The Right To Sponge?

Intel has decided not to license Centrino technology to competitors like Via or SiS.

The general reaction is that this is a terrible, terrible thing.

It’s Santa Clara, Not Santa Claus

Intel plans to heavily promote Centrino, promote as in two billion dollars worth of promoting.

Understandably, they’d like to reap all the benefits they can out of it, and not let others freeload off their efforts.

They have a perfect right to do that. They are not obliged to keep their competitors on life support.

Remember that until a few years ago, Intel owned the mobo chipset business. Even AMD chips ran off Intel chipsets. Companies like Via were way out on the periphery. It was We

It wasn’t until Intel did something stupid that companies like Via got its foot in the door.

Now just how did Via get its foot in the door? They got off their butts and made something different and more appropriate than what Intel was making.

In short, they competed. They didn’t go from a 5% to 50% marketshare by copying or semicopying Intel. They did something different.

Intel got over its mistakes and it wants its chipset business back. That’s what they’re doing and they have a perfect right to do that.

Business Means Risk

The article linked above cites a few examples of companies that tried to monopolize the computer industry to extract extra profits from it, and failed.

However, in all these cases, essentially the same thing happened. Mr. Big Company essentially said, “We’re taking over, and you can’t beat us,” and its competitors said, “Oh, yes we can,” and did.

But it never would have happened in any of those cases if competitors weren’t forced to build a better (well, actually in most of these cases, cheaper) mousetrap.

Intel is now saying, “We’re taking over, and you can’t beat us” to Via. They need to respond, and whining doesn’t work.

A Favor In Disguise?

You never beat anybody by saying, “Me, too.” You can’t beat anybody with their own stuff.

If Via gets blocked out of the PIV business, they’ll . . . they’ll . . . just have to focus on AMD boards. What a terrible thought. Maybe if that’s their main revenue generator, they’ll learn to do them right the first time.

So the immediate end result of this will be Intel will make some more money, maybe you’ll pay fifty bucks more for an Intel mobo than you do now, and AMD will get another fifty dollar cost advantage. That will help them a bit, which is hardly bad for the overall computer market.

But even there, in the broad sense of the word, AMD is a “me too” company, too. The only real problem they have with Intel is that they aren’t Intel. Intel has a job and they want it.

If Intel is Godzilla and AMD is Godzilla’s son, AMD wants to be just like daddy. Maybe kick daddy’s ass in the process, but it wants to be just like dad, another dinosaur.

That’s the deep underlying reason why AMD can never be a true threat to Intel; they both share the same dream and play the same game and Intel has more chips to play with.

To destroy Intel, you have to destroy the vision they’ve sold the world of what a PC is supposed to be: a powerful, expensive box, and replace it with something else that people like more. AMD can’t do it because they’re just as married to the idea.

Intel trying to toss everyone out of the chipset business is just a minor symptom of that paradigm. They think they ought to charge a lot and make a lot of money from their products, and this is their way of keeping things that way.

But Via isn’t in that position.

Via’s Real Opportunity

In the long term, if they play their cards right, Via is far more of a threat to Intel than AMD, simply because it doesn’t carry the same mental baggage Intel and AMD does and has nothing to lose by breaking the mold and offering a different vision.

Why did IBM and Apple and 3dfx fail? They failed because Compaq and PC clones and nVidia offered at least good enough if not better for less.

The long-range potential of Via is not making motherboards at all. That’s just a cash cow. Their real potential is in their CPUs and computer systems.

Who is making the smallest, cheapest, least heat-inducing computers today? You want to laugh at the performance, fine, but they laughed at Japanese transistor radios, too.

In the history of the PC market, cheap and good enough always beats expensive and better. When you have enough power, you work on the price and the size.

I could write a long explanation, but of the three CPU companies, who is going to want to build a $200 computer soon? Or a portable $200 one a few years after that?

The PC industry is saturated or close to it in the developed world. That leaves the rest of the world, most of whom can’t afford developed world pricing.

Build a computer for them, and you’re going to find out that you’ve built a computer not just for the Third World but the whole world.

And where does that leave Intel down the road with five or ten billion dollar fabs and 10GHz or 20GHz processors? In deep, deep trouble.

If Via views this as an opportunity to focus on its main chance, Intel blocking them may be the biggest favor anyone ever did anybody in this industry.

They could very well drop the ball. But eventually, somebody won’t.

Email Ed

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