Windows Weekly (Episode 910): Intel Outside - Pat Gelsinger's Exit, FTC Investigation, Dia Browser

Released on December 4, 2024

Hosts:

• Leo Laporte
• Paul Thurrott
• Richard Campbell

1. Intel's Leadership Shakeup

Timestamp: [02:00]

The episode opens with a significant update on Intel's leadership. The board of directors has placed CEO Pat Gelsinger in a "no-win" situation, demanding his retirement or termination. Gelsinger opted to retire immediately, signaling turbulent times ahead for the once-dominant semiconductor giant.

Paul Thurrott comments:

"Yeah, they announced new GPUs. Everyone's been looking forward to these and dear God, I'm just kidding, who cares?" ([01:47])

Leo Laporte adds:

"Gelsinger was brought in just a few years ago. He is a designer, he's been there, he was under Andy Grove back in the day, knows he's an engineer, knows Intel's business..." ([02:29])

The hosts express disappointment over Gelsinger's departure, acknowledging his efforts to steer Intel towards integrated solutions combining design and fabrication, a strategy reminiscent of industry strategist Ben Thompson's recommendations.

2. Strategic Missteps and Market Dynamics

Timestamp: [03:00]

Richard Campbell and Paul Thurrott delve into Intel's strategic challenges. Despite Gelsinger's initiatives, Intel's recovery and transition have been sluggish compared to competitors like AMD and foundry leaders like TSMC.

Paul Thurrott states:

"Intel made too many bad choices... They weren't there for mobile and they're not there for IoT. And remind me what else is? That's everything." ([06:00])

The discussion highlights Intel's historical reluctance to innovate beyond the x86 architecture, missing critical shifts towards mobile computing and Internet of Things (IoT) devices. This stagnation has allowed AMD to capture market share and TSMC to dominate the foundry space.

Richard Campbell observes:

"Microsoft has analysis on this that you needed the mobile market to justify the cost to modernize your fabs. Right. Yeah. To go to extreme." ([05:09])

The hosts compare Intel's vertical integration approach to TSMC's more flexible foundry model, suggesting that Intel's inability to adapt has left it vulnerable to disruption.

3. Potential Future Directions for Intel

Timestamp: [12:00]

With Gelsinger's exit, the conversation shifts to Intel's potential paths forward. The likelihood of dismantling the company or separating its design and fabrication arms is discussed.

Richard Campbell speculates:

"There are other divisions. Right. Like I worked with GE, with a team at GE that did steam turbines... They have all these fabrications... They have all these unused assets." ([16:23])

Paul Thurrott adds:

"They wrote down all of their kind of like real estate associated cost or just asset associated cost of all of their physical assets. So in other words, they have all these fabrications... and they're losing value." ([18:10])

The panelists debate the feasibility of Intel spinning off its foundry business into a separate entity, akin to how other conglomerates like General Electric have restructured over time. This separation could potentially unlock value and allow each segment to focus on its core competencies.

4. Microsoft and Windows' Role in CPU Evolution

Timestamp: [20:00]

The discussion broadens to encompass Microsoft's influence on Intel's trajectory. Comparisons are drawn between Intel's challenges and Microsoft's past strategic shifts, particularly in transitioning to cloud services as a counterbalance to stagnating traditional businesses.

Paul Thurrott remarks:

"The parallels between Microsoft and Intel are super strong. Microsoft had this other thing to turn to when what used to be their primary business started stagnating and then declining..." ([07:53])

The hosts examine how Microsoft’s embrace of ARM architecture and AI-driven features like Copilot could serve as both an opportunity and a challenge for Intel. Microsoft's advertising push for ARM-based systems, despite known performance and compatibility issues, reflects a broader industry shift towards alternative CPU architectures.

5. Windows 11 Updates and Patch Tuesday

Timestamp: [38:00]

Shifting focus to software, Paul Thurrott and Leo Laporte discuss recent developments in Windows 11, particularly the upcoming Patch Tuesday update, which is anticipated to be significant.

