Intel has $55.9B record year, ships 46M tablets

[R0H1T]

I have gathered from this thread that you are in a bit of an emotionally charged moral outrage type situation here, so attempts to address your position based on logic are probably wasted as they will fall on deaf ears as failing to assuage the outrage...but have you given any consideration to the possibility that you personally just might not understand the "contra-revenue" program correctly?

That possibly you are raging against some misguided concept that exists only in your mind?

History shows humans are pretty quick to decide something or someone is a demon, vilify first and don't think twice about it. Do you hold yourself as being above folly or misunderstanding?

Definitely not but whenever a competitor (any competitor) tries to corner a certain segment of market using tactics, like contra revenue however you define it as, that are deviant from fair play (IMO) & borderline illegal, again making use of certain legal loopholes, I'd like to call them wrong plain & simple.

Now how do you define wrong depends, like legal/illegal or ethical/unethical, on one's perspective & how close they are to action on the ground.

Sitting afar I see Intel doing what any other profit making company would do, but I do not condone any such practice nor any other company doing such a thing.

While for some it may be a necessary evil but I can't define it in varying shades of grey, it;s in black & white for me.

 

[mrmt]

Definitely not but whenever a competitor (any competitor) tries to corner a certain segment of market using tactics, like contra revenue however you define it as, that are deviant from fair play (IMO) & borderline illegal, again making use of certain legal loopholes, I'd to call them wrong plain & simple.

Where's the legal loophole Intel is using?

 

[witeken]

This has nothing to do with this thread, but I can't bother to create a new one:

Industry Strategy Symposium: http://www.eetimes.com/document.asp?_mc=sm_eet&doc_id=1325318

Many interesting things from many companies.

 

[R0H1T]

Where's the legal loophole Intel is using?

Selling anything below cost is illegal in my part of the world, probably anywhere else as well, or do you claim that Intel is not paying manufacturers additional money to sell Baytrail through their devices? You're arguing semantics here even though it's pretty evident to everyone what's going on.

 

[DrMrLordX]

I, for one, congratulate Intel for their impressive earnings in Q4 2014. Like they care. But I'll congratulate them anyway.

If their competitors have nothing to say about contra-revenue, then there seems little reason to belabor the point.

Besides, contra-revenue is currently x86/x86-64's best hope at establishing a foothold in the mobile market. As an x86 fanboy first and foremost, watching Intel sacrifice anything and everything (including their dignity? It only hurts 'cuz it's true!) to blaze trails for x86-64 is somewhat gratifying.

 

[krumme]

When Intel pours 4b into mobile the natural response from apple and ss is to double up r&d to protect their domain.
Its so wrong on the long term. Its got the exact oposite effect of what was intended.
What happens when ss 14nm in apple A9 hits in huge numbers this fall?
Will Intel dump 6b in mobile? What do they expect ss to do? Nothing??? No its just more r&d. Faster euv 10nm ramp.
Its like amd hitting intel straight on.

 

[ShintaiDK]

When Intel pours 4b into mobile the natural response from apple and ss is to double up r&d to protect their domain.
Its so wrong on the long term. Its got the exact oposite effect of what was intended.
What happens when ss 14nm in apple A9 hits in huge numbers this fall?
Will Intel dump 6b in mobile? What do they expect ss to do? Nothing??? No its just more r&d. Faster euv 10nm ramp.
Its like amd hitting intel straight on.

After the A8 I dont have much faith in A9. The low fruit was picked with the A7.

 

[ShintaiDK]

Selling anything below cost is illegal in my part of the world, probably anywhere else as well, or do you claim that Intel is not paying manufacturers additional money to sell Baytrail through their devices? You're arguing semantics here even though it's pretty evident to everyone what's going on.

You should inform the local authorities then. The big companies like Qualcomm, MediaTek, AMD etc all missed the obvious information you hold. All those high payed lawyers of theirs must have been worthless. So informing them as well should help you in uncovering this illegal operation you claim.

 

[mrmt]

Selling anything below cost is illegal in my part of the world, probably anywhere else as well, or do you claim that Intel is not paying manufacturers additional money to sell Baytrail through their devices? You're arguing semantics here even though it's pretty evident to everyone what's going on.

No, it is not. Law is a bitch: If Intel were giving its chips for free but the costs of adopting Intel solutions was silimar to adopting a competitor's solution, then it would be something illegal in *some* countries (some countries don't legislate on the matter) but also on the WTO dumping rules.

