Tablets will kill PC sales - Intel CEO

[GoFlyKiteNow]

Intel moans

Chipzilla CEO Paul Otellini has admitted that tablet sales are hurting its PC business.

Otellini said in a conference call that "the big question on everyone's mind" how Intel will respond to the new computing category of tablets. He praised Apple for its success with the iPad and said that it had done a wonderful job reinventing the category. But the downside is that tablets will "probably" impact PC sales at the margin.

He said that punters have a limited amount of discretionary income and some will choose to purchase a tablet instead of upgrading an existing PC or purchasing a netbook in any given period. Despite Apple's early gains in the tablet market, Otellini remains confident that Intel can "win this segment because it will take a longer term view."

"In the end, it will be additive to our bottom line, and not take away from it," he said.

He added that Intel is currently working with a number of partners to bring to market tablets running Windows, Android and MeeGo operating systems across a "variety of form factors and price points."

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THE AGE OF THE TABLET COMPUTER is upon us, and Wall Street stepped up its efforts this week to gauge just how destructive the trend will be to the traditional personal-computer market.

Computer-industry observers have been warning for months now that tablets are primed to “crowd out,” or cannibalize, personal-computer sales because they can perform a lot of the same tasks but are cheaper and fit better with an on-the-go lifestyle.

The industry has only a few of the slate-style computers on offer at the moment, most prominently Apple’s (ticker: AAPL) iPad and Samsung Electronics’ (A005930.Korea) Galaxy Tab.

But dozens of companies have announced or are expected to release tablet computers of one sort or another in the coming months, ranging from Archos (JXR.France), a maker of chunky, brick-like portable video players, to ViewSonic, a maker of computer monitors.

 

[Dreamer1]

December 5, 2010 3:50 AM PST
U.S. chip manufacturing in the age of the iPad
by Brooke Crothers

Behind the fly-off-the-shelf popularity of products like Apple's iPad and iPhone are hundreds of thousands of manufacturing jobs--mostly overseas. Is it possible to create more of those jobs here in the U.S. to combat chronically high levels of unemployment?

Personal computing is moving rapidly beyond the laptop. And there's no better example than Apple, whose most popular products are arguably now the iPhone and the iPad. The surging demand for anything Apple is causing a seismic shift in chip manufacturing to Asia, the hotbed of new silicon ecosystems. Though companies like Hewlett-Packard and Dell also play a role, they are still primarily Intel-centric PC makers, while Apple is morphing into a maker of smartphones and tablets, which is creating the alternative non-Intel silicon manufacturing ecosystems overseas.

So, is there anything a U.S. gadget supplier like Apple can--or should--do to help maintain a chip manufacturing base in the U.S.? Seeking an answer to that question I recently sat in on a Stanford University class taught by Andy Grove, the former Intel chief executive, and talked to Vivek Wadhwa, director of research at the Center for Entrepreneurship and Research Commercialization at Duke University's Pratt School of Engineering.

My premise was pretty simple. The tablet and high-end smartphone are pushing chip manufacturing outside of the U.S. and away from PC chip stalwart Intel, which has always maintained a large manufacturing base here. My question: If all things are more or less equal technologically, is it a feasible business decision to source silicon from companies, when possible, that have manufacturing bases--and create jobs--in the U.S.?

One of the most prominent examples is Micron Technology and its flash memory chip joint venture with Intel, IM Flash Technologies. Micron is a scrappy Boise, Idaho-based chip manufacturer that survived Japanese chipmakers' takeover of the lion's share of the DRAM (Dynamic Random Access Memory) business in the 1980s and is still alive and kicking despite Asia's--primarily South Korea's and Japan's--preeminence in the memory chip business now.

Toshiba, in particular, is emerging as a strong presence in flash memory now. Thanks, increasingly, to Apple. In fact, to date, a sizable chunk of the flash that went into the iPhone and iPad was sourced from Toshiba. Most pointedly, Apple announced publicly in 2009 that it had cut a $500 million deal with Toshiba to supply flash.

And flash is now prominent in the new MacBook Air, which is offered with 64GB, 128GB, or 256GB flash drives. In the popular 11.6-inch MacBook Air, for example, an iFixit teardown reveals a 64GB solid-state drive supplied by Toshiba.

