Welcome to Mostly Cloudy! Today: Intel’s decline shocks Wall Street, why SBOM requirements could be a real problem for open-source projects, and how OpenAI could shake up the world of no-code development.
Photo by Slejven Djurakovic on Unsplash
From such great heights
Everyone knew Intel was in rough shape when Pat Gelsinger returned to take control of the iconic chip company in early 2021, but, somehow, not even Wall Street knew it would get this bad.
"No words can portray or explain the historic collapse of Intel," Rosenblatt Securities' Hans Mosesmann told Reuters after Intel reported a 32% decline in quarterly revenue Thursday. “It is now clear why Intel needs to cut so much cost as the company’s original plans prove to be fantasy. … the magnitude of the deterioration is stunning,” Bernstein’s Stacy Rasgon wrote to clients Friday, according to the Oregonian.
It’s been clear for several months that the PC market is hibernating for the winter after a surge in buying during the early part of the pandemic, but Intel’s decline in the data-center market — which, for the most part, is still humming along despite wider economic worries — is shocking, even allowing for its poor competitive positioning against AMD last year. The company reported a 33% drop in revenue from its AI and server processors in the fourth quarter, a period during which the big cloud companies got first crack at its long-delayed Sapphire Rapids processors.
It’s not clear where this leaves Intel going into a pivotal year for the company, a year in which Gelsinger can no longer point to the sins of his predecessors for Intel’s predicament. The company has commited billions to expand its manufacturing capacity over the next several years, and it expects to lose money next quarter with no clear savior on the road map to leapfrog ahead of AMD on performance or to match the price/performance benefits offered by Arm-based chips.
There’s no doubt that the last couple of years have been painful for anyone associated with Intel, but never forget this is a company that enjoyed a dominant position over one of the most vital sectors of the economy for more than two decades. Intel may have famously missed out on the smartphone, but it controlled the market for the chips that powered the cloud computing boom from Day One.
That position covered up what we now understand to have been a multitude of problems, including everything from manufacturing missteps and design debacles to acqusition errors and missed opportunities. Thanks to the immense amount of software built around its chips that is currently running the world, it’s going to take a while for Intel’s position to completely erode; old enterprise tech companies are far more resillient than you might think, even long after they’ve stopped influencing the market.
But if the speed of this decline is shocking to the financial analysts who are granted special access to Intel executives that you and I aren’t, it’s not hard to conclude that inside Intel, things are really, really bad. At this point, companies building businesses around cloud-computing instances or homegrown servers have no choice but to consider alternatives.
SBOM ticking
Eclipse Foundation president Mike Milinkovich raised an interesting and potentially troublesome issue on Twitter (speaking of shocking declines) this week, detailing how open-source projects are being impacted by the push for software bill of materials reporting. Increasingly, Eclipse Foundation projects are being asked by users for details around the country of origin of their contributors, threatening to turn open-source projects into “suppliers,” as he put it.
Open-source software was the trigger for the explosion of the information economy, and if open-source code starts being treated like parts of an airplane, it’s going to have a profound effect on how software is built in the future. You can argue some of that oversight was overdue when it comes to problems like open-source security, but demands for formal reporting requirements by open-source users could erode the fluidity and cross-company collaboration that allowed those projects to thrive, and threaten a lot of good projects simply because one person in China or Russia contributed code.
Regulators, software developers, and lawyers need to come up with an interesting way to thread the SBOM needle to protect the security of open-source users while maintaining the vitality of open-source projects. Otherwise, software will become a lot more expensive.
Around the enterprise
Darling-of-the-moment OpenAI is hiring hundreds of contactors to help it make ChatGPT into a no-code software development tool.
Speaking of complicated relationships with open-source software, Google’s layoffs hit a number of employees who were longtime members of open-source communities, including Chris DiBona, who started Google’s internal open-source team.
Tuesday’s “technical” incident that halted the opening of trading on the NYSE was blamed on a staffer who apparently left a backup system running, which is a cowardly way of admitting that the NYSE needs better backup and recovery procedures.
Microsoft suffered a widespread outage early Wednesday that took down everything from Azure to Teams, although it happened at the right time of day to avoid angering U.S. users.
Thanks for reading — see you next week!