Qualcomm considering getting into the Fab business

[lol123]

That would be a stupidest possible move for IBM. Any large seller of x86 servers would have to be an idiot to tie themselves to AMD. IBM has no personal computer business. Their only x86 product is in the server space. Where did you get the idea that IBM partnering with AMD would make any sense at all? Wow.

They could then either be tied to AMD, and sell only AMD servers, letting them compete for the tiny server space (we're talking 5-8%?) that AMD is purchased in, or they could be tied to AMD, and still sell Intel servers. Which of those make sense? To me, neither.

Do you seriously think that an Intel monopoly on server CPUs is a good position for IBM to be in, whether strategically (control over platforms, programming models etc.) or purely economically (prices of Intel CPUs that go into IBM x86 servers)? That the RISC CPU market is shrinking (albeit with POWER growing its market share at the expense of IPF and SPARC) is a fact and has been for years, leaving System z as the only hardware platform controlled by IBM.

I don't believe for a second that AMD in its present state can make competitive server CPUs again, however with IBM in on the design process more directly and more involved than before things would look a bit different. The legal implications of such an arrangement are a bit unclear however, and the business reasonings of IBM are another hurdle to that ever happening.

Edit: I do seem to recall though that IBM holds an x86 license from the days of the IBM PC.

 

[ShintaiDK]

IBM sells software/maintenaince. They dont care what CPUs etc it is. Thats how their business model works.

There is no money in hardware for IBM.

 

[ShintaiDK]

might work for mobile devices re apple but not desktop. no way intel would let apple fab their chips. unless apple moves all products over to arm.

i'm assuming that there's patent issues involved as well which intel could use to prevent another major player joining?

p.s i though samsung had already said they were investing in new fabs?

p.p.s could we see TSMC/GF or samsung (or all 3) joining forces at some point in the fab game? if not and intel rules the roost that would mean intels cell phones would be far more power efficient/faster and overall better than the competition no? assuming good designs and a healthy advantage in process tech

It wouldnt work for any device cept basicly x86 CPUs. All due to margins.

Samsung is mainly investign in NAND, memory etc facilities. logic not so much.

I dont think TSMC would join with GF or Samsung. GF is the smallest one and essentially out of the game already. Either GF will be bought up or simply dissapear. Samsung will at a certain point change to TSMC for logic manufactoring. But I dont see any merges.

 

[Arachnotronic]

Oh, there is no doubt that they are massively overvalued. That bubble will eventually collapse.

Exxon doesn't earn as much $ as Apple. Maybe someday when Apple starts making less they'll be overvalued, but right now, they're actually priced pretty conservatively at 14x past earnings.

 

[Ferzerp]

Exxon doesn't earn as much $ as Apple. Maybe someday when Apple starts making less they'll be overvalued, but right now, they're actually priced pretty conservatively at 14x past earnings.

Step away from the RDF. Exxon has lower margins, but has about 160% of the profits that Apple has (with 4 times the revenue).

The top 4 for profit in the US are Exxon, Chevron, Apple, then MS. Exxon has over 150% of the profit of the second place slot, and Chevron, Apple, and MS are pretty close to one another. (amusingly, MS has higher margins than Apple, but less revenue)

 

[lol123]

IBM sells software/maintenaince. They dont care what CPUs etc it is. Thats how their business model works.

There is no money in hardware for IBM.

That's true in a limited sense, but for a systems company like IBM there is more to selling hardware than the profits you make on hardware sales directly (which is just a function of the price tag you choose to set on your systems anyway). Just ask Larry Ellison why Oracle is so keen on restoring SPARC to its former glory, or IBM why they discount their hardware systems so heavily (probably beyond what could be considered profitable when looking at just the servers) for select customers.

 

[Ferzerp]

IBM why they discount their hardware systems so heavily

Again... What? Have you bought any Power systems recently? Are you sure you aren't just making things up that you feel sound knowlegeable? (hint, IBM's "systems and technology" group has like 35-40% margins.)

 

[lol123]

Again... What? Have you bought any Power systems recently? Are you sure you aren't just making things up that you feel sound knowlegeable?

Discounting systems is standard practice in this industry, and has to do with the scale and breadth of your hardware purchases, your history as a customer and what software and support contracts you buy with your hardware. In fact, paying list price for large-scale enterprise servers is rare. I think you should turn down your tone a few notches unless you want to continue making a complete ass out of yourself.

http://www.channelregister.co.uk/2009/11/05/ibm_power_engine_deal/
http://www.theregister.co.uk/2008/12/05/ibm_power_deals/
http://www.itproportal.com/2011/06/07/oracle-offers-heavy-discounts-exadata-hardware-software/
http://www.channelregister.co.uk/2010/12/07/oracle_pricing_changes/
http://www.theregister.co.uk/2011/10/11/oracle_sparc_t4_server_pricing/

 

[ShintaiDK]

That's true in a limited sense, but for a systems company like IBM there is more to selling hardware than the profits you make on hardware sales directly (which is just a function of the price tag you choose to set on your systems anyway). Just ask Larry Ellison why Oracle is so keen on restoring SPARC to its former glory, or IBM why they discount their hardware systems so heavily (probably beyond what could be considered profitable when looking at just the servers) for select customers.

