Economics, redefining Moore’s Law

Once in a while, as a reporter, you come across an article you wish you had written. I have been pointing all the problems Intel is having across the board, and most people can’t seem to put all the pieces together of the rough ride the Chipzilla is having. Business Week did a bang-up of connecting the dots in this most brilliant piece. As I read through the article, here is the crux of Intel’s problem.

Part of what’s hurting Intel is changes in tech buying patterns, analysts say. Corporations are increasingly favoring low-end chips, says Steve Kleynhans, vice-president for infrastructure strategies at IT consultancy Meta Group in Stamford, Conn. Many find that even a cheap processor can run 99.9% of their applications but costs hundreds of dollars less. Plus, Web-based applications, which require little power on the desktop itself to process information, are proliferating. That’s already affecting Intel’s average selling prices.

The economics is mutating the Moore’s Law into Moore’s Claw and right now it has a tight grip around Intel’s neck. It faces the same problems as Microsoft does, but it does not have as dominant a market share. It has competitors which have not only caught-up and upstaged it. It cannot change the behavior of the “edge” or millions of consumers who don’t buy into the logic of “ever-faster-processor” anymore. I used to be one of the firm believers in upgrading computers every six months. It has been nearly a year since I contemplated a new machine. (Perhaps that’s because all my spare cash is going to new cell phones and maintaining this blog!) Last week I was mucking around with a Transmeta-powered laptop, and boy I was surprised to find out that it did everything I did without as much as breaking a sweat. I am going to follow-up with a post on why Media Center PC is going to be a colossal cock-up. I leave you with this thought!

Will the artifacts buried there represent just another chapter in this chip legend’s history — or a key turning point, when Intel’s long-term dominance had started to wane?