Cost breakdowns by firms such as iSuppli show that the flash memory component of iPads and iPhones, as percentage of a total bill of materials, ranks very high and is--depending on whether it's 16GB or 64GB--sometimes the largest single component in terms of cost.

Is this business that Micron and/or Intel--who manufacture flash at facilities in Lehi, Utah, and Manassas, Va.,--could get a bigger piece of? That's a business decision Apple has to make. But my point is that the opportunity to make that choice could vanish if trends continue.

U.S. manufacturing clusters
Grove's Standford University graduate business class focused in part on "industry clusters," which are described as "a geographic concentration of interconnected businesses, suppliers, and associated institutions focused on a particular field (i.e., Silicon Valley)," in the class handout. And one of the questions for open discussion was, "How do we make Silicon Valley an industry cluster for manufacturing technology?"

I didn't hear any good answers to that question. What I did hear were more needling questions such as, "Can you control what you don't produce? We say, no." Or statements about America's lack of focus on maintaining a manufacturing base, such as, "America is not fighting right now, at least not very hard." And, of course, the usual warnings about major disincentives: the stratospherically high U.S. corporate tax rate--a point Intel's current CEO Paul Otellini is not bashful about making--was cited as second only to Japan's at 40 percent.

The corporate tax rate is an important issue because, when it's globally competitive--that is, low--it draws business to the U.S. naturally, in the spirit of Adam Smith's oft-quoted maxim of the Invisible Hand. The U.S. government can't plan a manufacturing base into existence--capitalism doesn't work that way--but a country can do everything possible to make the conditions favorable.

Grove asserts that the U.S. government should be aggressive on all fronts to keep the international playing field as level as possible. "Is China following WTO (World Trade Organization) rules? Should you be worried about being accused of protectionism?"--Grove asked the class. He was posing questions that seemed to imply that the U.S. needs to do more to help itself.

And product giants like Apple can also do their share by turning to existing U.S. sources. "Yes, let's put pressure on Apple. If Apple bought flash from Intel or Micron, that's a great example," said Duke University's Wadhwa.

But not all manufacturing is created equal. "The vast majority of manufacturing is destructive to the environment. Like paint and toy manufacturing. And if you build more manufacturing plants here like Foxconn--which build Apple's iPhone in China--Americans wouldn't want to do those jobs. It's mindless, grunt work," he said.

Wadhwa continued. "Germany (for example) is all very high-level manufacturing. It's very high-level technology products and they pay very high salaries. It's not grunt work. By all means let's get high-end high-tech manufacturing in the U.S. Flash memory is a good example. Manufacturing the most critical ingredients of solar technology is a good example. And clean-tech manufacturing," he said.

Some manufacturing, surprisingly, is coming back to the U.S. The Stanford class cited cases of "re-shoring" of manufacturing by General Electric, Caterpillar, and Ford. In some cases, unforeseen complications make manufacturing abroad simply impractical. And China's cost of living is rising too, which will work against low-cost manufacturing in that country in the future.

Let's hope that the U.S. remains as hospitable as possible to high-quality high-tech manufacturing jobs and that companies like Apple do their share to source from U.S.-based suppliers when possible.

Originally posted at Nanotech - The Circuits Blog

Brooke Crothers

 

[Dreamer1]

MANAGEMENT gurus are constantly scouring the world for the next big idea. Thirty years ago they fixated on Japan. Today it is India. The more restless are already moving on to Peruvian or Zulu management. Yet in all this intellectual globe-trotting the gurus have sorely neglected the secrets of one of the world’s great economies. Germany is the world’s largest goods exporter after China despite high labour costs and a strongish euro. It is also stuffed full of durable companies that have survived hyperinflation and two world wars. Faber-Castell, a giant among pencilmakers, boasts that Bismarck was a customer.