Larry got a little dream of only selling Oracle running on SPARC. Hence a new monopoly. Totally different case.

IBM business case is about long term support contracts on software that you keep paying. Thats also why they did so good in the economic crisis. nobody could come out of those contracts.

 

[Ferzerp]

"discount" and still make 35-40% margins. That isn't discounted. That's premium pricing.

Let's look at actual earnings releases shall we? Sure a lower margin than last year, but still way off the charts for hardware. The facts don't back up your wild claims.

http://www.ibm.com/investor/1q12/press.phtml

 

[pelov]

Larry got a little dream of only selling Oracle running on SPARC. Hence a new monopoly. Totally different case.

IBM business case is about long term support contracts on software that you keep paying. Thats also why they did so good in the economic crisis. nobody could come out of those contracts.

What would you consider 'x86 everywhere' to be?

:sneaky:

 

[blckgrffn]

Again... What? Have you bought any Power systems recently? Are you sure you aren't just making things up that you feel sound knowlegeable? (hint, IBM's "systems and technology" group has like 35-40% margins.)

They can be mind boggingly cheap for the volume they sell. Yes, we do buy them. I mean, how many can they move? How can they offset their fab costs with such low volumes and not charge ridiculous amounts? (I get it - software licensing...)

Our Power 7 4U (trying to remember how many cores/speeds... many/fully populated) were very competitively priced against our Nehalem-EX 4U 4 way boxes with 1TB ram - except they only had 512 GB of ram

I know that one of the Unix guys left here to be a presales tech for IBM, and he was talking about Power blades that were $5-$10k each.

I wont say they are free or cheap, just not 2x-3x the price (or more) like they may have been in the past. Of course, we didn't have our big-boy x86 parts in the past, either.

 

[Martimus]

Again... What? Have you bought any Power systems recently? Are you sure you aren't just making things up that you feel sound knowlegeable? (hint, IBM's "systems and technology" group has like 35-40% margins.)

Quite simply, if you don't control the hardware, then you can't monopolize the software that goes into it. As you said, they are a service and software business, but as soon as they stop selling hardware then others will be able to compete with them on that software and service, reducing margins.

 

[lol123]

Quite simply, if you don't control the hardware, then you can't monopolize the software that goes into it. As you said, they are a service and software business, but as soon as they stop selling hardware then others will be able to compete with them on that software and service, reducing margins.

Exactly. Software and services is without a doubt the primary business of IBM these days, but their software division would be weaker without their hardware division.

 

[ShintaiDK]

They can be mind boggingly cheap for the volume they sell. Yes, we do buy them. I mean, how many can they move? How can they offset their fab costs with such low volumes and not charge ridiculous amounts? (I get it - software licensing...)

Our Power 7 4U (trying to remember how many cores/speeds... many/fully populated) were very competitively priced against our Nehalem-EX 4U 4 way boxes with 1TB ram - except they only had 512 GB of ram

I know that one of the Unix guys left here to be a presales tech for IBM, and he was talking about Power blades that were $5-$10k each.

I wont say they are free or cheap, just not 2x-3x the price (or more) like they may have been in the past. Of course, we didn't have our big-boy x86 parts in the past, either.

And what do you pay IBM every year in maintenaince? Thats where the money comes in. Looks cheap, ends up expensive. Thats what companies learned in the crisis when they needed to cut back.

I still think Oracle takes a good 20% of the purchase cost in "support" every year.

 

[blckgrffn]

And what do you pay IBM every year in maintenaince? Thats where the money comes in.

I can truthfully say I have no idea. I know that we get a fairly sweet deal as we sell/develop enterprise ERP software that is hosted on WebSphere, so we don't pay anything (to the best of my knowledge, this isn't contractual language I am interpreting for you...) for software maintenance ourselves but sell it into every company that buys into our platform.

So, zero on the software maintenance and I think we bought three years on the servers when they came in, per our usual purchasing practices.

I think what you're getting at is that you are likely paying IBM software maintenance if you are using Power, fair enough. But we don't lump in VMware or Windows maintenance if we talk about Dell or HP do we?

 

[lol123]

And what do you pay IBM every year in maintenaince? Thats where the money comes in. Looks cheap, ends up expensive. Thats what companies learned in the crisis when they needed to cut back.