But if Intel is just normalizing the costs, e.g., offsetting the higher costs the OEMs will have for adopting Intel solutions when compared to ARM solutions, then no, there's no illegality taking place.

 

[R0H1T]

You should inform the local authorities then. The big companies like Qualcomm, MediaTek, AMD etc all missed the obvious information you hold. All those high payed lawyers of theirs must have been worthless. So informing them as well should help you in uncovering this illegal operation you claim.

And what would that achieve, you know very well that only China & perhaps EU can bring such a case since the manufacturing facilities are In China & that EU has extremely strict regulations (probably covering such grey areas) but since no one has brought that to their notice everything if perfectly legitimate right?

No, it is not. Law is a bitch: If Intel were giving its chips for free but the costs of adopting Intel solutions was silimar to adopting a competitor's solution, then it would be something illegal in *some* countries (some countries don't legislate on the matter) but also on the WTO dumping rules.

But if Intel is just normalizing the costs, e.g., offsetting the higher costs the OEMs will have for adopting Intel solutions when compared to ARM solutions, then no, there's no illegality taking place.

That's the loophole right there. If I pay Honhai to use my SoC, being sold at list price, & I offset any other component costs using contra revenue then I am directly subsidizing the device. You do know how anti dumping regulations work right & how nations circumvent such rules?

There's no point arguing about this anymore since all you're doing is trying to confine contra revenue in legal parlance & there aren't rules, yet, which can deal with such practices since the practice itself is innovatively new.

 

[Anon_lawyer]

And what would that achieve, you know very well that only China & perhaps EU can bring such a case since the manufacturing facilities are In China & that EU has extremely strict regulations (probably covering such grey areas) but since no one has brought that to their notice everything if perfectly legitimate right?That's the loophole right there. If I pay Honhai to use my SoC, being sold at list price, & if I offset any other component costs using contra revenue then I am directly subsidizing the device. You do know how anti dumping regulations work right & how nations circumvent such rules?

There's no point arguing about this anymore since all you're doing is trying to confine contra revenue in legal parlance & there aren't rules, yet, which can deal with such practices since the practice itself is innovatively new.

What you are thinking about is predatory pricing. It is pure non-sense to say that the practice is new and that there aren't rules. Probably a majority of all predatory pricing cases ever involved price rebates. Calling it contra-revenue won't fool anyone, or change how the law applies.

Predatory pricing is specific though. In the U.S. it is basically not a thing, because U.S. antitrust law is about consumer protection. U.S. courts have taken the view that even if you price below cost, and drive your competitors out of business, it is almost impossible to recoup your losses. Therefore, lower prices mean that the consumer comes out ahead overall.

Europe applies a stricter standard. E.U. antitrust law really evolved in the post-war era and takes a broader view. Antitrust law is about economic development as well as consumer protection. Nevertheless, predatory pricing is only an issue for a dominant firm, selling below variable cost. Not total cost, variable cost.* A small player (which Intel is in tablet SOCs) is not dominant and can still sell below variable cost. I rather suspect that Intel is selling, net of contra revenue, above variable costs - because that's what any good lawyer would tell them to do.** In any event, based on what Idontcare said a while back, it sounds like they are targetting specific products. If Contra revenue is only used for products where they are a minor player, they are definitely home free in the E.U.

Chinese antitrust law is closer to the E.U. model than the U.S., but still very underdeveloped. It's hard to make a solid prediction, but in general if you're okay in the E.U. you're okay in China.

Overall, it's pretty hard to see how Intel would get in legal trouble anywhere no matter what the contra revenue on tablet SOCs.


* www.lw.com/thoughtLeadership/predatory-pricing-in-eu this article provides a decent summary of E.U. predatory pricing law. (PDF)

** On the other hand, Apple tried a straight up hub-and-spoke price fixing conspiracy. Sometimes good lawyers get ignored.

 

[AtenRa]

But if Intel is just normalizing the costs, e.g., offsetting the higher costs the OEMs will have for adopting Intel solutions when compared to ARM solutions, then no, there's no illegality taking place.

Intel Mobile and Communications Group Net Revenue Q4 2014 = -6M

Intel Mobile and Communications Group Operating Income Q4 2014 = -1110M

In order to have minus(-) in Net Revenue it means you offer more discounts than your sales, meaning you spend more than you sell. That is not offsetting the higher cost of your product vs the competition

 

[mrmt]

And what would that achieve, you know very well that only China & perhaps EU can bring such a case since the manufacturing facilities are In China & that EU has extremely strict regulations (probably covering such grey areas) but since no one has brought that to their notice everything if perfectly legitimate right?That's the loophole right there.

