pabst, the author of Toms Hardware , a very successful computer products review site just wrote another negative article about Intel. The article is titled "Intel's Pricing not Justified" He writes that Intel is charging roughly triple the price for their 1000MHz processor as to a comparable AMD processor. The processors have nearly equal performance yet Intel feels that it can get away with charging three times as much. Tom states that CPU's are not status symbols like cars and most intelligent people won't be willing to purchase at such high prices.

As most of you know, the computing industry is driven by speed and price. Many people are willing to pay for the fastest speed available whether you are talking about CPU speed, video card speed, or whatever. Most others are willing to pay a balance between speed and value so that they get the best performance for their money.

When a company such as Intel is no longer the speed leader, nor the value leader, people will not tolerate significantly higher prices for Intel products. People are not stupid and will not tolerate these high prices.

Also, the computer industry right now is not what it was a few months back when CPU's and computer components were short in supply. Demand has decreased now for computers are parts are widely available. So, if someone needs to purchase a computer now, they are no longer faced with the choice of choosing between AMD or Intel due to shortages. This should further push consumers to make the best decision.

When pricing mistakes such as what is happening now, gross errors such as putting unstable products on the market, supporting RAM that nobody wants and watching Intel's sales slow, one cannot help but look at the management of the company.

Craig Barrett is the current CEO of the company. He is the one responsible for the mistakes that are occurring now. Intel was started by three guys; Gordon Moore, Andy Grove, and Craig Barrett. All of them have had roles as CEO. Moore was one of the first, Grove was second, and now Barrett is third. Grove's performance was remarkably good. He made the decision to get Intel out of the memory market and focus on the CPU instead. He lead the company in a leadership position during most of his tenure. Grove and Moore were considered to be very different personalities and Craig Barrett was considered to be the middle personality or the balance of the two.

Grove coined the phrase "only the paranoid survive" in his book "Only the paranoid survive." His thinking is that you should fear your competitors and the potential threats your company may have. Well, this seems to be quite on the contrary from what Mr. Barrett has been displaying. After Intels stock shot down nearly 20% over about a week, reporters interviewed him about his company. He claimed that it was an over-correction and that the market was overcorrecting. When asked about what the company was focusing on he spent nearly 90% of the time mentioning networking products and non- CPU products. He claimed that the processor is still their core business, but spent nearly all of his time talking about other products. When asked if Intel would continue to support Rambus RAM, he stated that it would and as long as it was economically worthwhile.

Barrett seems to be very much contrary to "only the paranoid survive." We can see this with Intel's pricing, forcing Rambus down our throats, and many other things. Mr. Barrett doesn't seem worried at all by the competition. Unfortunately, having a big ego or acting like a big dog isn't doing to help beat any competitors.

As many of have seen with Intel in the past, it has done best when focusing on its strengths- the processor. It has done worst when it was in the memory business and was competing with many other companies. Another example is Coca-Cola; when Robert Guizetta took over he sold off all of the non-beverage related businesses and focused the company on its strength- beverages. The company did very well during this period.

To add to this, I watch an Intel analyst meeting and the annual meeting over live webcast. If you watched this, you would have seen person after person walk out demonstrating non-CPU products that Intel is working on.

Sure, Intel is a big company and has plenty of money to diversify, but they seem to be focusing on their weaknesses in markets that they don't dominate such as networking and are seeing their main strength (CPU) starting to become a weakness.

And, as mentioned, they have been making mistakes in their core market. The company is supporting Rambus which is a very expensive RAM that doesn't deliver good performance/money. New RAM DDR is already on the market which will nearly match or beat Rambus memory in performance for the money when support becomes available.

Mr. Barrett mentioned that it will continue to use it as long as it is economically worthwhile. I think what we are seeing is Reagan economics or the idea that supply creates demand. The result of this policy of spending in order to get the country to grow put the country deep in debt. This idea that Rambus is going to create huge demand among consumers doesn't sit well with most people. The idea of forcing a product down consumers throat and arrogantly thinking they will buy it won't work

As a result of this, I have added AMD to my holdings and will continue to sell Intel. At the next shareholders meeting, I urge all of you to vote for someone more suitable than Craig Barrett. As shareholders, we should not continue to watch the the companies brand be destroyed. It takes years and years to build a brand and only a short time to ruin it.

---

Average user rating