If you own Intel stock, and held it prior to this fall, then please kindly stop crying for long enough to read this. We're getting to the root of the problem.

Dearly beloved, we gather here today to honor the original microchip titan - the maker of the chip writing this very blog: Intel. 

Between July and August of this past year, Intel lost a devastating 46% of its stock value. Especially between August 1st - 2nd, Intel hemorrhaged 26.05% of that value in a single day. A single day. As one of the largest corporations in the world, and what used to be considered a blue-chip quality equity, this is an ominous blow to a firm that is hugely important to the American economy. Intel directly employs approximately 130,000 employees, however, Intel operations and technologies as a whole are estimated to support over 721,000 American jobs.

So, today we are here to explore - what happened?! Many point to the recent earnings report, which revealed a dismal performance in the data center sector, as the catalyst for this steep drop. But the truth is, this plunge was a long time coming, and happened on several fronts. Intel's fall from grace is a story of missed opportunities, strategic blunders, and a fundamental inability to adapt to the rapidly changing landscape of the tech world.

Massive Mobile Mishap

The age of mobile computing has been massive paradigm shift to the tech landscape, and unfortunately for Intel, a massive missed opportunity that they are now feeling the sting of. While Intel had long dominated the desktop and laptop markets with its x86 architecture, the mobile revolution was spearheaded by Advanced Reduced Instruction Set Computing Machine (ARM) processors, a dissenting architecture that was invented for low-power, energy-efficient devices. ARM's dominance in smartphones and tablets was a direct consequence of its efficiency and adaptability, offering significantly better battery life and performance in smaller form factors. ARM processors excelled in power management, allowing smartphones to run for days on a single charge, a feat that x86 architecture simply couldn't and cannot match. Imagine an x86 chip powering your phone - it might last a whole fifteen minutes before needing a recharge. Intel's initial attempt to compete, the Atom processor launched in 2008, struggled due to high power consumption and a lack of developer support. Powerful computing capabilities had been Intel's bread and butter, however, energy conservation (aka the buy-in of the ARM game)... evidently not so much. This lag allowed ARM-based processors to secure a dominant market share, with estimates showing that ARM processors accounted for over 90% of the smartphone market by 2015, while Intel struggled to gain traction. Today, Intel is all but completely cut out of the mobile market. Essentially: they were peddling widgets - and the best widgets in town, to boot - but to a market hungry for doodles.

Intel's entry into the smartphone market was also delayed, with its first significant foray occurring in 2011 with the launch of the Medfield processor. However, this late entry put Intel at a disadvantage, as competitors like Qualcomm and Samsung had already established strong market positions with their own ARM-based chips. Intel's attempts to penetrate the mobile market were further hampered by their continued focus on their established x86 architecture, which was not as well-suited for the power constraints and performance demands of mobile devices. Intel struggled to adapt its existing technology to these new requirements, leading to products that were often outmatched by their ARM-based counterparts. They chose to stick with what they knew, clinging to "we still make the best widgets, dammit! People LOVE widgets, who even cares about doodles?" - Perhaps if they had cared, this blog would be a success story.

The mobile revolution not only reshaped the computing landscape, but also shifted the power dynamics within the tech industry. The emergence of smartphone giants like Apple and Samsung, both wielding highly-sophisticated ARM processors, created new powerhouses that challenged Intel's long-held dominance. These mobile-centric companies prioritized low power consumption and user-friendly experience - areas where Intel had not traditionally excelled. This shift in power left Intel scrambling to catch up, but by that point, the mobile market had become saturated with ARM-based processors, making it difficult for Intel to regain significant market share. Intel's inability to embrace mobile computing had far-reaching implications for its future, implications they hadn't considered when they chose to focus on x86.

The dominance of ARM in the mobile market severely limited Intel's potential for growth, especially as the smartphone market expanded rapidly and became the primary computing platform for billions of users. By neglecting this burgeoning market, Intel missed out on a massive opportunity to expand its reach and diversify its revenue streams. Furthermore, Intel's lack of success in the mobile space hindered its ability to compete effectively in the emerging data center market, where ARM-based processors were also making inroads, particularly for specialized tasks like AI and machine learning. The mobile revolution ultimately exposed Intel's shortcomings in adaptability, innovation, and market foresight, setting the stage for its ongoing decline. While Intel struggled to adapt in the mobile market, its challenges extended beyond the mobile space. The company's dominance in the data center was also threatened by the rise of specialized processors like GPUs, which were rapidly becoming more powerful and efficient for certain tasks, particularly in the growing field of AI/ML.

