
Andy Grove and the iPhone SE - ghosh
https://stratechery.com/2016/andy-grove-and-the-iphone-se/
======
pslam
> “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.”

This was an interesting time for embedded microprocessors. I was a big fan of
DEC/Intel StrongARM and XScale, and the team I worked with preferred using
them in designs.

I disagree that it was simply an economic choice, and I think anyone who
worked in the ARM embedded industry around that time would also disagree. The
move to sell off XScale was after years of neglect. The most obvious defects
were the PXA250, which could only cache write-thru due to a bug (Wikipedia
does not mention this), and the lack of USB2.0 high speed, despite it being a
key feature of every competing SoC.

It was obvious to everyone in my industry that ARM was going to take off in a
big way, and exponentially -- "microcontrollers" had grown up, and reasonable
compute power could be put everywhere at home, and even carried around with
you.

Intel, on the other hand, was seen by everyone I knew, to be more concerned
with cannibalization of its low-end x86 market. Stealey and Atom were coming
down the pipeline (Silicon Valley secrecy wasn't what it is today), and Intel
was looking to make a play in the market. Except, Intel's designs were off the
mark by orders of magnitude in power consumption, and could never fill that
niche. Still, the word in the street was Intel had bad internal politics at
play, and its ARM offerings had to go.

So yes, it's a great shame Intel missed that incredible opportunity at a
pivotal moment. But no, it was not an economic decision.

~~~
rb808
I can remember how RISC chips were going to take over the world, Linux/RISC
was going to be the greatest threat to Intel. 10/20 years later x86 is
everywhere from the Macs to high end servers to lowliest tablets. The latest
Atoms are actually very good.

ARM meanwhile dominates the lowest end, but no one really makes money out of
it. I think Intel was wise to avoid.

~~~
pslam
> 10/20 years later x86 is everywhere from the Macs to high end servers to
> lowliest tablets. The latest Atoms are actually very good.

10/20 years later, ARM represents the vast majority of both volume and profit
in home personal computing. x86 is only "winning" if you define a very small
category to compare against ARM.

> ARM meanwhile dominates the lowest end, but no one really makes money out of
> it. I think Intel was wise to avoid.

Edit: Meanwhile the "PC" category became largely irrelevant. That's what Intel
missed.

~~~
scholia
_> Edit: Meanwhile the "PC" category became largely irrelevant. That's what
Intel missed_

That's a ridiculous claim. 2015 shipments of 288.7 million units (Gartner) may
be down but they're still huge: that's _791,000 per day_. And sales of Windows
tablets and 2-in-1s are growing very rapidly.

Are tablet sales "largely irrelevant" because they're lower than PC sales
(206.8 million, says IDC), and even if you include tablet PCs running Windows,
declining even faster?
[https://www.idc.com/getdoc.jsp?containerId=prUS40990116](https://www.idc.com/getdoc.jsp?containerId=prUS40990116)

~~~
msh
Apple did not become the world's most profitable company selling macs, they
became it selling arm based devices.

That's the market Intel missed.

------
auggierose
> Intel would go on to sell XScale to Marvel in 2006

I was astonished to see how far reaching the Marvel Empire has become (I do
like their comics and tv shows and movies :-)), but it's _MarvelL_.

~~~
akoster
I just had a discussion about the spelling difference with a coworker
yesterday, and couldn't believe I didn't notice this today. Good catch!

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xd1936
Fantastic read, thank you. I too thought about what the iPhone SE means in
regards to the (somewhat failed) launch and disappearance of the iPhone 5C.
Targeting a lower price with higher-end materials certainly is a turn-around
from their strategy a few years ago... I had never considered that the 5C was
simply a decision based on manufacturing and supply chain issues, as the
article states. Very interesting.

~~~
humbleMouse
I love the iphone 5c. I love that it works great, its fast, it cost me $160 on
craigslist, I can throw it across the room or drop it and it doesn't break,
etc.

------
draw_down
I've been wondering what is the thing that will come along which Apple totally
ignores and ends up dwarfing them. Who knows, but it seems like VR is a
possibility. Imagine if someone ships a very immersive VR experience, that's
going to be a lot more compelling than the 5" phone screen in your hand. And
it doesn't seem to be a space Apple is paying any attention to, though of
course they could just be doing things in secret.

~~~
toyg
VR by definition cannot impact everyday life the way smartphones or PCs did.
It will forever be a novelty, imho.

The real threats for Apple, imho, are successful web companies expanding
towards hardware. Apple does great HW and poor online services; someone doing
great online services and great HW could hit them badly. Google got close
already; Microsoft will try again once they complete their retooling; Amazon
are unfocused but could fish a winner with some original thinking;
Facebook/Dropbox/others might also challenge at some point. Luckily for Apple,
hardware is very difficult to get right and get profitable.

~~~
danschuller
Virtual and augmented reality seem like the endgame for what phones do for us
now. Instead of a computer on every desk, or every pocket, it's one in every
eye.

I'd rather follow a set of virtual arrows to my destination than have to keep
checking my phone. This goes for a lot of tasks I use my phone for. Though the
privacy concerns are more worrisome than mobile phones!

~~~
toyg
Vr and augmented are different things. Augmented has potential, but the heavy
lifting will likely be done in smartphones for the time being, like it's
happening with watches. The smartphone is the perfect "unit of computing" as
it is; we will get better interfaces, but the mobile revolution has already
happened. Augmented won't be as transformative as smartphones have been.

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petra
One thing i wonder about: iPhone sells on status, for example in china. Would
people compromise on something as critical as screen size for status ? Can a
small sized screen project status well, even if it's understandable socially
that bigger is better ?

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rpgmaker
> Andy Grove died yesterday. He is widely considered the greatest CEO in tech
> history.

I thought the consensus was that _Steve Jobs_ was "greatest CEO in tech
history". Make up your mind Silicon Valley!

~~~
pchristensen
It might be clearer to say that AG was the best _tech CEO_ in tech history,
and SJ was the best CEO in tech history.

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BIackSwan
iPhone SE is at a full 30% premium price as compared to US. So a product
priced at the magic price point of INR 27500 is instead at a prohibitive ~ INR
40000 which most consumers in India will balk at.

The SE will sell massive volumes in India if the pricing matches the one in US
- but at the current point its very uncertain looking at Indian consumer
landscape.

~~~
monkbent
Read the last footnote

~~~
canuckintime
Your footnote is still missing the context. The iPhone 5c launched at Rs
41,000 back in 2013 too. While the SE is obviously a better value than the 5c
was, it is still priced out of reach for most people and the impact will be
marginal in international markets. More likely it will result in more of the
Indian elite getting the SE, instead of the 6s, resulting in a lower ASP.

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findjashua
tldr: growth at the expense of margins, like AG did in the late 90s

