These acquisitions almost always end up being run into the ground because Intel is so used to turning the crank on their mature (read: awesomely ubiquitous software support) CPU architecture that they don’t want to spend much on R&D on things that aren’t proven money makers. But they keep trying to div diversify in a very half-assed way because they have such a high market share in CPUs (not that it is without legitimate threat from AMD) that to continue to grow they want to hit new markets.
Fortunately for my team, Intel completely shitting the bed on 10nm meant that all these problems were barely noticed - who can blame you if the silicon isn't there.
The thing is, that when you pay a premium, overinvest and under-deliver you end up with no choice in the exec team - and you end up 'cutting you losses' and doing a McAfee.
1. Old, hugely successful company needs to find new growth areas.
2. Company acquires company in high growth area (sometimes innovative, sometimes not)
3. Taking from the MBA playbook that higher investment equals more growth, acquired company is given aggressive targets but also a huge budget to meet them.
4. Company goes on a massive, usually relatively untargeted hiring spree, things become a major shitshow, acquired leadership team is eventually canned.
Instead of finding some realistic product targets and then setting a budget around what resources will be needed to attain those goals, the budget is allocated based solely on desired revenue and somehow hiring all these people without a clear plan will make that happen.
I'm genuinely curious, has this ever worked?
- bought and turned into success
- bought and integrated into the larger business
- bought and closed after running into the ground
- bought and then later spun off due to inability to create a successful business or integrate.
Not just for Google, but across IT as a whole.
AT&T's mistakes were made by people who were more technical than MBA, but it's a consistent trope that "Google bought Company A" and then Company B brings their salespeople to muster the next morning to inform them what's going to happen at Company A, and the next sales retreat is fistbumps all around.
I wonder if we could put a break on mergers and acquisitions, not for the sake of communities, workers, and competition, but just for the poor stockholders!
my recollection is that it's closer to half. m&a deals tend to be executive vanity projects as often as sound strategy.
Because in an ideal world you expect M&A to provide synergy, but it is often where 1+1 = 1.5 or less, and at best successes are 1+1 = 2. What people should be aiming for is 1+1 = 2.5 or more.
And recent Intel ( Post Andy Grove or Post Patrick Gelsinger ) has a track record of both poor strategic decision, acquisition and execution.
Note: That is M&A with respect to diversification.
it's a fascinating component of how companies are often overvalued in m&a activity.
Youtube -> Google
Twitch -> Amazon
Instagram -> FB
WhatsApp -> FB
FriendFeed -> FB
LinkedIn -> Microsoft
Ring -> Amazon
Paypal -> Ebay (Well they didn't destroy it)
Flipkart -> Walmart
Github -> Microsoft
Moat -> Oracle
EMC -> Dell
Beats -> Apple
Nest -> Google (Debatable?)
Qualtraics -> SAP
Macromedia -> Adobe
Mulesoft -> Salesforce
Tableau -> Salesforce
Skype -> Microsoft
Redhat -> IBM
Kaggle -> Google
Metaweb -> Google
Probably others - these are just the ones I can think of off the top of my head.
I don't know about every item in your list, but I do know at least in some of those cases that the acquired company was largely left alone. They were perhaps given some integration goals, but the parent company specifically "left them alone" to not kill the secret sauce that made them successful in the first place.
Pay attention kids. There are times when a company is investing in the future. Do exactly that. Buy equipment that will be useful down the road because it won't last.
One place I worked had some awesome custom test stands for the product we were developing. I wondered how they ever came to be since money seemed tight and we actually had some layoffs. Development had been going on since years before I got there and they hadn't landed a customer yet. We rebooted the design for the 3rd time and did finally win. The business became very significant to the company. Sure, they let a small team keep trying but we never could have made it without that initial investment in equipment/infrastructure. Spend the money when it's available, but try to make it count.
Mobileye: Paid $17B for it.
Altera: Paid $17B for it. At the time, Altera had a net profit of $0.5B. With something like $2B in assets, this will take 30 years to break even. How much growth are they expecting to offset that?
McAfee: Paid $8B for it, sold it for later. I'd love to see if they ever made back the amount they paid for it.
Nervana: They recently announced they're dropping the HW they produced. Time will tell if they can adapt the Nervana SW stack to the other ML company Intel just bought.
Infineon: Would love to see the numbers on whether they made a net profit on it. They may actually have with the sale to Apple.
WindRiver: Same question.
