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Comment by btilly | Hacker News Reader

The most important part of the article is easily missed unless you've read The Innovator's Solution. Which is the follow up book and spends a lot of time looking inside of organizations to see why it is so darned hard to catch the disruptive train.

A company with a profitable niche and a profitable technology will wind up with high internal costs. That's fine in their main business because they have a profit margin to play with. But it is surprisingly hard to trim back that "fat" to go after much lower margin revenue with a cheaper technology. (Fat is in quotes because it isn't really fat. It is necessary for the high margin business.) It is common to try, and to conclude that it is a failure.

That is why Intel made this mistake.

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Until Intel isn't producing chips with way more profit margin than an ARM at 100% capacity, it's not a mistake.

ARM has volume, but x86 has profit.

It can be a good business decision to run a business for maximum profit and a quick exit. However when you do that with a major corporation like Intel, it tends to make people unhappy.

Intel will continue with the high profit margin right until the chips don't sell. And then Intel gets to go out of business.

> Intel will continue with the high profit margin right until the chips don't sell. And then Intel gets to go out of business.

Or, it can switch to selling ARMs and be a fraction of the company it is right now.

Intel's revenue last year was a record $60 Billion. If Intel could get $30 per ARM chip and didn't have to pay a royalty to ARM (ha ha) and had every single iPhone sold last year, that would only make them a $6 billion company. In reality, Apple would never pay that and ARM takes their cut. So, at best, Intel would only be about a $1 billion revenue company, and, that was only last year when Apple moved 200 million iPhones, the previous year was only 100 million.

So, Intel would be roughly 1/10th to 1/100th the size it currently is if it manufactured ARM's instead of x86. Yeah, I'm sure managers inside Intel are lining up for that business decision.

It is going to be better for Intel to glide to "irrelevance" for a very long time rather than switch to making ARM's.

So in your scenario, Intel stops making desktop, laptop and server chips completely. Doesnt replace them with ARM, but throws those businesses away and only gets any revenue from the existing mobile ARM market.

I dont think that's actualy what anyone is suggesting.

But it is. Intel runs its fab lines as near to full capacity as they can. Consequently, every ARM you make means you make fewer x86's.

So, you're telling me that a fab line manager is going to reduce his profit margin by 10% just so he has a fallback when the x86 market collapse and decimates Intel?

This is like finance guys before the stock market crash: "I can be contrarian but it does me no good. If I'm right, my company is so invested in the stock market going up that my company is dead anyway. If I'm wrong, well, I look like an idiot and don't make money. So, I'll just try to make money and cash out."

So, just like Apple, with the same "high margin" strategy, their 19th year of record revenues and $600 billion in store?

And how exactly would them (Intel in this case) selling commoditized, low margin, products make it better for them?

Isn't it even worse, even quicker, for low margin players when their stuff doesn't sell?

The challenge of disruption is when you have a clear value proposition that everyone agrees on. The genius of Steve Jobs is that every year or three he'd introduce a new product line with a new value proposition and cannibalize his existing products in the process.

He's gone, and Apple has stopped doing that. Apple is now losing marketshare. (Android is estimated at 82%.) Their app store is globally under half of the market. They are projecting a year over year decline this quarter.

It probably won't be visible to the untrained eye in the next 5 years. It won't be missable by anyone in the next 10. But Apple's best days are behind it.

>He's gone, and Apple has stopped doing that

Actually they did just that with the Apple Watch -- which added ~6 billions to their revenues, and even as an early v1.0 eclipsed all "wearables" to date. http://www.cnet.com/news/thanks-to-apple-watch-smartwatch-sa... http://www.macrumors.com/2016/01/26/apple-watch-apple-tv-rec...

And their services dept doesn't do that bad either: http://appleinsider.com/articles/16/04/20/as-a-standalone-co...

They've also keep improving the Apple TV (people who haven't followed Apple forget how slow and incremental the rise of the iPod was -- from 2002 to 2007 people gathered at Keynotes to cheer if it got silly features like Wifi or a color screen or some smaller sibling), working on a car, and other things besides.

>Apple is now losing marketshare.

Barely -- from April 2015 to now, they've gone up and down, some quarters winning over Android, others losing. http://www.comscore.com/Insights/Market-Rankings/comScore-Re...

Besides I've never understood this "let's pin Apple, a single company, against the whole of the industry put together". They've never had the "most" market share -- just the most of the most lucrative (higher end, high margins) segment of the market.

>It probably won't be visible to the untrained eye in the next 5 years. It won't be missable by anyone in the next 10. But Apple's best days are behind it.

I think I've read that again, in 1997, 2000, 2002, 2004, 2006, 2007, 2009, 2012, 2015 etc. A.k.a "Apple is doomed".

The iPhone meant you no longer needed an iPod. The iPad meant grandma no longer needed a Mac. The Apple Watch requires an iPhone.

What kind of bizarro metric is that?

The iPod never meant you don't need a Mac.

The iPad never meant you don't need an iPhone (and hardly ever meant you don't need a Mac/PC).

The idea that a device should replace previous devices was never much of a concern. The only thing that qualifies 100% in that story is that the iPhone was by nature also a portable music player -- and if you had one obviously you didn't need the iPod. Apart from that, all were individual lines, with their own strengths and limitations -- not supposed to replace one another.

Apple isn't selling technology, though, they're selling a brand. There are different dynamics in play.

Disruption as a concept seems to be a bit of an empirical controversy these days.

http://www.bloomberg.com/news/articles/2015-10-05/did-clay-c...

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