Paul Thurrott notes:

"Patch Tuesday is next week. One might make an argument that the update we get next week, next Tuesday will be the 24H2..." ([46:37])

The update, associated with Windows 11's 24H2 iteration, aims to enhance system reliability and incorporate substantial under-the-hood changes likened to what the industry might consider jumping to "Windows 12." However, past updates have been marred by reliability issues and UI inconsistencies, casting uncertainty on the efficacy of forthcoming patches.

6. TPM 2.0 and System Requirements Controversy

Timestamp: [49:00]

A significant portion of the discussion centers on TPM 2.0 (Trusted Platform Module) requirements for Windows 11. Initially proposed in 2015 as optional, TPM 2.0 became a mandatory requirement years later, paralleling Intel’s own delays in adopting newer security standards.

Paul Thurrott reflects:

"Microsoft revealed the system requirements for Windows 10... in 2015... They actually said that in 2015. So this was six years right before they actually did it in Windows 11." ([49:46])

The enforcement of TPM 2.0 now aligns with modern security practices, but not without controversy. The hosts discuss Microsoft’s handling of system requirements and the potential impact on users with older hardware, as well as the broader implications for security and enterprise management.

Richard Campbell adds:

"It's a decade old. That's an old [TPM]." ([54:16])

The conversation underscores the tension between advancing security measures and maintaining hardware compatibility, especially in enterprise environments where legacy systems are prevalent.

7. Potential Dissolution and Foundry Focus

Timestamp: [13:36]

Speculation arises about Intel's future structure, with possibilities ranging from complete dissolution to a focus solely on foundry services. The hosts consider the challenges Intel faces in capturing the foundry market and the immense investments required to compete with established players like TSMC.

Paul Thurrott asserts:

"The biggest opportunity here is the foundry, because if it works, it could serve..." ([24:14])

Richard Campbell concurs:

"It makes sense to carve that off into an entity that has to live on its own. And so it gets a lot more efficient." ([26:22])

The debate highlights whether Intel can successfully pivot to a foundry-first model or if market forces will necessitate a more drastic restructuring.

8. Comparison with Historical Corporate Restructurings

Timestamp: [16:48]

Drawing parallels with historical corporate restructurings, such as General Electric's refocusing into GE Aerospace, the hosts discuss how Intel might emulate similar strategies to remain viable.

Leo Laporte cites:

"Like the Intel board probably cares more about Intel being kicked off the DAO than any of that." ([06:33])

The conversation emphasizes the potential for brand retention versus complete rebranding, pondering whether Intel can maintain its market presence through selective divestitures or if a complete rebranding is inevitable.

Notable Quotes

• Leo Laporte:

  "This is actually a kind of sad because Gelsinger was brought in just a few years ago..." ([02:27])

• Paul Thurrott:

  "Intel made too many bad choices... They weren't there for mobile and they're not there for IoT. And remind me what else is?" ([06:00])

• Richard Campbell:

  "AMD has their eye off the ball in x86 right now because of that." ([24:14])

• Leo Laporte:

  "It's interesting to see Microsoft putting Qualcomm-based ads on big football games despite Windows on ARM flaws." ([26:58])

Conclusions and Future Outlook

The episode concludes with an air of uncertainty surrounding Intel's future. The departure of Pat Gelsinger marks a potential turning point, while the company's strategic missteps have left it struggling against more agile competitors. Intel's possible restructuring, focusing on its foundry business, remains speculative but critical for its survival.

Simultaneously, Microsoft's evolving strategies with Windows 11 and ARM-based systems indicate a broader industry shift towards integrated, AI-driven computing solutions. How Intel navigates these changes will significantly impact its standing in the highly competitive semiconductor and technology markets.

Note: This summary excludes advertising segments, intros, outros, and non-content sections to focus solely on the substantive discussions relevant to the podcast’s main topics.