It's no a loophole, it is working as designed in this case, it is a recognition by the lawmakers and from the WTO that in certain cases it is licit to sell below costs. If sell below costs = automatically wrong the law would say just that.

 

[R0H1T]

What you are thinking about is predatory pricing. It is pure non-sense to say that the practice is new and that there aren't rules. Probably a majority of all predatory pricing cases ever involved price rebates. Calling it contra-revenue won't fool anyone, or change how the law applies.

Predatory pricing is specific though. In the U.S. it is basically not a thing, because U.S. antitrust law is about consumer protection. U.S. courts have taken the view that even if you price below cost, and drive your competitors out of business, it is almost impossible to recoup your losses. Therefore, lower prices mean that the consumer comes out ahead overall.

Europe applies a stricter standard. E.U. antitrust law really evolved in the post-war era and takes a broader view. Antitrust law is about economic development as well as consumer protection. Nevertheless, predatory pricing is only an issue for a dominant firm, selling below variable cost. Not total cost, variable cost.* A small player (which Intel is in tablet SOCs) is not dominant and can still sell below variable cost. I rather suspect that Intel is selling, net of contra revenue, above variable costs - because that's what any good lawyer would tell them to do.** In any event, based on what Idontcare said a while back, it sounds like they are targetting specific products. If Contra revenue is only used for products where they are a minor player, they are definitely home free in the E.U.

Chinese antitrust law is closer to the E.U. model than the U.S., but still very underdeveloped. It's hard to make a solid prediction, but in general if you're okay in the E.U. you're okay in China.

Overall, it's pretty hard to see how Intel would get in legal trouble anywhere no matter what the contra revenue on tablet SOCs.


* www.lw.com/thoughtLeadership/predatory-pricing-in-eu this article provides a decent summary of E.U. predatory pricing law. (PDF)

** On the other hand, Apple tried a straight up hub-and-spoke price fixing conspiracy. Sometimes good lawyers get ignored.

That's because the law, as it stands today, doesn't encompass or envison the computing industry holistically but that doesn't mean that they can't expand its scope. Intel doesn't operate in a multitude of markets, market segments, consumer segments, industry segments in isolation of each other.

I wonder how the LCD price fixing case was resolved, did the EU fine the defendants based on whether they fixed prices of LCD monitors, TV's or small screen items like a smartphone? The law, as I stated earlier doesn't take into account the semiconductor/MPU industry as a whole. What they're doing now is taking into account the components that sell in a given sector, say mobile, & not how the players operating (dominating) in multiple sector, say servers, of the (computing) industry are leveraging their clout (or money) to manipulate a certain subsection of this (computing) industry.

absence of evidence is not evidence of absence

I rest my case.

 

[witeken]

Reality does not agree with your point of view. Unless you can somehow change reality to conform to your opinion, I suggest you to change your opinion instead.

 

[TreVader]

After the A8 I dont have much faith in A9. The low fruit was picked with the A7.

You do realize that going from A7 to A8 is like going from Nehalem to broadwell, right? If you "aren't impressed" with that, why are you impressed with Intel taking 6 times as long to do the same thing with massively larger R&D?

And what about A8X? Apple doesn't just quit when they are ahead like Intel. A8 is old news!

 

[R0H1T]

Reality does not agree with your point of view. Unless you can somehow change reality to conform to your opinion, I suggest you to change your opinion instead.

The sad reality is that I'm right, you can twist it however you want to but Intel is paying others to sell their stuff & that's certainly not right.

 

[Arachnotronic]

Intel Mobile and Communications Group Net Revenue Q4 2014 = -6M

Intel Mobile and Communications Group Operating Income Q4 2014 = -1110M

In order to have minus(-) in Net Revenue it means you offer more discounts than your sales, meaning you spend more than you sell. That is not offsetting the higher cost of your product vs the competition

Well, unless your BoM cost delta was ridiculously and awfully huge, which it was. Nobody is arguing that Intel didn't screw up on the BoM side of things...they did.

The delta was like $15-$20 in many cases, and if you're selling your chip for $10, then that's -$5 to -$10 in most cases.

 

[Arachnotronic]

You do realize that going from A7 to A8 is like going from Nehalem to broadwell, right? If you "aren't impressed" with that, why are you impressed with Intel taking 6 times as long to do the same thing with massively larger R&D?

And what about A8X? Apple doesn't just quit when they are ahead like Intel. A8 is old news!

A8 was a good chip, but I think with A9 you'll see a bigger improvement in microarchitecture + better clocks from the FinFET node.

