Bad Product or Bad Positioning? Intel’s Unlockable CPU

Intel introduced the G6951 unlockable CPU consumer product this month.  Most of the press has been critical.  Is this new chip / upgrade process a bad product, or a good product with bad positioning?

The Consumer Desktop Upgrade Cycle

Desktop computer consumers buy or build their own computers.  After some period of time, as their computer performance declines (a natural effect of computer usage).  Over time, new software continues to be released that places ever higher demands on the computer’s processing power.  As computing becomes ubiquitous, consumers’ expectations of the capabilities of their computer continue to grow.  These three factors cause consumers to become less satisfied with the performance of their old computers, and they desire to upgrade their performance.

Upgrade options for consumers previously were limited to two options – replace components within an existing computer with higher-performance components, or purchase a new computer to replace the older computer.

Intel introduced a third option with the G6951 CPUunlock latent capabilities in the existing hardware.

The CPU Upgrade Process

A consumer wants to improve the processing performance when they believe that their desktop is CPU-bound and that upgrading their CPU will improve the overall desktop performance.  [This is usually not the best price-performance single component to upgrade, but that is not the point of this discussion.]  The consumer, having decided to upgrade the CPU of their desktop has the following options:

  1. Purchase a new CPU, disassemble their current computer and replace the old CPU with the new one.  Note: This may require replacing the motherboard (not all CPUs work with all motherboards), which may then cascade into a need to replace other components or add additional hardware to enable other existing components to continue to work.
  2. Purchase a new desktop computer, install their existing applications onto the new computer, migrate data, set up the new computer on the network, connect and configure their existing peripherals (printers, scanners, etc), set up user accounts and security on the new computer, and possibly replace existing peripherals that do not work with the new computer.
  3. Purchase a $50 upgrade card at a retail store and enter the code to increase the performance of their current CPU, with no other changes.

Intel’s Value Proposition

Given the assessment above, there are some significant benefits to consumers of having a CPU that can be upgraded in-place.

  • Avoid the time spent upgrading components or migrating to a new system.
  • Enable a performance upgrade at a much lower price point.  New, better-than-you-already-have CPUs are not available for $50, nor are entirely new desktop computers.
  • Avoid the waste (ethical benefit) and disposal (practical benefit) of the components or computer you are upgrading (replacing).
  • Extend the lift of existing hardware, likely reducing the dollars-per-year that the consumer spends on desktop computers.

There are also some potentially significant benefits to Intel of a product that is designed this way.

  • Eliminate the processes of binning (testing and sorting identically manufactured CPUs based on their maximum performance) and reducing the complexity of logistics of handling multiple CPUs (at different performance levels).
  • Simplify their product offering (possibly) by collapsing multiple performance-levels of the same CPU into one part number.
  • Reduce overhead costs by carrying fewer CPUs in inventory.
  • Possibly gain market share from AMD by having their CPUs be perceived as more compelling by computer manufacturers who believe they will sell more desktops that include the consumer value props outlined above.

Press Reaction

The most common reactions and reporting in the press have positioned Intel’s offering as the following:

  • Intel takes advantage of consumers by shipping crippled CPUs that require an additional fee to unlock their true potential.

Pretty brutal.  Here are some articles in the press.

Discussion

So – what do you, product managers, think?

  • Does this new product solve a valuable problem for consumers that they might be willing to pay for?
  • If so – was the positioning bad?
  • What would you do differently?  Or do you believe that any press is good press?

No one that I’ve seen has written an article that starts with the upside, so this article emphasizes the positive, while the linked articles emphasize the negative (about the product).

Chime in below or on twitter.com (include a link to this article, and your tweet will show up below).

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This article was published on Thursday, September 30th, 2010 at 8:26 am and is filed under Product Management, Quick Post, Slightly off-topic.
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10 Comments

  1. The stop-watch image, and the category tag of “Quick Post” are a first attempt at trying to “brand” these shorter articles that live between longer articles.

    Also – clearly, I need more practice at writing shorter articles. :)

  2. This Solves a Valuable problem for Intel, namely having a plethora of CPU product line. Visibility factor for what they are advertising will be very low for this product because of thousands of combinations of hardware and software on customer desktops.
    On the value proposition the word upgrade is a wrong choice. PC upgrade means different things to different people.

  3. It’s just a bad product. However you position this, you can’t get away from the fact that the consumer is forced to pay more money for a piece of hardware he already had. He’s getting nothing more in terms of hardware but now he’s got to pay more to make it work. Maybe they should be selling addon devices like a sim card you attach to the processor which would boost the performance of the cpu. I can imagine that working for them.