Yes, big companies should do some big bets. But bets are to make a net profit in the long run, with several failures along the way. With the amount Intel Capital has dumped in buying companies, and adding in the costs involved while holding them (employee salaries, capital expenses, etc), has Intel made money or lost money?
>Infineon: Would love to see the numbers on whether they made a net profit on it. They may actually have with the sale to Apple.
Likely not. Intel paid $1.4B for Infineon, invested billions into it every year, could not catch up to Qualcomm. Finally got the Apple contract by reducing price. And when they did it took out many of their 14nm capacity that could have been better used for something else. The $20 per pieces also did not really cover their R&D as stated in the court case against Qualcomm. In the end Apple got most of their R&D for $1B, and had to force to sign a license with Qualcomm or faced with the possibility of Intel shutting down their Modem business and they are left with no modem for iPhone.
Which equals to usually three pieces of redundant silicon with high availability failover, functional safety on each, high computer power needs and hard real time requirements (translating to further companion acceleration silicon).
Intel would love that to be Intel instead of some arm, riscv, Nvidia, whathaveyou...
The global vehicle production is in the order of 100mio vehicles per year, and drive ai is a growth market.
Is invest the same if I were Intel.
Do you mean the person or the company? If you mean the person, this is going to pretty weird.
at first they thought it would sell quad-core processors, but discriminating consumers learned that third-party antivirus makes your machine slow, unstable, hot and runs down the battery. Thus it damaged Intel's brand.
I don't get the anti-virus market at all. Granted all AV products are probably horrible and I haven't used a third party AV on a personal machine ever since about 2009-ish  but back in college I distinctly remember the consumer AV stuff was so much taxing on performance compared to "enterprise" stuff. I don't think there was ever a technical reason for this, was there? So, why?
Now I do remember subversion checkouts or anything file intensive was pretty bad (and it still is if you don't have a decent SSD) but my impression is that the enterprise av was better than consumer? Am I misremembering this?
 I think I switched to Microsoft Security Essentials or some variant of it if I recall correctly.
But like anything new, gets fat marketing budget, then after that grace period runs out, they are expected to be self sufficient and yielding a return.
Then even if everything goes well, those expectations and returns will also grow and eventually things change.
But initially, the honeymoon period is always fun, bit like first year at university, then things start to get real, real fast.
In case anyone isn't totally clear on why Intel is in such trouble: they made a lot of money selling high-end CPUs for desktops, and even higher-margin parts to datacenter operators.
On the PC front, when I was in high school (late 90s/early 2000s) it was common to have the computers on a "3 year replacement cycle" where they'd replace 1/3 or 1/4 of the computers every single year. Compare that to today where "2009 era" iMacs (!!) are floating around, ready for purchase at 200-300 dollars. There's no growth here.
On the mobile side, Intel had the chance to make chips for Apple but said no. They couldn't make the numbers work volume-wise. It's an interesting story, read it if you haven't.
Then comes datacenters. High-performance, high-power has been an Intel stronghold for 10-20 years but the whole industry is consolidating into AWS/Amazon/Azure who will probably make their own CPUs at some point, if not their entire own PCs. Either way this is bad for Intel: they face either someone who doesn't want their product, or a much larger buyer with much more purchasing leverage than a corporate IT department buying in small quantities. Same deal with storage -- the larger operators aren't paying the crazy EMC/NetApp margins those guys could cram down corporate IT's throats. Amazon has already announced plans to make ARM EC2 instances for reasons of both power and not paying Intel's crazy margins.
The thing Intel still does have is world-leading fab capabilities. I remember back in the 90s Intel always outperfomred AMD by running at much higher clockspeeds, and they could do it because of their superior process technology. But that allowed AMD to run laps around them in microarchitecture, which is showing with Ryzen. I don't see Intel becoming a contract manufacturer soon but I'm sure they've discussed it internally.
My company just abandoned an ASIC project with Intel. Should have been a turnkey FPGA conversion but they couldn't deliver.
Do they? TSMC appears to be ahead of them in terms of both performance and fab capacity.
The only question would be whether they would let that guy leave through the door under his own power.
The logical solution is to ride the gravy train until it tanks completely.
A dinosaur can take a VERY long time to fall.
Or sell arm compete with TW, China ARM licensee at 10-25% margin for 5-15% market share. And you don't have any competitive advantage like Qualcom with IP on CP.
If you're Intel CEO, how are you going to choose?
Both. There is no reason why it is one or the other. And this is not just in hindsight, I said this even before BK becomes the CEO.
In the short term, or at leats in the terms of CEO thinking, it is the best to concentrate on the money making platform. In the longer term, this will come back and haunt them.