Should be cool to see what they do...

 

[witeken]

The sad reality is that I'm right, you can twist it however you want to but Intel is paying others to sell their stuff & that's certainly not right.

Then prove it.

 

[Arachnotronic]

You do realize that going from A7 to A8 is like going from Nehalem to broadwell, right? If you "aren't impressed" with that, why are you impressed with Intel taking 6 times as long to do the same thing with massively larger R&D?

And what about A8X? Apple doesn't just quit when they are ahead like Intel. A8 is old news!

TreVader

I don't actually disagree with you that Apple is impressive. I would just like to point out that the "massively larger R&D" is used for a much wider range of products. Intel builds chips for notebooks, desktops, workstations, servers, storage, tablets, phones, etc. It does in-house process technology, and it has to do a lot of software/hardware enablement for a wide variety of customers in all of these markets.

Apple takes its sizable R&D and focuses on a handful of products. Apple releases just two processors per year: Ax and AxX. And the AxX is a straightforward derivative of the Ax. Is it any surprise that Apple builds great chips for the handful of products that it can focus its crack team of chip designers on?

This is another reason I wouldn't build a Mac chip if I were Apple: I wouldn't want to risk having my best engineers working on a very low ROI project when there's a very high ROI one (iOS devices) that requires all the skill and talent it can muster.

 

[R0H1T]

Then prove it.

What's there to prove, that Intel is subsidizing pretty much (i.e. almost) every Baytrail device they've ever sold OR the recent financial results including ~

Originally Posted by AtenRa
Intel Mobile and Communications Group Net Revenue Q4 2014 = -6M

Intel Mobile and Communications Group Operating Income Q4 2014 = -1110M

was them lying to their investors & the SEC ?

 

[AtenRa]

Well, unless your BoM cost delta was ridiculously and awfully huge, which it was. Nobody is arguing that Intel didn't screw up on the BoM side of things...they did.

The delta was like $15-$20 in many cases, and if you're selling your chip for $10, then that's -$5 to -$10 in most cases.

The BOM delta was for the platform, not the SOC.

 

[Arachnotronic]

The BOM delta was for the platform, not the SOC.

Yup, but the SoC is intimately tied to the platform, no?

You can't buy a Bay Trail chip without needing to build around it the rest of the platform.

So if Intel is selling a $10 chip and OEMs need to pay $20 extra relative to a competing $10 ARM chip to implement the chip, Intel needs to cough up $20 in contra-revenue support. That would lead to negative revenue of $10.

 

[witeken]

What's there to prove, that Intel is subsidizing pretty much (i.e. almost) every Baytrail device they've ever sold OR the recent financial results including ~was them lying to their investors & the SEC ?

Take the well-substantiated idea that BT was originally designed for laptops, so the cost was way too high for the low-end tablets Intel needed to get a foothold in the tablet market. Even if they made a low-end SKU, no one would buy it because of the additional component (not the silicon, which is simply priced competitively; it's actually laughable for people to suggest Intel's paying OEMs to use their chips because those same anti-Intel folks also say in the same sentence that Intel's this monopolistic company with ultra high margins, which couldn't be possible if they did what those people claim) costs. This claim is based on reality.

Then you ask how Intel was indeed able to sell 46M tablets, if BT wasn't compelling for OEMs. Simply because they, like they explained in great detail, paid the component cost delta themselves.


If we now apply Occam's razor, your idea does not win. Because if your idea was really true, then how do you explain that Intel talked so much about reducing the BOM disadvantage throughout 2014. You can't. If your idea can't explain reality (which, btw, is why religion's ideas are so stupid), it's simply plain false.

This is a good lesson in logic. Using your intelligence (if you have that, but there's hope) instead of your emotions to come up with the right, factual conclusions.

I hope you learned anything, because I'm not going to spend any more time on this topic (which will become utterly irrelevant this year anyway, so we'll see if Intel suddenly stops selling tablet chips like your model of 'reality' predicts -- and by the way, have you every looked at benchmarks of Bay Trail; it's an amazing chip for even $300 devices, so never mind sub $100 ones) or learning you how to reason, certainly if you can't (or refuse to) face reality.

In any case, on page 37 you'll find the answers to your questions: http://intelstudios.edgesuite.net/im/2014/pdf/2014_Intel_IM_Smith.pdf.

Edit: I hope you're not offended or found my comment offensive, but I just want to stress that opinions should not be part of who you are, they're just thoughts you think that can change if new information comes around. One should never emotionally attach himself to any opinion.