Thankfully, a couple of management thinkers have defied the boycott on Germany. On November 18th Bernd Venohr, of the Berlin School of Economics and Law, gave a fascinating talk on the “secret recipe” of the country’s Mittelstand at the second annual Peter Drucker Forum in Vienna. Last year Hermann Simon, of Simon-Kucher & Partners, a consultancy, published an even more gripping sequel to his 1996 book on “Hidden Champions”. Put the two together and you get a good idea of the management theory at the heart of Germany’s success.

Although the term Mittelstand is sometimes applied to quite small, parochial firms, the most interesting ones are rather bigger and more outward-looking. Most shun the limelight: 90% of them operate in the business-to-business market and 70% are based in the countryside. They are run by anonymous company men, not hip youngsters in T-shirts and flip-flops.

They focus on market niches, typically in staid-sounding areas such as mechanical engineering rather than sexy ones like software. Dorma makes doors and all things door-related. Tente specialises in castors for hospital beds. Rational makes ovens for professional kitchens. This strategy helps them avoid head-to-head competition with global giants (“Don’t dance where the elephants play” is a favourite Mittelstand slogan). It has also helped them excel at what they do.

Globalisation has been a godsend to these companies: they have spent the past 30 years of liberalisation working quietly but relentlessly to turn their domination of German market niches into domination of global ones. They have gobbled up opportunities in eastern Europe and Russia. They have provided China’s “factory to the world” with its machine-tools.

The Mittelstand dominates the global market in an astonishing range of areas: printing presses (Koenig & Bauer), licence plates (Utsch), snuff (Pöschl), shaving brushes (Mühle), flycatchers (Aeroxon), industrial chains (RUD) and high-pressure cleaners (Kärcher). Kärcher’s dominance of the high-pressure market is so complete that in 2005 Nicolas Sarkozy caused a scandal, after a spate of riots, by calling for a crime-ridden banlieue to be cleaned out “au Kärcher”.

How durable is the Mittelstand model? Sceptics worry that it will eventually become the victim of globalisation: emerging-world companies will learn to produce their own clever machines at a fraction of the cost. They also worry that Mittelstand companies are too conservative. American start-ups can become global giants in a generation (Wal-Mart, now the world’s biggest retailer, was not even listed on the stock exchange until 1972). German companies are content to remain relatively small.

The first criticism is overstated. Mittelständler have not only focused on sophisticated niches that are hard to enter. They have thrown their energies into building up ever more powerful defences. They constantly innovate to stay ahead of potential rivals. They are relentless about customer service. Their salespeople are passionate about their products, however prosaic, and dogged in their determination to open up new markets. Mr Simon’s “hidden champions”, mostly German Mittelstand firms, typically have subsidiaries in 24 foreign countries, offering service and advice. Many get the bulk of their revenues from service rather than products. Hako, which makes cleaning equipment, generates only 20% of its revenue from sales of its machines.

The second criticism has more substance. Germany has a poor record at generating start-ups or at quickly turning smallish firms into giants. Mittelstand firms are finding it increasingly difficult to persuade the world’s best and brightest to make their careers in rural backwaters. But for all that, the record of the Mittelstand over the past three decades has been a history of global conquest rather than missed opportunities. Koenig & Bauer, for example, gets 95% of its revenue from outside Germany.

German lessons

So the Mittelstand is likely to keep powering Germany’s export machine for years to come. But does it have any lessons for the rest of the world? Mr Simon says that although 80% of the world’s medium-sized market leaders are based in Germany and Scandinavia, successful Mittelstand-style companies can be found everywhere from the United States (particularly the Midwest) to northern Italy, so the model does seem to be transferable.

Three general lessons—for politicians as well as corporate strategists—follow from this. First, you do not need to try to build your own version of Silicon Valley to prosper; it is often better to focus on your traditional strengths in “old-fashioned” industries. Second, niches that appear tiny can produce huge global markets.

The third lesson is that Western companies can preserve high-quality jobs in a vast array of industries so long as they are willing to focus and innovate. Theodore Levitt, one of the doyens of Harvard Business School, once observed that “sustained success is largely a matter of focusing regularly on the right things and making a lot of uncelebrated little improvements every day.” That is a lesson that the Germans learned a long time ago—and that the rest of the rich world should take to heart.