Oh, now that's just not true.
Intel fabs were at 90+% capacity (it's why they outsourced a lot of the support chips). You would have to bump an x86 in order to produce an ARM.
This is one of those Innovator's Dilemma moments. Even IF we concede that ARM will eat x86 (and I don't concede that without a lot more evidence), there is no moment where switching from making x86's makes sense until Intel is almost near death.
They are at 100% capacity.
That is their fault for delay in the 10nm Fab not online in Israels, not building more capacity in existing Fabs, and not doing better Forecasting. All of these happened during BK's tenure.
Intel Custom Foundry was a little late, but that was 2012, they have achieved little to nothing during its 5 years of existence. The point is, if you do not have a product offering that is inside those 1.5B annual shipment of Tablet / Smartphone SoC, Modem Baseband and WiFi, at least offer to Fab those product line since Intel and x86 is not competing in that segment. Instead Samsung and TSMC got that market volume and is now able to sustain the leading edge R&D.
But such purchases are good PR for the shareholder perception and almost gets down to churning purches thru the books on the surface, look good at that level of perception.
Agreed, They should focus upon what they have and with that, perish the thought they focused upon there FPGA with toolchains and support that could drive it into that and many markets.
If Intel added a small FPGA to their CPU's and they could - that could drive a whole new market of development and one in which they are placed to capitlise upon what IP they do have. Certainly an FPGA would make for a good mix with AI, if Intel would make such tools and open up FPGA's more to users and get that adoption going. Then the whole CPU/GPU race may well change into their favour.
They should have diversify into either into more silicon products or Custom Fabs, instead their Custom Foundry was a complete mess. What Intel dont realise was their competitor isn't actually AMD or Nvidia, but TSMC and Samsung. The market has no problem paying premium for leading edge node, leading edge processor design and software support. The problem is Intel lost on the first two and lost the third with respect to CUDA.
At least the new CEO seems to understand the problem better.
It makes sense when a large company acquires a smaller one, or founds a division from scratch, because it can provide that smaller company/company with uniquely valuable resources. E.g. Google/Alphabet founding Waymo because of Google's existing expertise in ML.
But how does expertise in processors translate to any kind of advantage for autonomous driving? Presumably the microprocessors in a self-driving car are one of the most commoditized parts... who cares if it's Intel, AMD or ARM?
Does anyone "in the know" have a clue around Intel's strategy here?
I can only guess they want to repeat the "Intel Inside" marketing campaign of the 1990's -- i.e. if they lost mobile, they don't want to lose cars too. But then wouldn't they want to form strong subsidized partnerships, the way they did with Intel Inside? Developing their own technology seems like it would make the autonomous car industry view them as competitors, not partners, and thus less likely to use their chips.
What am I missing?
My only explanation is that Intel may believe they would have trouble breaking into that market with their own chips, and buying the company means they can make it dogfood Intel's products. If successful, it strengthens their sales argument to others.
Not sure I described this 100% accurately, but it's something like that. Hence the Intel acquisition. Their tech is pretty good honestly, used to power Tesla Autopilot 1 before they decided to build their own solution.
I couldn't live without it anymore, the city has probably around 500 bus lines. Making 3 combinations isn't unusual and it works to the point where I don't worry about researching a new route. Whenever you aren't commuting it is your best option to finding a route.
Sometimes I spend a weekend in smaller cities I don't know well. They have bus lines which you can't find online anywhere. But everything is on Moovit. This has saved me so many hours, I feel like I should be paying for it.
The original idea was for Intel to wrest control of multimedia from Microsoft and create an Intel controlled multimedia subsystem. They didn't actually acquire Dragon for the speech recognition part, but Dragon's fate was even worse.
An example of this: Sears. Dominant retailer, completely missed the boat on ecommerce, now bankrupt. Literally.
It suggests ubers and bike shares, but they’re pushed down to the bottom of the options list.
Bike share + train multimodal commutes being the norm is the dream of every modern urbanist.
Google Maps seem strangely over optimized for things like minimum walking at the beginning of the route. Plus the Google Maps “how far away the bus is” doesn’t update based on new data (from the city bus trackers or crowdsourced data) unless you close the app and re open
They’re probably trying to make sure they don’t miss out on the autonomous car revolution. Which will likely require more chips, in both vehicles and infrastructure.
But this is a huge gamble, as an infrastructure upgrade like this will cost billions or trillions. And it may likely never happen. But if and when it does, then Intel may be standing on the next wave of huge spending for its technology.