Hi, this is Wayne again with a topic “Your Next CPU, Behind a Paywall”.
All right, let’s jump right into what even is our headline topic. We kept things kind of vague, allowing us to start with anything we want. I guess why don’t we jump right into Intel on demand? Was this the one that you were looking at in the dock? Going, oh really, are you freaking kidding me, I’m doing my best Luke voice, because you’re not here to do the Luke voice. Yes, this is the one that I had that reaction to it feels like we are getting the BMW, heated seat. Subscription Service Intel has revealed details, it’s uncomfortable about software-defined silicon, a capability of its next-gen Xeon processors, Intel imma, let you finish, but the other way of phrasing. This is, it is a an incapability of next-gen Xeon processors unless you pay okay, so the official name is Now intel on demand and it will man the way even the way.
This is worded from Alex Clark, probably copying directly from Intel’s own press releases and announcements and whatnot. Okay, so Intel on demand will allow system administrators to pay extra to enable special purpose accelerators. Let me give you my version of that. Okay, Intel on demand will hold Ransom features from system admins unless they pay extra.
Okay. That much is true to undisable special purpose accelerators. It’S in the freaking Hardware.
You just unlock it in the latest sdsi. So this is software defined silicon patch. It shows that Intel on demand can do the following discover, which features are physically present on a particular CPU offer administrators to activate them and enable administrators to assess how often they are used.
It’S currently unclear what exactly will be paywalled, but here are some of the accelerators on Intel’s upcoming Sapphire Rapids platform that could potentially be paywalled Advanced, Matrix extensions, Dynamic load, balancer Intel data streaming accelerator and Intel quick Assist Technology. Now this time around, it’s limited to the data center, but Intel has actually pulled this kind of before. In 2010 they tried to do a similar thing where you could unlock hyper threading and some cash on well said. Was it a Pentium CPU? I can’t remember whether it was an I3 or a Pentium branded CPU. It was a Pentium CPU. You would actually you could buy.
You could buy this card scratch off gently increase the performance of your gateway, SX 2841-09e, with the processor performance upgrade card. Wow, that’s great! I think you mean downgrade out of the box um. I had no idea.
This was a thing. That’S horrible there’s been a huge breadth of responses, but with some people saying it makes sense and others absolutely hating it uh. Why don’t we let Luke go first. I I feel, like you’ve, already had a pretty strong reaction to this over yeah. There’S uh, there’s some things about it that I sort of understand this enables them to have less total skus. That seems fairly reasonable.
There’S uh some some notes in here saying like oh, that means that you might be able to get them for cheaper. I seriously doubt that’s going to be a thing. I suspect. All of these will just be price increases a way of inflating the price without actually stating that on the on the sticker price on the box, I see a lot of as your note that you just wrote out.
I see a lot of benefits here for Intel like being able to raise the price, but in an indirect Way, by being able to have less skus by being able to bend things in a in a particular manner. All this type of stuff. By being able to generate ongoing, this delay is really bad um, Maybe, by being able to generate ongoing income from a CPU that they use to just sell. Once I mean that’s, what investors want to see, they want to see recurring Revenue. They do not care. How many widgets you can sell in a quarter? They care how many of those widgets you’re still collecting money for a year, two years, five years down the road yeah, because this right now sounds like you’re buying it one time, you’re buying a single unlock.
But you know the ball keeps rolling right. I said I very definitely could see this moving into a subscription service instead gross gross, and it’s particularly frustrating for me to see this in the land dock this week, because just earlier today, I actually finished shooting our full video about the situation where Pantone is holding Users, colors hostage for fifteen dollars a month now to be clear. This does not appear to be entirely pantone’s fault. Both then and Adobe are staying quite zip-lipped about the whole situation, but what we suspect is going on is that is a breakdown in negotiations between the two companies that ultimately results in more money for them and a crummier experience, a degraded experience for the user, and I I don’t understand how how we’re allowing this to happen.