Economist.com/blogs/schumpeter

 

[longbow]

Title is sensationalizing tablets. I think Intel missed the boat on catering to tablet/smartphone market. Even within tablet market there is competition from smartphones. However it does not mean that intel cannot get into the business. It is just that they are late to the game. But they have all the knowhow needed to cater to the market.

Personally the tablet is hopeless at entering info - writing a long memo or putting together a spreadsheet. However, it is excellent for cruising the internet/intranet - where the info is already there. I think it opens up new markets. Doctors will be able to use it to open patient records, look at charts and maybe input simple data. Can see a doctor walking around with a 7 pound laptop. It also opens up an entire marketplace for those that are not used to typing.

 

[GoFlyKiteNow]

Behind the fly-off-the-shelf popularity of products like Apple's iPad and iPhone are hundreds of thousands of manufacturing jobs--mostly overseas.
So, is there anything a U.S. gadget supplier like Apple can--or should--do to help maintain a chip manufacturing base in the U.S.?
------------------------

It was reported Obama had a couple of low profile meetings with Steve Jobs on this matter. To keep jobs in USA.
There is a potential of millions of low paid jobs overseas being eliminated with the
new design / manufacturing strategy proposed by Mr Steve Jobs for the USA.

 

[Dreamer1]

Behind the fly-off-the-shelf popularity of products like Apple's iPad and iPhone are hundreds of thousands of manufacturing jobs--mostly overseas.
So, is there anything a U.S. gadget supplier like Apple can--or should--do to help maintain a chip manufacturing base in the U.S.?
------------------------

It was reported Obama had a couple of low profile meetings with Steve Jobs on this matter. To keep jobs in USA.
There is a potential of millions of low paid jobs overseas being eliminated with the
new design / manufacturing strategy proposed by Mr Steve Jobs for the USA.

It is high time that the extremly arrogant old Ti-Ko Terry GAO of Foxconn be taught a good lesson!He has 3 million jobs.

 

[Watchman]

It's like saying the washing machine will kill the refrigerator .

Common sense is lacking in today's youth and even adults .

 

[GoFlyKiteNow]

It's like saying the washing machine will kill the refrigerator .

Common sense is lacking in today's youth and even adults .

Wrong analogy , friend.

What it means is that, while tablet PCs take hold in the market, it will take away PC sales volume down..not eliminate it completely. But then, when a sector ( PC sector ) sees its market volume has less and less growth and even a decline in offtake, that sentiment itself will kill off bulk of its future. Absence of growth is enough to sound the death knell.

No doubt PCs will be around to serve high performance markets etc. But they constitute today less than 10% of global PC volume. The rest is for the common man who go for notebooks, netbooks , laptops, which are all potential victims for the tablet PC. Add to that their accessories (battery chargers/adapters, USB devices, plastic parts, molded parts etc and you have a huge shrinkage in PC related industries.

The advent of micro miniaturization, energy efficient processors that are very powerful make the tablet PC show high performance promise.
.

 

[Watchman]

Ok let me try again .

It's like saying the frying pan will kill the deep fryer ?

 

[johnny333]

Ok let me try again .

It's like saying the frying pan will kill the deep fryer ?

Why is it difficult to accept that the PC as we know it know will change

Take a look at the Mac mini:
http://store.apple.com/sg/browse/home/shop_mac/family/mac_mini?mco=OTY2ODEwMw
It's a tiny computer, you just need to add a monitor & keyboard/mouse.

In future I suspect some tablets will have ports for optional add-on larger screens & keyboards/mouse, but will by itself be a portable tablet,

 

[GoFlyKiteNow]

Why is it difficult to accept that the PC as we know it know will change

Take a look at the Mac mini:
http://store.apple.com/sg/browse/home/shop_mac/family/mac_mini?mco=OTY2ODEwMw
It's a tiny computer, you just need to add a monitor & keyboard/mouse.

In future I suspect some tablets will have ports for optional add-on larger screens & keyboards/mouse, but will by itself be a portable tablet,

The future ( if one may risk saying it ) will be wireless connectivity.
Just a tablet with wireless link to connect to a monitor or hdtv whatever which will come with a wireless device inbuilt or plugged in small module at the rear,,like some bluetooth dongle working at 60 Ghz standard freq.

