What do you do when your customers don’t buy your products because they offer less value than the older ones? Well, you force them to ‘upgrade’.
This is by no means a new phenomenon at Intel, they have been ‘gently persuading’ customers to do things which contravene their best interests for decades now. Unfortunately for the semiconductor company, their hands are a bit tied of late with consent decrees, fixed pricing for Tier 1 customers, and all of that.
So what do you do when your most lucrative market is full of customers balking at underwater TCO and price increases that are multiples, not small percentages, of the older, better parts? Like the olden days you play dirty but unlike the olden days you play dirty in a novel way.
The problem is that these customers are both not stupid and for the first time in a long time have not one but two alternatives. Those are AMD of course and waiting at the wings a whole host of ARM vendors from IoT to servers, there is finally real competition. Intel has a very short window in which to capitalize on these tricks before the alternatives lead to a mass exodus of customers. The real question is why is Intel playing the short game so hard now, they have to understand the consequences.
Note: The following is analysis for professional level subscribers only.
Disclosures: Charlie Demerjian and Stone Arch Networking Services, Inc. have no consulting relationships, investment relationships, or hold any investment positions with any of the companies mentioned in this report.
Charlie Demerjian
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