Remembering Bill Campbell, Magic Leap’s Expose, Intel’s Re-Org Implications

This was written by Tim Bajarin who has been in the industry since 1981 and has had deep relationships with such pioneers as Bill Campbell.

One of our industry’s most warm-hearted leaders lost his battle with cancer this week. There have already been many who posted thoughts about Bill but I wanted to add a few from my perspective because Bill Campbell meant a lot to me personally. When he was an executive with Apple, I would meet with him often to discuss the market and areas he was focused on. While our relationship was business focused, Bill quickly made sure I knew he was a friend too. From my first meeting with him, he would hug me and ask how I was doing. This was not just polite talk. He really wanted to know what I was up to and see if I was doing OK.

Over the years, as he got to know my business and how we worked, he would often give me suggestions on how to look at a problem I would have and try and help me get any particular issue I was working on back on track. As many who have written about Bill point out, he was a friend and mentor to many, especially Steve Jobs and Larry Page. However, even peons like myself, as a young analyst, got his undivided attention when we talked and he always made me feel important and special.

I have seen various articles in which he was called “Coach” and tied that nickname to his mentoring role. However, that nickname came from the fact that, before he became a business executive, he was a football coach, a place where he learned his early mentoring skills. So it was natural to still call him Coach in business settings as he so often became a real mentor to some of the giants in our industry.

After he left Apple and went on to Claris and eventually Intuit, we did not have much contact. Yet, every time I would see him at an Apple event because of his role as an Apple board member, he would put his arm around my shoulder and hug me and honestly ask how I was doing. That is just who he was; warm-hearted and willing to help anyone and everyone who came to him for advice, counsel and, in some cases, serious mentoring.

Bill Campbell was one of the good guys of our industry. While I have known other major tech leaders that have also been very friendly and helpful to my career along the way, none had the warmth and gentle temperament Bill had and his willingness to help when asked. He really was a giant among men and his heart and gentle smile will be greatly missed by myself and hundreds of others who along the way were able to call him Coach and friend.

Magic Leap’s Expose

Earlier this week, Wired ran a very long exclusive on Magic Leap, a company the public has not seen or heard much about. The timing of this article is interesting given we are not sure if Magic Leap will release a product this year. However, with all the attention Oculus and HTC Vive is getting, it makes sense they want some recognition also. There are more questions than answers and ultimately what sits at the heart of my biggest question is if this company can create a thriving ecosystem mostly on its own. We don’t know if it will run Android apps, or need custom developed apps, or play standard AR content, or plug into an AR ecosystem, or if it wants to try to be the AR ecosystem. Google being an investor and Google’s CEO sitting on the board may give us some clues, but ultimately, this is a startup taking on a much larger task than it likely has with its own resources. I have no doubt they will make it to market with a quality experience but the real decider of their success will be who they partner with.

Below is a video Wired put together I encourage you watch if you want to understand more about Magic Leap or even Augmented Reality in general.

Intel’s Re-Org Implications

Where to begin with Intel. There is so much to say, both in a looking back, “what really happened?” kind of way but also in a “what should they do now?” way. I’d heard rumblings this was coming so I wasn’t surprised. I wouldn’t have been surprised regardless. You can’t have half-empty and, in some cases, mostly empty fabs and keep things going the way they were.

Intel’s re-org and layoffs are said to be done to focus on high growth areas. Here is a statement from the release:

The data center and Internet of Things (IoT) businesses are Intel’s primary growth engines, with memory and field programmable gate arrays (FPGAs) accelerating these opportunities – fueling a virtuous cycle of growth for the company. These growth businesses delivered $2.2 billion in revenue growth last year, and made up 40 percent of revenue and the majority of operating profit, which largely offset the decline in the PC market segment.

Firstly, while IoT has grown from nothing to a small something, it is disingenuous (in part) to include it in this overall narrative. Let’s not be fooled, data center was at least, if not more, than 90% of revenue growth and operating profit. Intel has a near monopoly and the data center and the margins are, lucrative. IoT is a sound area to be focusing on, particularly to fill fabs should Intel succeed here, but it will be a very low-margin game as embedded chipsets generally sell for under $5, an area Intel has historically not been fond of.

The layoffs, roughly 12,000 jobs globally, make sense and are part of a cost savings trade-off. Given the slowdown coming in data center spending (as indicated by a number of private research notes I have highlighting CTO/CIO spending surveys) it is clear the high double-digit growth Intel has seen in data center growth is slowing and Intel knows it. While revenues were good this quarter, Intel is preparing for lean years and rightly so. These layoffs are the reduction in spending Intel is choosing over slowing their pursuit to keep Moore’s Law going even further. Intel has already stated their new process technology will move from 2 to 2.5 years and, if they slow investments in this area, that could easily slip to 3 years or longer. They would then be in jeopardy of losing their razor-thin lead in process technology advancements.

Intel’s biggest ace in the hole, in my opinion, is their process technology. If, at the end of the day, Intel is the last man standing at 5nm or beyond, everyone will have to come to them to make and/or license their process. We need/want to get to 5nm for the benefits of performance and power/thermal reduction. We are going to be able to bring very powerful capabilities to very small objects at that time and whoever gets there could reap the rewards. This is why Intel must fight to keep a lead and keep chasing 7nm then 5nm, and beyond.

Intel simply can’t keep betting on x86 and keep the money coming. They could license ARM and design and sell their own ARM chips in a hope to fill fabs, they can do the obvious thing and make Apple’s and Qualcomm’s ARM chips on their leading edge process but neither option to help bring fabs to a moderate capacity seems to be an initiative. I hope it will at some point and I’d like to see Intel embrace their destiny sooner than later.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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