CPUs - the MP3 Players of Processing

Central Processing Units (CPUs) are the new analog clock. We still see plenty of them, but are indisputably living through their twilight. These blocks that built the Intel empire were once the undisputed king of the computing world: a single, powerful engine, driving everything from our personal computers to the massive data centers powering the internet. Intel, the peerless CPU producer, played a pivotal role in shaping this landscape. From the launch of the 8086 processor in 1978 - the Rosetta Stone of microchips which ushered in the PC revolution - to the iconic Pentium processor that dominated the 1990s tech market, to the modern-day Core i7 and Core i9 series, Intel's CPUs have powered countless innovations and shaped the way we interact with technology. For decades, they were nearly solely engineering and producing the brains of all of our desktops.

However, the world of computing is undergoing a dramatic shift, and in the same way the ape yielded us man over time, the evolution of computing demands we progress beyond the CPU. While they do remain essential today, by sheer scale of production availability, their reign as king is decidedly through. Specialized processors, designed to excel in specific tasks, are emerging as powerful alternatives. Graphic Processing Units (GPUs), initially developed for graphics rendering, have evolved into extremely powerful engines for AI/ML capabilities, far outperforming CPUs in these domains. Field-Programmable Gate Arrays (FPGAs), programmable chips that can be configured to perform specific functions, are increasingly being used for custom hardware solutions in areas like networking, security, and edge computing. Even AI accelerators, specifically designed to accelerate deep learning tasks, are challenging the traditional CPU paradigm. These specialized processors are taking on tasks previously handled solely by CPUs, leading to a fragmented computing landscape where specialized tools are used for specific jobs.

Intel's reliance on the CPU in the face of the custom chip era originally became a double-edged sword, and transpired to a regret. While their microchips brought immense success for decades, it also limited Intel's ability to adapt to the changing world. Their focus on CPUs rendered them slow to embrace the growing importance of GPUs, FPGAs, and other specialized processors. The company's future success depends on its ability to embrace these new technologies and expand its portfolio beyond its traditional CPU-centric focus. The question is: Will Intel embrace this shift, and succeed, or will it be left behind as we assume the era of specialized processors?

Execute or Be Executed

While Intel's inability to adapt to the mobile revolution played a significant role in its decline, the company's internal struggles and missteps in execution also contributed to its downfall. Intel faced a series of challenges that hampered its ability to innovate and compete effectively in a rapidly changing tech landscape. One of the most critical issues was Intel's organizational culture, which, while successful for decades, became increasingly resistant to change as the tech world evolved. The company was known for its strong focus on CPUs, which led to a siloed approach to innovation. This emphasis on a single product line, while successful in the past, prevented Intel from effectively exploring and integrating new technologies like GPUs and FPGAs. Many analysts have argued that the company's internal bureaucracy and resistance to outside ideas slowed down decision-making processes and stifled the development of new products and strategies. There was a widespread sense that the company had become too comfortable with its success, and it was reluctant to embrace new ideas that might challenge the status quo.

Intel's strategic missteps further compounded these challenges. The company's acquisitions, partnerships, and product development strategies often failed to deliver the desired results. The 2015 acquisition of Altera, a leading manufacturer of FPGAs, was seen as a strategic move to bolster Intel's position in the data center market, but the integration proved to be challenging, resulting in delays and inefficiencies. The Altera project was an attempt to merge Intel's traditional CPU architecture with Altera's FPGA technology, aiming to create a hybrid chip capable of handling both traditional workloads and emerging AI/ML demands. However, this approach proved to be conceptually rigid, leading to a series of setbacks and ultimately resulting in a spinoff of the Altera technology. This misstep exemplifies how Intel's reliance on its established CPU-centric approach hindered its ability to adapt to the changing landscape of specialized processors.

This acquisition, along with other missteps, further cemented the perception that Intel was struggling to keep pace with the rapid evolution of the tech landscape. The astronomical success in this space of competitors like NVIDIA and AMD also played a significant role in Intel's decline. These companies aggressively pushed into the data center market, developing powerful GPUs specifically designed for AI/ML workloads, which quickly gained traction and challenged Intel's traditional dominance. These competitors, fueled by agility, innovation, and a willingness to embrace emerging technologies, forced Intel to react to changing market conditions, often playing catch-up. Rather than directly challenging NVIDIA and AMD's dominance in the data center market, Intel initially targeted their intelligent chip offerings towards the PC market. While this ambition held promise, the timing was ultimately off, as the data center space had already become a battleground for AI and high-performance computing - whereas the PC market was conclusively not ready - even if the chip was! This miscalculation, along with other strategic missteps, further eroded Intel's once-unassailable position, leaving it vulnerable to competitors that were better positioned to meet the demands of a rapidly changing tech world.

Intel's future success hinges on its ability to break free from its past dependence on CPUs and embrace a more agile, innovative approach to the changing landscape of computing. To regain its competitive edge, Intel needs to prioritize adaptability and innovation, fostering a culture that encourages experimentation and embraces new technologies. The company must be willing to challenge its established practices and embrace the shift towards specialized processors. Intel must learn to play the "doodle" game if it wants to remain a player in the evolving world of technology.