To be frank, I think that's a great thing. I don't want companies to stay giant in perpetuity, I think it's great that they are essentially "recycled" when new, better companies come along and eat their lunch.
If anything I think it's quite bad that over the past 25ish years that a lot of big companies have really learned the lessons of "disruption" and have responded by just buying up the smaller but up-and-coming competition before they can overtake (looking at you Adobe and Figma).
It's bad for a company to go bad.
It's bad for a company to lock out competition.
Hard disagree, so I wonder what your basis for this bullet is.
Agree on the other two though.
1. Tautological: from company's perspective, it's bad for the company (itself) to go bad.
2. More broadly, it's reasonably self-evident that it's bad for employees, and bad for shareholders of a company, for that company to go bad
3. Where we can have discussions, and probably for a long and fun if not necessarily fruitful time, is whether it's "good" or "bad" from market's, or consumer's perspective for companies to go bad. I personally think not.
I think we'll likely mostly agree that it's good for market to filter out and punish bad companies or companies that go bad, once they go bad, for whatever reason; but that doesn't necessarily imply or follow that's it's good for companies to go bad.
In other words, what's your perspective/bias - why would it be GOOD for a company to go bad? Why would it not be absolutely fantastically wonderful if all companies perpetually stayed good and we lived in utopia of rainbows and unicorns? :>
(all this without defining what "company going bad" means, left as an exercise for the student :)
Generally where my head was at. The other two points were better scoped. I personally think it's good that companies go bad, as it moves control over productive assets from one group to another. This is good for society for a variety of reasons, not the least of which is enabling new ideas to be tried. Can a long lived company try new ideas? sure, but the degree to which they avoid risks (if they live a long time they necessarily avoid undo risk) puts on upper bound on how ambitious they are with new things.
Sometimes on net things are good because of other effects like "ah, promising new competitor gets a chance to shine!" but if you could have _both_, you absolutely _would_. A company going bad is a _cost paid_ for new blood, not an _added benefit_.
It's not good that you have 100 fewer hours when you spend 100 hours creating something awesome. It's bad that you have 100 fewer hours. If you could create the same awesome thing and still have those 100 hours to do something else, that'd be fantastic.
All other things being equal, I would far rather Intel be awesome than not. If it turns out the world is such that all other things can't be equal, it might be worth having Intel not be awesome in favor of other benefits, but I'm never going to be _happy_ about Intel not being awesome.
When they can't it's good companies come and go, or Kodak would still be blocking digital cameras (https://www.reuters.com/article/us-kodak-bankruptcy-idUSTRE8...) but the price we pay is things like wasted effort on re-implementing everything that didn't need to change at the new place, good people can't always move to it as you mention, etc.
Different countries at different times adopt different positions on the scale between inefficient (?) state-linked monopolies with jobs for life and letting the market do its thing. I'm not sure what factor means that sometimes we end up with Samsung and other times British Leyland.
That itself is an example of capitalism as the least worst option... similarly how much effort goes into trading currencies or commodities or whatever just so people get a fair price and aren't screwed over by whoever is the only person selling at the moment they need something. But we're self-interested, biased, and this is the workaround (or the system that emerges from our nature - self-interest is turned into the energy behind it all and "greed is good").
Except that semiconductors are a national security issue at the moment.
Plus, dictatorships arent against the US per se, they re against the US convincing the populace they too could act like americans, and are extremely dependent on that Schrodinger state where you re both the factory for the US and a public political opponent. Symbiotic parasite pretending to be the host's alternative.
Plus the US might change heads at the top, but it s hardly a safe ally to have. Ukraine nearly went to complete disaster thanks to Trump and having morons elected there is a security risk for many too...
Maybe too big is a national security issue, too.
Too big to fail is a real problem for any part of our economy.
Perhaps, or perhaps we're dealing with monopolization.
Perhaps this is too much of a radical idea, but if a company is so critically important that it can't be allowed to falter without government support, then it should be nationalized.
At the very least the government support should be made explicit, and large, critically important companies should be forced to pay much higher insurance, i.e. the equivalent of what banks need to pay for FDIC insurance. Sick of the whole "privatize the profits and socialize the losses" mindset.
Don't you have on the order of tens of thousands of dollars invested in Intel through retirement savings, though? When S&P 500 companies fail, your retirement savings become worthless. (Apple is really the one you want to watch out for, though!)
If a major player is massively overvalued, though, then index funds, too, will feel some pain as the exuberance in a major player dissipates.
I hold some INTC directly after having been extremely impressed with the company's dedication to rigorous process in engineering interviews in the mid-2010s. I'm sad to see such a great company go through hard times.
I don't love this; the total stock market is a lot of tech companies, and I already have plenty of exposure to tech by working in the field. It's a good heuristic for most people, though. (And no, I don't do anything about this underlying fear of tech sector exposure. I just buy the Target Date 20XX funds like everyone else.)
My only point is that the grandparent comment generally expects companies to die when they get into the S&P 500. If that's true, we're all screwed. If one S&P 500 is just stealing business from some other S&P 500 company, though, it's probably a net gain. But if it's some privately owned startup, then it's not as concrete a win, and let's be honest, startups are driving a lot of the innovation in tech.
