Last week, I was pre-briefed on today’s launch of AMD’s impressive Ryzen Pro line. AMD is once again moving aggressively against Intel’s dominance with a competitive line and Intel has never been more vulnerable. This vulnerability comes from a combination of bad internal Intel practices, questionable Intel behavior, and what appears to be a massive reduction in resources.
But rather than focusing on that, what struck me was part of AMD’s coming campaign, which will ask the question whether buying an Intel Xeon part could put your job at risk. Given that I came out of IBM in the early 90s when that company had negative brand equity, I may have some unique insight here. You see, in a very short period, IBM went from being the company that had the valid slogan “nobody ever got fired for buying IBM,” to the company that folks avoided like the plague, almost putting the firm under.
The company got there by massively breaching trust. I think you could argue that Intel has done the same thing, but the market has yet to come around to the same solution.
Let us look at the IBM event based on my recollection (I authored a report on it while in IBM) and see if the parallels with Intel’s behavior hold water.
Where IBM Went Wrong
Much of IBM’s power came from three things. It had a significant technology lead on competitors, a level of trust with customers that was unprecedented at the time, and near complete market dominance, resulting in near complete customer lock-in. This meant that the only way to compete with IBM was to either steal its IP and massively undercut its prices, which generally attracted disloyal customers and resulted in expensive civil and criminal charges from IBM (not to mention incredibly low margins), or to come up with an alternative disruptive technology.
IBM got hit by a near perfect storm that developed over decades. First, it was forced to sign a consent decree, which broke IBM’s software lock-in, then it breached customer trust with abusive practices that charged the customers for IBM’s mistakes, and then Sun Microsystems and WinTel (Microsoft and Intel) hit the market with disruptive and, apparently vastly better alternatives. Now, I say apparently because studies done years later found that most of the early client/server stuff didn’t actually work and Microsoft’s server solutions didn’t really mature until well after IBM fixed its problems.
On top of this, instead of defending its dominant mainframe technology, IBM seemed to side with Sun and Microsoft that it was prematurely obsolete. This was particularly ironic given that the IBM mainframe remains one of IBM’s most successful platforms today.
IBM eventually recovered and today is again one of the most trusted brands, but that was an expensive lesson hard learned, which resulted in the only firing of and external hiring of a CEO in IBM’s history. To say that during this time it was painful to work in IBM would be an understatement. It was harder still on customers, who had to aggressively defend any purchase of IBM product as there was a very real chance employment could be put at stake around that issue.
Intel doesn’t enjoy lock-in outside of design wins with OEMs (AMD hasn’t been socket compatible with Intel for around two decades). But moving from an AMD to Intel PC or server is pretty easy because the related operating systems, mostly Windows or Linux variants, work seamlessly on both.
Intel’s recent breach of trust, while different from IBM’s, is arguably even more troubling. With the disclosure of the kernel-memory-leaking design flaw, we found out Intel had been knowingly selling defective processors for months. Notified in June of 2017, Intel didn’t disclose the problem broadly until January of 2018. And some of the fixes were potentially worse than the problem.
During that window, Intel disclosed Chinese OEMs tied to the Chinese government, but didn’t disclose U.S. OEMs or the U.S. government. This not only opened non-Chinese companies to attack, it uniquely put the U.S. at risk, which is Intel’s own country, along with any other company or country outside of China and its allies.
Finally, during this lack of disclosure, Intel’s own CEO divested every Intel share (this could explain why) he could in a possible attempt to avoid what might have been a stock market backlash. (At last check, there are 35 active lawsuits, which may increase once we start tracking successful attacks using this exploit.) That recall hasn’t happened yet, and it would require replacement chips that didn’t have the defect to be in market, but the damage to trust should be pretty pronounced.
Wrapping Up: How You Could Get Fired for Buying Xeon
I think this would come down to a major contract review and/or a high-profile security breach (recently reported to be imminent) tied to a system decision that you made based on either a known or unknown Intel exploit. This suggests an enterprise- or government-level purchase, where the breach exposure was traced to the Intel Xeon processor and your defense was to rely on Intel disclosures, or where there was not sufficient follow-through to assure that relevant patches were applied in a timely manner or actually worked. Or, more simply, an inability to defend against the question: “If Intel’s own CEO didn’t have faith in Intel’s technology when it came to his money, why did it make sense for you to invest our money in it?”
Given how rapidly IT folks are targeted as scapegoats, even when they do everything right, perhaps AMD has something with this anti-XEON campaign.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+