Same with printers. scanners etc. Even the battery charger will be obsoleted by induction coupled charging with no connectors or wires.

Consider this. China makes about 600 million small battery chargers/adapters per year for mobile fones, video game machines, portables etc. all of these will he obsoleted by induction charging plates.- thatwill be suitable for all models and devices across the board - no more special connectors for diff models, wires and moulded parts, transformers etc - and they will be made by many nations.

Imagine the number of SME's that will be affected in China !

 

[Narong Wongwan]

Well they said the mobile phone will replace the landline back then..but after so long and now everyone having a mobile phone while less people have landlines........i still dun see them dying out completely.

 

[johnny333]

The future ( if one may risk saying it ) will be wireless connectivity.....

I don't know if that's a good idea.

Many suspect that power lines contribute to health issues. Even handphone use has been linked to issues such as memory loss, etc Just imagine getting zapped by Wifi, bluetooth, 3G, Dect,.., signals day-in, day-out. May have alot of unknown health implications.

I prefer using cable instead of WiFi because cable is still more secure & reliable. In fact when you contact an ISP support line, one of the 1st qsts they will ask is if your are connecting via cable or wireless.

I doubt there will ever be one universal standard because someone always comes up with what they think is a better way to connect things

 

[GoFlyKiteNow]

Well they said the mobile phone will replace the landline back then..but after so long and now everyone having a mobile phone while less people have landlines........i still dun see them dying out completely.

Land lines are still around because they are protected by the governments
as they used to employ huge number of people before mobile fones come
on stage. However , as the use of mobile fones tech spread and people found
alternate employment from the land line industry, the protection were gradually loosened. But one thing is for sure. There is virtually no growth and the user base has shrunk for landlines with telcos even giving connections free of charge in a bundle package format. Even the mfrs of land fones have stopped production of the sets completely, so are the electronic exchanges for land lines, being replaced by cell towers all over the place.

 

[eatshitndie]

The future ( if one may risk saying it ) will be wireless connectivity.
Just a tablet with wireless link to connect to a monitor or hdtv whatever which will come with a wireless device inbuilt or plugged in small module at the rear,,like some bluetooth dongle working at 60 Ghz standard freq.

Same with printers. scanners etc. Even the battery charger will be obsoleted by induction coupled charging with no connectors or wires.

Consider this. China makes about 600 million small battery chargers/adapters per year for mobile fones, video game machines, portables etc. all of these will he obsoleted by induction charging plates.- thatwill be suitable for all models and devices across the board - no more special connectors for diff models, wires and moulded parts, transformers etc - and they will be made by many nations.

Imagine the number of SME's that will be affected in China !

duh! wireless connectivity is already here. it will not replace fiber to the home. for mobility yes, but not for static, ultra high bandwidth entertainment and experience. it all boils down to physics. the spectrum necessary for wireless to offer services on par with fiber is not easy to obtain, and it is always regulated, controlled and auctioned off by government. the future tech model is two-fold: big screen and big sound ultrawide bandwidth experience at home and office, and smaller screen optimized bandwidth experience on the move.

 

[Zombie]

too many people kena cancer these days..

 

[GoFlyKiteNow]

duh! wireless connectivity is already here. it will not replace fiber to the home. for mobility yes, but not for static, ultra high bandwidth entertainment and experience. it all boils down to physics. the spectrum necessary for wireless to offer services on par with fiber is not easy to obtain, and it is always regulated, controlled and auctioned off by government. the future tech model is two-fold: big screen and big sound ultrawide bandwidth experience at home and office, and smaller screen optimized bandwidth experience on the move.

I am referring to connectivity between the computer and the peripherals. Including power supply chargers.

 

[johnny333]

too many people kena cancer these days..

Cancer is a convenient term used to lump together the illnesses that doctors don't understand.

Alot of it can allegedly be traced to man made chemicals in our environment, there are hundreds & hundreds of them.

I remember reading a study where a school located nearby a high tension line had higher rates of cancer.

With the PAPs attitude of money first, everything else ignored, it's not surprising that even our own PM had cancer.