If I had a time machine, I would definitely use it to time the market!
My savings account is not what I'm talking about. Inflation or not, it is still a number I can describe as "positive".
I'm referring to bonds that retirement and wealth management add to funds use to supposedly counter volatility. These are investments that at best will only pay single digits. They have suffered the worst year since 1931 or something. And we're just getting going. The frustrating part is as I said, the underlying bonds themselves still pay that 4% or so which would be much better than the funds are achieving. But for some reason they have to sell the bonds at a loss.
fund managers don't have "personal" or "corporate" assets that are anywhere near the scale of the (retirement) funds they manage; being held responsible for mismanagement would not lead to a source of capital to replace that which had been lost through mismanagement.
All investment has risk.
It seems the person upthread owns a target date fund and this means they probably are diversified. Their post doesn't make a lick of sense.
"When S&P 500 companies fail, your retirement savings become worthless. (Apple is really the one you want to watch out for, though!)"
Why is my fund in Intel but not in Apple? The whole point of choosing the index is so that you are diversified. You would only lose if Intel lost out to a foreign company, otherwise the demise of Intel is made palatable by the rise of Apple and AMD.
Companies come and go from it all the time:
https://www.inc.com/ilan-mochari/innosight-sp-500-new-compan...
"Unless you bought inte directly, the rewighting should handle it. Unless it fails quickly and spectacularly"
I would find little comfort in the fact that if Intel goes down 85% -slowly but somewhat spectacularly- from its current level it will eventually be excluded from the index.
The fact that I had to google for the details of its fall gives me comfort that when intels time comes it won’t cause harm on its slow exit.
An investor would need to front many billions of dollars for an uncertain payoff over a decade or two, and Intel could at any moment become competent again. And if no investor is willing to take that risk, there would be no new competitor.
Adobe and Figma are software companies, so don't require capital investment. So if one shuts down, it's relatively easy to make a new UI modeling tool(or for an existing one to take over their customers).
It's a disastrous process, I passionately hate it
No. Managing innovation at the scale of Intel is a challenge. And their customer base (PCs and servers) is shrinking. Also, this is only like 15% of the workforce. Which is only 5% more than a typical culling.
I think their main error was short-termism. They were addicted to high margin (workstation/server) devices. They had no interest in the low margins of mobile devices. They could not imagine how low-power devices would take over the world.
Only a few companies can buck the Innovator's Dilemma, usually only founder led enterprises with significant control.
The Innovator's Dilemma isn't about missing quarterly guidance. The dilemma is that it's perfectly rational and profit maximizing to continue focusing on your cash cow even when obsolescence is a foregone conclusion. It wouldn't be a true dilemma, otherwise.
The incumbent is the only player that can maximally squeeze the very considerable remaining profits from old technology, and they should do so with gusto. Moreover, switching to new technologies comes with more risk, even when it seems obvious what the new market will look like because the old market has almost zero risk--it's completely proven.
All the "solutions" to avoid the dilemma, like selling the old technology to take future profits and then pivoting to the new market, are just corporate branding shell games. They might even be in fact sub-optimal, but in any event the fundamental dynamics remain the same.
There are transaction costs to creating and building a corporation, but do those offset the clear costs of leaving money on the table, especially in the modern world of highly liquid capital, and particularly in markets with clear technological breaks. The lesson of the Innovator's Dilemma is that very often the perfectly, unqualifiedly rational decision is to press your advantage to the very end. And importantly it not only maximizes short-term profits, but implicitly it maximizes long-term profits globally by most efficiently allocating resources. Why waste energy swimming upstream when there are endless fish spawning and starting their journey upstream already along with ample resources of their own.
So a deal based on any price wasn't a realistic avenue for iPhone. The fact that Intel was actually considered was itself a radical move on behalf of Steve (absent the technical obstacles that emerged later).
This is reported in a profile of Otellini:
> "We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it," Otellini told me in a two-hour conversation during his last month at Intel. "The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do... At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it. It wasn't one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought."
https://www.theatlantic.com/technology/archive/2013/05/paul-...
Is there any evidence that mobile chip makers who do not also create/own the device and are in a race to the bottom on price actually get decent returns?
He and his whole team were furious.
IBM crippled the AS/400 when it looked like it could eat into their mainframe business, for example.
It's the innovator's dilemma.
I think of it as a peer to the 2005 proposition that electric cars didn't need to be golf carts and the technology was coming into place to make high performance, real cars that were purely electric. Could have been true. As they say "very dangerous, you go first." That one paid off.
I wonder if there is a list of large dollar, novel, engineering expeditions and how they turned out.
␄
¹ Where "miracle" means some really smart people worked really hard at it for a long time.
Rather Intel wanted to leave the baggage of x86 behind, segment the market for higher profits and hoped to get better performance than superscalar x86. But they never achieved the latter and most people just wanted 64 bit and software compatibility.
