Intel sees the next wave: artificial intelligence
"Connected" published an article discussing how, despite ongoing market changes, companies like HP, Dell, EMC, and Intel have continued to restructure but haven't managed to successfully transform. They've attempted to shift toward software and cloud-based businesses, only to return to their hardware roots. The article suggests that these companies have failed to anticipate the industry's future direction. However, Intel is now looking ahead, focusing on the next big wave—artificial intelligence.
The article outlines the challenges these once-dominant hardware giants are facing. In just a few years, these companies have changed significantly. They're no longer as powerful or influential as they were a decade ago. These companies recognize that the tech industry is evolving rapidly. With the rise of smartphones and tablets, the importance of traditional PCs has declined. Meanwhile, the growth of cloud computing from companies like Google, Amazon, and Microsoft has allowed many firms to build software without investing heavily in physical data centers. When hardware is needed, companies are increasingly turning to non-traditional providers, influenced by tech giants like Facebook and cloud service providers.
Despite this awareness, these companies often struggle with how to respond effectively. As the industry continues to change, they keep reorganizing, transforming, and trying to stay relevant. Some have pursued new markets through acquisitions, while others have abandoned those efforts and shifted focus again. Change is the only constant in the hardware sector.
At one point, many of these companies believed that becoming software-focused was the way forward. For example, Intel spent $7.68 billion acquiring McAfee in 2010, while HP spent $11 billion on Autonomy in 2011. Dell also made several large software acquisitions. However, these moves didn’t pay off. Recently, Dell sold its software division, HP sold its Autonomy unit, and Intel parted ways with McAfee. These failures show that transitioning from hardware to software isn’t easy.
Some also tried to pivot toward cloud computing, but those efforts didn’t lead to success either. HP split into two separate companies, and Dell merged with EMC. Intel, meanwhile, has been acquiring various chipmakers. It seems that after struggling with software, these companies are returning to their hardware roots, still searching for the right path forward. Only Intel appears to be moving in the right direction, with a clear focus on AI.
While some companies have managed to adapt, others have struggled. IBM, for instance, transformed itself over 15 years ago by shifting from hardware to consulting and services. It sold its PC business and focused on high-margin corporate IT solutions. This strategy worked well as the PC market became more commodity-like. Similarly, other companies have tried to follow IBM’s model, making big acquisitions in areas like cloud, security, and software. But not all have succeeded.
HP, for example, had ambitious plans to restructure, including selling its PC division. However, it faced internal turmoil, and those plans were eventually abandoned. Meanwhile, Intel has found success by positioning itself as a key player in the cloud infrastructure space, supplying chips to major tech companies. This shift has helped it stay relevant in a changing market.
Looking ahead, the challenge for these companies is not just about transformation—it's about vision. Intel is now betting on artificial intelligence, acquiring companies like Movidius and Nervana. These moves align with its core strengths and could position it for long-term success. Other companies, however, continue to stumble, failing to see where the industry is heading. The lesson is clear: adapting is not enough—companies must also foresee the future.
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