It will not be surprising if every vendor I mention here sheds staff this year. Staff cuts and revenue reductions are poor ways to judge the success of companies in these parlous times. The economy is messing with our metrics. We should  judge success by:

1. Movements in market share
2. Sustainability of business strategy
3. The profitability picture (not short term, but over the medium term – because they may be quarters where profits vanish into necessary restructuring)

Having said that, let’s consider the situation of Intel, Apple and Microsoft in that order…

Intel

Intel presents a mixed picture. It has done serious competitive damage to AMD in the x86 market. So in terms of market share, the situation looks positive, despite the fact that Intel’s revenues will inevitably suffer to some degree this year.  The competitive challenge for Intel is that it must now compete with Nvidia and AMD’s subsidiary ATI in the graphics market. Graphics is where the action is on PCs, Macs and laptops, because the graphics card is doing most of the work. (To be honest you could put a puny cpu in many of these devices and as long as you plugged in sufficient memory and a powerful graphics card, the user wouldn’t notice.)

In theory Intel should be feeling the heat in the graphics market from both Nvidia and ATI, who appear to have  superior technology. Nevertheless, Intel dominates the market and it actually increased its market share last year. It now has 47.3% of all desktop and notebook graphics, mainly because it has 57.1% of the notebook market – and that by the way, is the market that’s growing.

Aside from these competitors, there’s also IBM, which – just in case you hadn’t noticed – has about 100% of the home games machine market (if you only count the most recent consoles from Sony, Nintendo and Microsoft.) As far as chips are concerned, IBM, like Intel, AMD and Nvidia is all about graphics. Ultimately, a computer game is 99.99% graphics and the most advanced graphics applications from that perspective run on IBM chips. There can be little doubt that IBM will ultimately come into direct competition with these other players. The battleground for that fight will most likely be around the “home entertainment center.” It’s too early to know how that market will pan out.

In my view Intel is doing better that it could have expected and that may be due to the effective leadership of Paul Otellini. I don’t think we need be concerned for Intel this year, unless we witness its market share slipping in any of its important markets.

Apple

My coverage of Apple is on-going so I’ll just upgrade it a little here. In case you’re unaware of it, my view is that Apple has broken Microsoft monopoly irreversibly, with the consequence that it can no longer be stopped in the desktop market or the laptop market. Microsoft, Dell, HP et al will simply have to get used to Apple having a growing share of those markets (by revenue.) I’d go as far as to say that “the Mac is now a saloon car, while the PC is a small run-around.” The products are not really in direct competition. If you want a Mac then you don’t really want a PC – and vice versa.

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