The first superscalar x86 processor was the Pentium, which came out in checks notes 1993 (Wikipedia claims design work started in 1989, hit working simulation in 1990 and taped out in 1992). Intel didn't start work on Itanium until 1994, after Pentiums were already shipping to customers, and Itanium itself wouldn't ship until 2001.
And, it may be paying off after all. Graphics cards are effectively giant VLIW machines. And while Intel's news cards get slaughtered on DirectX 11 or older games, they are quite competitive when used on the DirectX 12+ stuff which basically wants a giant multi-core parallel processor.
I'm gonna add the caveat that the failure didn't happen out of the gate. Xscale was leagues ahead of anything else two decades ago. Atom stumbled at the start but Cherry Trail had a better price to performance ratio than anything that followed it. Intel's failure was nothing but pure avarice.
My impression is Intel hit the price for embedded just fine, but at higher watts, and thus they can't compete.
That was also excellent for Cherry Trail, with an SDP of 2 watts. When you have some time sit down and compare the benchmarks from a Cherry Trail tablet like the Surface 3 and its successor chips like the 4415Y. The 4415Y like the one in the Surface Go is three years newer, has a 60% higher TDP, a Recommended Customer Price over four times higher, and while its 3D chops are better it actually benchmarks lower than the Cherry Trail chip in PCMark.
As someone who worked related to those projects (PowerVR, which supplied graphics IP for some of those devices, on Android so other OSs may have a different view), I am completely not surprised they didn't go anywhere.
This was a good few years ago - I no longer work for PowerVR, and Intel seem to have completely given up on the market for some time. My memory isn't likely prefect, but I can give broad strokes.
It always felt like "Having" to go to PowerVR was an embarrassment for the teams, they kept trying to replace us with their internal GPU architecture, presumably completely fail to hit any power/performance targets, then last second call us again and try to rush everything through. Then, it feels like most of the time they drop the entire project before it made release anyway.
The teams that we worked with never felt high status - all the engineers we spoke to were either on that team because they couldn't move internally to something more prestigious due to some internal politics, or were actively in the process of changing teams. There were times where our internal engineering contacts changed monthly, if we had any engineering-level communication at all.
There's also some weird public claims about things around this - like PowerVR not providing driver source or similar, but that's simply not true. As the person packaging up the releases, they were only source releases, no obfuscation, with full documentation and build instructions.
The PowerVR driver model generally meant releasing a "reference" driver as source, with hooks for customers to hook up to their specific SoC implementation (think stuff like setting clocks, power management, bus endpoints etc.). The supplied package only had a couple of example backends. While one of those may have been an Intel chip, it was only minimally setup in order to make the graphics work for PowerVR testing. It was simply not possible to release a binary-only driver. But I've seen this claimed on a number of tech forums - often from people claiming to have knowledge from the Intel side, and if that's true and not exaggeration, I can only assume it's due to lack of communication between teams internal to Intel. I can assure you, someone in Intel had the full driver source.
Though WRT the internal communications, I sometimes saw this from the other side - we dealt with 2 Intel teams with different SoCs they intended to build, and it felt like 2 different companies. They never shared anything between them, almost as if they never spoke at all, and seemed resistant to changing that. I have no idea why, I guess it's just how their management structure is setup?
If you go through all that and end up with an actually good product, I feel it'll be almost luck rather than anything else.
I applied to Intel's architecture group in 2015, and when I asked one interviewer "does Intel have a strategy if TSMC catches up on process tech?" I was left with a blank stare, as though nobody in the group had contemplated the possibility. I didn't end up working there...
That said, Intel got exceptionally unlucky on which technologies they pursued and which they didn't, so I hope they can turn things around. They missed on through-silicon vias and chiplets, EUV, Cobalt wires, and several low-power transistor technologies.
Do you have a source for this? The only one I found says Intel is 2x TSMC:
https://www.statista.com/statistics/883715/microprocessor-ma...
By wafers produced (including memory), TSMC is 2nd and Intel is 6th. TSMC is 2x the 5th placed company on the table, so Intel is even smaller than that. https://www.eetimes.com/chipmakers-increase-share-of-global-...
Wafers at 14nm or better would probably be a good metric for who has the volume behind top nodes to then be able to stay in front. If that's TSMC by a large margin losing the mobile and GPU markets has really done a bigger number on Intel than I had assumed before.
1) Completely missed the boat on mobile. Their ARM-competitive chips (Atom, etc.)... weren't. Missed on every measure from power to performance. Let Qualcomm and Samsung eat their lunch.
2) Missed too many ticks and replaced them with tocks. Fell far behind because of ridiculous tilt-at-windmill folly around Itanium and other architectural decisions that absolutely didn't pay off. Ended up taking way too long to get further down on process size.
3) Lost their competitive edge so much that Apple finally realized they can do it better and suffer the transitional costs of building a middleware layer to translate off of x86. Apple's fully committed to that, so Intel doesn't just lose the "no one is using a PC anymore" market, they're also losing the "those people who DO use home computers which happen to be Apples" market.
It's absolutely incredible to watch these formerly phenomenally innovative companies falter at that very core competency of staying cutting edge but we see it happen over and over again.