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What Formula One tells us about the tech industry

By - Source: Tom's Hardware | B 0 comment

Every year for the last four, I’ve had the privilege of attending races at the famous Brickyard, otherwise known as the Indianapolis Motor Speedway. Once again, this year it was interesting how you can draw parallels from racing into the tech market.

 

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Lenovo Is On Fire

One of the best branded cars on the track, with respect to a tech brand, was the AT&T Williams car sponsored by Lenovo. What I thought was fascinating, was Lenovo actually had a better brand placement than AT&T did. 

Much like the company did after the IBM acquisition, the cars did not start well but one driver pushed his car so hard that he was up to sixth place by the end of the race when his car caught on fire and he had to exit. Lenovo, the company, has been pushing incredibly hard of late and while you could argue “they are on fire” in this instance it is a good thing.

They’ve recently released a set of videos on YouTube, showcasing things you’d never want to do with any laptop, from taking it deep sea diving, to slamming against a wall at 30 miles per hour using a crash test dummy, to jumping off a roof with the darned thing (now there is a job that doesn’t look like fun). Whether you like the videos or not, they showcase a company that is willing to take risks and be different ; one that is pushing hard to compete and win, and one that is starting to throw aside its IBM heritage and think outside the box. 

With regard to the race itself, they just contributed one of the most powerful supercomputers to their F1 team which reminds us they aren’t just a PC vendor. They actually do a great deal more, though mostly in China. This whole idea of putting a logo on a car but not actually having anything to do with victory or defeat makes no sense to me. With this move, Lenovo can actually take partial credit, if the car wins and the effort is more than just a silly waste of advertising dollars. 

Eventually, they will be entering the consumer market - I’ve seen some of what is coming and I think you’ll be impressed. They are channeling HP, Dell, and Apple while tossing in a little of the fire their team showed at F1. The results could be very interesting. Granted they could also crash and burn, but if you don’t try to win, what’s the point of racing, or selling technology ?


Intel : Greatly improved, but struggling to make a difference


There is no argument that this has been a great year for Intel in terms of market share as they have taken back a substantial amount of the ground they lost to AMD in a number of markets. However, over the last several years they have, and you could argue the entire processor segment has, lost a great deal of relevance. 

This is reflected in both Intel’s market valuation and their influence on the technology industry both of which are well off of their one time highs. 

Part of his problem is they simply haven’t been the great partner the hardware OEM’s want, and the other part of the problem is that Intel marketing has been a huge hole that money has been poured into for years without getting back much benefit. 

At the F1 races when I first started going the Intel car was not only the slowest on the track but the Intel brand (Itanium actually) wasn’t very visible. Of course, in the past, it did lead to a lot of humor out of the AMD (which sponsors Ferrari) folks at the races who could point to the similarities between dead car and a dead technology. 
 
This year the Intel car was much faster than in previous years and the branding on the car was crisp, easily readable, actually said “Intel” and we got to see more of it. This last was because the driver around mid race pulled off the track onto the lawn and under large tree, somehow got a lawn chair and sat and watched the rest of the race. I’ll even bet he had a nice cold drink. 

This both speaks to the team player problem Intel has and the marketing improvements they are going through. While the car and the brand got a lot of visibility (the cameras were on it and the vacationing driver on and off for the rest of the race), the car was never a contender for the lead and it didn’t look like the driver even cared. 
 
Winning the race for Intel isn’t about beating AMD anymore, the entire segment is being devalued. It’s about making what Intel does relevant again. If they can do that, this rising tide will raise all boats (especially Intel’s), because they are the largest boat in this pond. If they can both learn Apple’s best practices (and avoid their bad practices), and treat the other OEMs as well or better, they could do more than just beat AMD, they (and their industry) could become truly relevant again.  


AMD : Forever second


Of course, being second in what is basically a two company market isn’t a good thing and AMD has slipped badly in market share over the last few months. Their recent merger with ATI has overshadowed a lot of the news that surrounds them and probably will continue to cause many to question whether they can execute.

The AMD Ferrari cars were third and fourth throughout the race. According to the dinner speaker we had the previous night, the reason the Ferrari’s weren’t able to challenge for the lead was they had wrecked their wind tunnel. According to the speaker, the tunnel was destroyed because Ferrari ignored the Wind Tunnel vendor’s advice and didn’t replace the large high-speed belt the cars used for the test. When the belt came off it came off ugly and damaged the wind tunnel. As a result, it became very difficult to tune the wings on the cars. 
 
We talked a lot about AMD vs. Intel as if the two companies were of near equal scale and scope, but that isn’t really true. Intel is vastly larger, tends to drive the market, and AMD has historically been left with what Intel left behind. Even if the AMD/ATI thing will result in all of the positive changes they imagine, by the time it is complete, Intel will still be the entrenched vendor and will have nearly unlimited time and vastly more resources to ensure AMD never gains a sustainable lead. 

But Intel is also locked into the status quo as the entrenched vendor and the way they have been caught in the past is by AMD getting to be first where the market will be. But they’ve never gone far enough ahead to change the game.  

Dropping back to the F1 comparison, were I Ferrari, instead of rebuilding the wind tunnel, I’d see if I couldn’t have someone build a better device one that would be a generation ahead of anyone else. In a way, that is what the AT&T Williams team is doing with the Lenovo supercomputer, which will be used for fluid modeling and extreme aerodynamics work, that could give them the edge they need to challenge other teams for the lead (that and making sure the car doesn’t catch on fire). By the way, evidently Williams has done this before

For AMD it should be building a merged company that, much like Dell did last decade and HP is doing this decade, is fundamentally more agile than anyone else can be. It won’t be any one product that causes AMD to pass Intel, it likely will be the combination of agility and better informed decisions supporting a superior strategy which will give the necessary result. 


Wrapping Up

I know I’ve probably taken a lot of liberties with my comparison of Formula One and the PC industry, but given this is likely the last year that F1 will be in the US, I can’t resist making one more point. The reason F1 does poorly in the US, and well everyplace else, is directly connected to marketing. It’s actually a much better race than NASCAR, but NASCAR is vastly better marketed here. 

As we look at the iPhone and think about how much demand has been generated for a device that shouldn’t be competitive, the lesson is that marketing should be more important than it is, and the experts that do it should be vastly more valuable than they currently are. 
 
Figuring out how to do great marketing in this post internet age will likely make the difference between an iPod like product and a Zune like product. Regardless of what some tech companies say, it is more fun to have a winning product than a marginal or losing one.
 
Finally, the fact that this latest race was won by a rooky who treats his team well and keeps his ego in check, should be a reminder to some high-flying tech CEOs that it is not how much you brag and swagger, it’s whether you actually win the race that is important. 

 

Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies. 

 

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