The world has now suffered at least 2 distinct phases to the recession. It might not be a classic double-dip, but 2008 and 2011 are certainly shaping up to be some of the most depressing years ever in the IT market. Against this very obvious state of affairs, Intel has banged out a series of record quarters. What gives ?
Fill a cup with water and sell it. That’s got to be one of the simplest markets possible. Water pours out of taps, nature constantly recycles it and everyone needs it. It could not be much simpler.
If water needed the man-made synthesis of more than a billion individual units, then things would be more complicated.
That only scratches the surface of the channel for chips – specifically Intel processors. Each step of the way, from the harvesting of unusual elements like Hafnium, to the fickle demands of a global market and challenges from upstart products like smartphones and tablets – producing the right amount of CPUs at the right time is a tough thing to get right.
That said, when a company consistently bangs out record sales for a product in a recession, you have to start wondering ‘Are they really that good – what are we all missing ?’
Having spoken to someone with very deep connections to Intel, it seems things are not as well as the market has been led to imagine.
Not only are there huge issues with inventory, Intel now seems to be admitting that it had ‘known this for quite some time’.
Let’s run a small analogy. Sliced bread runs down a production line. Machines apply butter and various fillings, before its cut in half and automatically packed into its container.
If you noticed that the sandwiches were not selling off the end, you might feel the urge to switch the machine off for a bit.
If you were the optimistic kind of sandwich maker, then you might want to slow the machine down and wait for demand to pick up again.
You’d be considered ‘slightly challenged’ if you kept it running at the same speed.
There would be doubts about your sanity if, knowing that the sandwiches were piling up, you actually accelerated the run rate.
It now appears that Intel has hit its deepest vein of product development and improved production levels, at the same time as the market has choked and cried “No more please, we’re full”. Even with the staggered launch of the Second Generation Core processors and the problematic Sandy Bridge chipsets, Intel has thundered forward. The ‘all you can eat buffet’ has transitioned into a ‘how much can you take – and then some’ saturation supply fest.
We will be pushing channel insiders to reveal the extent of the issue and how it’s having a knock-on effect on the market.
KitGuru says: We suspect that the knock-on effect of Intel speeding up production in a recession must manifest itself in multiple ways. Watch this space.
Comment below or in the KitGuru forums.