Like can you imagine, okay going into a furniture store and them unilaterally deciding that they don’t sell couches anymore, we’re not going to sell you a couch, but you could rent one forever for over the lifetime of the product two times or three times the cost of Buying a couch, it’s like okay cool, but I I don’t want that. I want to buy a couch too bad yeah. The slow erosion of ownership of anything in our lives is uh is is not fun, I’m not a fan of it um. So here’s here’s some general reactions, uh, Cisco, IBM and many others do this. So Intel’s Enterprise customers are already used to it. That’S I guess a fair enough reaction.
Um, you know it said here. Aws or Azure will just buy what they need and no one will really care, but I mean here’s. A response to that particular take no AWS will not simply buy whatever they need. They will actually go build a team to develop their own arm-based graviton processors and they will get them fabbed and they will develop software that runs on them. In order to say you to moves like this, that’s what’s actually going to happen in the short term before companies can execute on a strategy like that yeah absolutely.
But I see this as a way that Intel is turning the thumb screws on their on their customers, and these are customers that have the resources to go somewhere else. This is terrible, especially these days, especially with the AMD killing it and, like you were saying the opportunity for them to just make their own, I think, has like almost never been better. I can’t say where I went this week. I also went on a little trip. This week can’t say where, but I will say that uh, you know AMD seem like cool guys, uh with cool products, and that has nothing to do with this conversation that we’re having around Enterprise CPUs uh, but AMD cool people, cool products um.
You know like it like it. You know red red products, um, uh, okay, so here’s another take all right, Intel screwed. They seem to have this belief that, no matter what their performance is, they’re still the top dog, but in fact their Data Center business is spiraling.
It’S circling the drain and Intel on demand just seems to be a way to force their remaining customers to accept another bill to help them prop up that Revenue stream. So it doesn’t look so bad that one I wholeheartedly agree with uh. Finally, the Third Kind of go ahead: oh geez, this delay is bad uh.
So does it surprise you? I was trying to time it for the ending. If you think it doesn’t surprise you that this happened under Pat gelsinger. Well, it didn’t there’s no way that this happened under Pat, because this is a thing that was obviously set in motion 24 to 48 months ago. I am frustrated that um, you know the the biggest move he’s made that has driven Intel’s stock hire is not the huge investments in Fab capacity is not the uh, the the refocus on engineering, but rather the layoffs they laid a bunch of people off and immediately The stock goes up 10.
This is the kind of short-term thinking that absolutely drives me crazy about publicly traded companies and the way the The Way That Wall Street reacts to the behavior of companies. With this, with this eye for short-term gains and this utter obliviousness to long-term strategy, I I just I I’m frustrated um. I I think that for their stock in the short to medium term, this is probably a really good move. But I would like to think that an engineering minded person would have the stones to pull the plug on this sooner rather than later, and figure out ways to deliver more value to the customer rather than extracting more money from the customer, yeah yeah. I do agree, it has been Pat by the way he’s been CEO since February 15th of 2021 he’s been there for a bit, probably not long enough to you know be there for when this was put in motion, but certainly long enough to have stopped it yeah.
The final take – and I think you already kind of addressed this – is that Intel on demand will allow for companies that don’t require the features to buy CPUs, cheaper and sure. If that actually happens, then fine, but tell me this riddle me this compared to the competition. How much cheaper is a model 3 that doesn’t have the rear, heated seats activated? Is it cheaper? Has anyone done the math on this because I’m pretty sure the Mach e is pretty competitive? I mean it kind of sits between the three and the it’s more of a y competitor, but I think you guys get the point.
No, that car is not 300 cheaper or even a hundred dollars cheaper. You just you’re, you are paying for it. The hardware is going in and in theory, yes, they can take that relatively minimal cost spread it out by like reduce their skew count.
Okay, so that’s a clear benefit to a Tesla or an Intel reduce their skew count by just putting in it every time and then, as long as enough people buy it for three hundred dollars. That’S so much more than the cost that they can justify, putting it into those cars where people don’t pay for it at all, but I promise you I give you my personal Linus Tech tips guarantee that Tesla is not selling those cars at a loss. Intel is not selling any CPUs at a loss and you are absolutely paying for anything that they put in it and if you weren’t, they would take it out. So I’m I’m frustrated, I’m uh, I I I I yeah.
I don’t know what else to say other than that this isn’t even the most frustrating topic this week. .