Do you remember brands like Remington and Olivetti? Or, if you’re under 30, you might want to ask: Have you ever heard of these brands? Chances are you’ve never heard of them or seen the typewriters they used to make. With it hangs the story of how great brands can emerge and disappear as the quicksand of technology tears companies apart and produces new winners and losers.
With the Artificial Intelligence (AI) revolution sweeping the world of economics, business and more, it’s best to reveal the moral of the story before telling that story: it’s better to disrupt yourself and what to feel profitable pain instead of being rude. disturbed by forces beyond your control.
The chips are broken for Intel. The microchip maker was simply blindsided by the rise of Nvidia in an AI revival. It evokes a Bollywood-style flashback to the time when Intel overwhelmed Texas Instruments (TI) and Motorola, the world’s first integrated circuit (IC) makers.
After all, the elephant couldn’t dance
Intel is reminiscent of Guru Dutt’s semi-autobiographical classic: Kagaz Ke Phool (Paper Flowers) in which a filmmaker falls on bad days after a phenomenal period. The chipmaker that fell prey to Nvidia’s rise could have learned a lesson or two from IBM, whose famous adaptability was captured in a book titled Who says elephants can’t dance?? The writer, Louis Gerstner Jr., was CEO of IBM during a tumultuous period of restructuring.
To understand the forces behind such a change, it is best to remember two things: Some technological changes may seem like extensions of an old one, but are in fact groundbreaking paradigm shifts where we end up not with an improved product, but an entirely new category of products or services that lead to the emergence of new brands that often spell the death of established leaders.
Until the 1980s, IBM dominated the market with large mainframe computers and proprietary software. But it embraced computer brands like Compaq so that smaller computers could be made “IBM compatible” to increase penetration and reach in a huge market. Later it integrated Microsoft’s famous Disk Operating System software. DOS, which subsequently gave rise to Microsoft’s Windows operating system, refers to several closely related operating systems that dominated the IBM PC compatible market between 1981 and 1995 as PCs (personal computers) replaced typewriters, including short-lived electronic typewriters around the world. The PC revolution was made possible by ‘Intel Inside ‘microchips’; the ‘Wintel’ (Windows + Intel) combination eclipsed Apple’s Mac as the planet’s ubiquitous desktop, and later laptop PCs became increasingly networked.
How IBM and Microsoft kept up
If you look closely, you’ll see that while IBM and Microsoft have successfully reinvented themselves, Intel never really went there. The current AI revolution has put the country in a tough spot in semiconductors, reversing its fortunes from the days of the PC revolution.
The writing is on the wall for industry watchers and insiders alike as AI is just getting off the ground: don’t mistake it for a paradigm shift (framework) that will create a new ecosystem for an improvement on the old product line. New-age partnerships, services, regulations and laws will dramatically change the landscape, requiring industrial elephants to dance innovatively or be swatted like bees.
Olivetti and Remington were typewriter brands that were destroyed by the rise of personal computers. As a result, you rarely hear of careers or job titles like “stenographer” at a time when data scientists and software engineers are predicting new career horizons. In fact, even software engineers are threatened by AI models, just like regular writers or graphic artists. You have to get better at the old game and also learn how to play the new game to master the situation.
IBM, which has since sold its PC business to China’s Lenovo, is now focused on providing hybrid cloud computing and artificial intelligence (AI) solutions to businesses, while Microsoft, which once made PC software, is now a progressive player is through the difficult but fruitful collaboration with OpenAI, whose ChatGPT chatbot generates human-like conversational responses to user queries.
Decreasing numbers
Market figures clearly show how Intel has fallen and are reminiscent of brands like early smartphone maker Nokia and web content company Yahoo, both of which have failed to respond adequately to revolutionary changes in technology-driven ecosystems.
Apple, like IBM and Microsoft, has embraced the changes well and has even generated new categories that keep the brand alive. It has shifted from Mac (desktop) to iPod (music player) to iPhone (smartphone with content ecosystem) to Apple Watch (wearable computer).
Nvidia has stolen what could have been Intel’s thunder if the Windows-era giant had spotted a new AI threat and turned it into an opportunity. Intel’s 12-month revenue through June 2024 rose just 1.99% year over year from $54.22 billion to $55.11, while Nvidia Corporation’s fiscal 2024 revenue is up 126% at $60.9 billion than the previous year’s $26.97 billion.
The market capitalization of these two corporate brands shows the contrast between growth and decline, even though their annual revenues are similar in absolute terms. Intel’s market value on the stock exchanges is $104.4 billion, while Nvidia is $3.61 trillion. Nvidia’s market value is now about 35 times that of Intel. Let that sink in.
A Tech-Tonic shift
New-age data centers embrace Nvidia’s AI-powered microchips, favored by advanced users and gaming industries. Intel’s data center revenues are going downhill. While Intel is facing the music, Nvidia, once a maker of graphics processing units (GPUs) that played second fiddle to Intel in the PC era, is now a leader in the AI era. Cloud computing giants such as Amazon Web Services and Microsoft Azure are among the partners as critical AI infrastructure grows in size and scale.
Intel is an elephant who couldn’t learn the steps needed to dance. The tectonic shift in the industry shows how AI is a can’t-miss bus. It is better thought of as a new category spawning a new ecosystem that needs to be understood from the start. It’s a jump, not a jump.
The good news is that AI also offers new opportunities. That would be a different story.
(Madhavan Narayanan is a senior editor, writer and columnist with over 30 years of experience and has worked for Reuters, The Economic Times, Business Standard and Hindustan Times after joining the Times of India Group.)
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