FPG- do you see any difficulty in reconciling these statements with your "Parts is Parts" view? I mean, if AMD can show a phoney roadmap and a cheaper price, shouldn't the OEMs just go with them?
Paul S. Otellini
Well, the roadmap is certainly the best door opener we have in talking to these customers, but it's not the only asset we have here. Then there's 2 classes of handset customers. There's obviously the traditional OEM manufacturers, and we've announced a number of those; but there's also carriers that are interested in doing a private label, and we've announced one of those with Orange in Europe. And the relationships that we have with carriers globally are pretty strong, and they go back a number of years. And those are -- those have to do with a lot of the work that Intel has done in their data centers and in the reconfiguration of the cellular network infrastructure. As both classes of customers look at the handset roadmap, what they want to do is find ways to provide differentiation from what's out there and service platforms for themselves. That's where the other element of our strategy, the non-silicon element of our strategy, becomes much more critical. And so what's our security roadmap as it relates to that? What's our location-based services capability? What kinds of sensors can we build into the handset? All of those are really hardware-centric features that employ software that allow someone to create a service annuity stream. That discussion is much more sophisticated and complex than just showing a roadmap. And that's the level that we're at today with most customers.
Paul S. Otellini
Well, the business model that we have today is one that I'm extremely comfortable with and we're working as hard as possible to maintain, which is -- and I described this last year in the analyst meeting. As compared to other non-integrated device manufacturers, we get paid twice for our products. We get paid the equivalent of a foundry margin, and we get paid the equivalent of an architectural margin and that allows us to generate fairly nice margins. So as long as we can fill up all of the factories we can build with Intel products at those kinds of rewards in terms of the ROI, that makes the most sense for us. Are there opportunities out in time to take advantage of the lead that we're building in areas like foundry? Yes, perhaps, and I've said that before. And you've seen some small announcements to that effect, where we've signed up some companies for some foundry activity over the next several years. I would look at those, and I would ask you to look at those as being learning experiences for us. A lot of the work we're doing here is to build the libraries, the tools that allow us as a company and our designers of the company to be able to use quick time to market, quick derivative capabilities, modularity for our SoC businesses going forward. And the best way to test those is to have some third-party customers to really validate how good they are, how -- or where they need some work. So it's a learning expense for us. It is for profit, it is not done strictly for -- just to get to know how to do this. And in terms of where it goes long term, I'll leave that point open.
Stacy J. Smith
And if I can maybe just add, one of the tactical benefits we see being an integrated design and manufacturing house is the speed at which we can ramp these factories. We'll have 25% of our shipment volume in Q2 coming from Ivy Bridge on 22 nanometer. And it's just an incredibly fast ramp rate. And even compared to what we did on 32 nanometer, that's a lot faster than what we're able to do. So we can just transition the market to these great new products. And I think you've seen some of the non-integrated models where they really struggle with ramp rates and yields and things like that. So it's a benefit in the long term to the product lineup, and it's a benefit tactically to our ability to transition the product line. |