    • Thanks Sebi!

      Personally, I believe the consumers will pay less for computing power with this model, because I believe Intel will convert lower costs into a more aggressive competitive position against AMD, and therefore lower prices at comparable (or higher) margins.

      As a product manager, I am approaching this as a problem – “needs computation power” not a solution – “needs a cpu.” No one actually needs “a cpu.” Unless it is for a scavenger hunt.

      I think your position is valid, and may best represent how consumers view this – others have said similar things on Twitter too. I just don’t personally view it that way. Thanks again!

  4. I would disagree with the “needs computation power” problem, as most PC users have “need speedy performance”. Gamers may have “needs computation power” and they overclock their machines.
    My opinion is upgrade for average customer is holistic (memory,peripherals, SW….) not one specific thing. Intel is inventing a solution for no ….

  5. It feels to me as if Intel came up with a great idea for Intel, and then said how can we spin this so customers think we did it for them. I have read over your points as to the value it provides the customer, and each time I feel like I am getting snowed. So if this does solve a valuable problem for consumers, I don’t see it. I can’t say for sure it is a bad product, it might perform well. The upgrade feature sure does seem like a bad idea.

    • Thanks Sam!

      You’ve emphasized for me how valuable the conversations on this blog are, and how worthwhile the investment of time in writing the articles is. Y’all have universally opposed my “opinion” on this one. It serves as a great reminder why product managers should not make decisions based on their opinions. It also reminds me of the phrase from the UX world – “you are not your user.”

      While Intel’s product idea actually appeals to me, everyone who’s chimed in here seems to agree with the analyses that all think it is a bad idea.

      Thanks again for sharing, everyone!

  6. Bad Positioning. I like the idea and would probably look into this idea if I were purchasing a PC and it made sense to me financially, but I’m a techie who understands what they are trying to do. However, if positioning is actually as its name implies, finding a position in your user’s mind that resonates with their needs, then Intel fails. I don’t think having something that is unlockable is an idea that most people can resonate. Despite all the benefits Intel proposes, it just makes you feel like they are hiding something and holding back something that you already paid for. Most users probably just assume after manufacturing that all costs are covered, they definitely wont understand the amount of other R&D costs that Intel pours in to develop new products. For Intel, I don’t even see how they could effectively market this to make their consumers understand.

    • Thanks, Jeremy!

      My memory may be hazy, but I believe Intel did something similar with Itanium processors for enterprise servers about 10 years ago. The OEMs would sell a server that had 8 Itanium chips installed and only 1,2, or 4 of them would be enabled – depending on what the customer had purchased. The customer then had an option to purchase an in-place upgrade, turning on additional processors.

      I think their positioning may have worked better in that market segment because TCO (total cost of ownership) was much more front-of-mind, and cost-to-upgrade is a big deal for servers. They may also have been positioning it as an extender of the useful-life of the server. Or perhaps the jump in performance was so significant?

      My guess is the cost of upgrade for those servers was comparable, in percentage terms, to the current consumer-product.

      Thanks again!

7 Trackbacks

  1. By Andrej Ruckij on September 30, 2010 at 3:58 pm

    By @sehlhorst: Bad #Product or Bad Positioning? Intel’s Unlockable CPU http://bit.ly/a0afYg

  2. By Tomas Kohl on September 30, 2010 at 5:36 pm

    Bad product or bad positioning? http://bit.ly/blYWz7 I'll say good positioning can only improve an already good idea, which this ain't.

  3. By Alltop Agile on September 30, 2010 at 5:37 pm

    Tyner Blain – Scott Sehlhorst: Bad Product or Bad Positioning? Intel’s Unlockable CPU http://bit.ly/9Dv2wA

  4. By Yuly Stevsky on September 30, 2010 at 8:48 pm

    Intel's Unlockable Chip – Bad Product or Bad Positioning? | Tyner …: Desktop computer consumers buy or build the… http://bit.ly/czMcR2

  5. By VasilyKomarov_RSS on October 1, 2010 at 3:50 pm

    Bad Product or Bad Positioning? Intel’s Unlockable CPU http://tiny.ly/MCo

  6. By Neil Shah on October 3, 2010 at 6:56 pm

    RT @sehlhorst: Bad Product or Bad Positioning? Intel's Unlockable CPU http://bit.ly/cglF16 #consumer #upgrade #prdmgt

  7. By Greg (MD) Wells on October 4, 2010 at 8:00 pm

    RT @sehlhorst: Bad Product or Bad Positioning? Intel's Unlockable CPU http://bit.ly/cglF16

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