That's exactly why IBM wants to sell you their hardware and is ready to cut prices substantially to make sure you do. The amount of maintenance they can sell you (and the amount of control they exert over the future of computing and the computer market as a whole) grows less when their customers run their operating systems and hypervisors on x86 instead of POWER or System z, and even less when they run their databases and middleware on Linux instead of AIX or z/OS. (Granted that IBM also has a large presence and investment in Linux.) The customer incentive to actually run IBM software and middleware is also weakened when IBM can't provide them with complete support of all system components. IBM for example has, naturally, better software and firmware integration with the RAS features of POWER and System z than those of Intel Xeon.

 

[ShintaiDK]

That's exactly why IBM wants to sell you their hardware and is ready to cut prices substantially to make sure you do. The amount of maintenance they can sell you (and the amount of control they exert over the future of computing and the computer market as a whole) grows less when their customers run their operating systems and hypervisors on x86 instead of POWER or System z, and even less when they run their databases and middleware on Linux instead of AIX or z/OS.

And where do IBM need AMD in all this? Or the need to make x86 CPUs.

 

[pelov]

I think what you're getting at is that you are likely paying IBM software maintenance if you are using Power, fair enough. But we don't lump in VMware or Windows maintenance if we talk about Dell or HP do we?

That's because neither Dell nor HP are designing, putting out the silicon and making the hardware from the ground up.

IBM does what Apple does: control everything. It works great and you don't have competing Power 7 architectures, rather the competing architectures are other RISC ones (I guess you can throw x86 into that boat as well since they're closer to RISC than CISC nowadays).

Unlike Apple, though, IBM has some of the brightest minds in all of engineering and it shows with their hardware.

 

[blckgrffn]

And where do IBM need AMD in all this? Or the need to make x86 CPUs.

Foundry volume for the former (so they can continue to pursue smaller technologies)? No idea on #2.

That's because neither Dell nor HP are designing, putting out the silicon and making the hardware from the ground up.

IBM does what Apple does: control everything. It works great and you don't have competing Power 7 architectures, rather the competing architectures are other RISC ones (I guess you can throw x86 into that boat as well since they're closer to RISC than CISC nowadays).

Unlike Apple, though, IBM has some of the brightest minds in all of engineering and it shows with their hardware.

Yes. The custom silicon in even our x86 systems is pretty impressive. The extensible QPI links in our modern ones, the custom linking technology and memory controllers in our older ones are pretty shiny.

HP thinking they were going to turn into IBM overnight was laughable.

 

[Ferzerp]

IBM does what Apple does: control everything

No, IBM actually deisgns hardware at a very low level. Apple does not.

 

[lol123]

And where do IBM need AMD in all this? Or the need to make x86 CPUs.

I can't really say that they do need AMD (whatever direction they take), but I figure that if demand for POWER systems really becomes so small that IBM can't justify continuing development on them (which, admittedly, is unlikely, if for no other reason that IBM in any case would have to continue supporting existing customers for at least 10 years), it would be better for IBM to make high-end x86-compatible processors and systems to compete with high-end Xeon than to cede the hardware side completely to Intel. The ISA doesn't really make that much of a difference in the enterprise space, but at least the added scale that is attainable in the x86 server market would help support development costs better than the RISC market does for POWER development today.

HP thinking they were going to turn into IBM overnight was laughable.

LOL, I strongly agree. HP is headed for complete irrelevance. Every stupid decision and every insane acquisition they make just puts them one step closer to complete disaster.

 

[alyarb]

IBM has an x86 license. Not x86-64.

 

[pelov]

HP thinking they were going to turn into IBM overnight was laughable.

Well, they tried with the Itanium

And, correct me if I'm wrong, weren't AMD and IBM always "close"? I guess as far as fabs go

Sunnyvale, Calif. and East Fishkill, NY, December 13, 2004 -- AMD and IBM today announced that they have perfected a new strained silicon transistor technology aimed at improving processor performance and power efficiency. The breakthrough process results in an approximate 24 percent transistor speed increase, at the same power levels, compared to similar transistors produced without the technology.

http://www.design-reuse.com/news/93...or-manufacturing-technology-breakthrough.html

And the Fishkill Alliance. Going fabless and buying SeaMicro might change their close ties with IBM I'd guess.

 

[lol123]

IBM has an x86 license. Not x86-64.

That makes sense. I wonder if IBM's existing x86 license coupled with AMD's ISA extension-sharing agreements with Intel could somehow render IBM with an x86-64 license in the event of an IBM buyout of AMD, but I'm really speculating wildly at this point. I also think there is a clause in the Intel-AMD agreement saying that it is null and void if either party is purchased by another company.

To maybe return to the original topic a bit: how much in trouble are both IBM and the ARM collective in the 10 years or so going forward? I would say, by the look of things, a lot of trouble.