Intel has just announced its Q2 2010 earnings. It is the best quarter in the company’s 42 year history. Some of you might say, “what?!” With the financial crisis in Europe and the U.S., how can this be possible? Here is a direct link to their Q2 2010 report.
You will see in the report Intel’s revenue is derived 57% from “Asia-Pacific” excluding Japan. With Japan’s 11%, the whole of Asia accounts for nearly 70% of Intel’s revenue! China’s roaring economy is likely contributing a significant portion towards this record earnings. It is a little wonder that Intel is building a new fab in China (300mm fab in the northern Dalian using state of the art 90nm technology). Toyota too builds auto plants in the U.S., and for the same reasons: it would be too politically insensitive to not given how much Toyota derives its revenue from the U.S..
Of course, contrast Intel with Google (see “Google vs. China – Good vs. Evil?“) and the difference between these two companies are glaring. In February 2010, Intel Capital (Intel’s investment arm) announced partnership with China Investment Corporation (CIC), China’s sovereign wealth fund:
Under the agreement, CIC and Intel Capital will explore investments outside of China, combining resources to both evaluate potential investments and support companies in their next stages of development. While the scope of investment opportunities will be global, there will be cross border opportunities that will benefit both the U.S. and China.
Google has thus far done a lot to antagonize the Chinese government – and – intended or not, the majority of Chinese netizens think Google is disrespectful of Chinese law. Google’s management is not stupid. The only conclusion I’ll draw is that Google does not expect to be a long term player in the search market in China.
It ain’t just Intel … or U.S. companies riding China’s growth engine. It’s also Europe. Here is an article in NYT from Germany’s perspective.
Good point, Allen. 50% of the worlds economic growth in 2009 was driven by China alone.
You beat me to it. I was going to write something about a comparison on Google vs. Intel.
But my take on Google is that it is rather PR/Image driven in its decision making. I will say that there are 2 kinds of companies today, especially in the tech area. 1st is the “Nerds”, who just wanted to make money. 2nd is the “Cool Nerds”, who thinks they are celebrities. Naturally, the 2nd type want the fame and the PR to maintain their “brand”, and thus make money from the “brand”.
The 1st category includes companies like Intel, Microsoft, etc., who tend to maintain very generic brand images of doing public good by creating new innovation.
The 2nd category includes companies like Apple and Google, who tend to think that they are the “cool kids” among the “nerds”. They try to build up some kind of mystique about their company, cultures, even leadership personalities. (such as Steve Jobs’ turtleneck sweater and ad vangard artistic look.)
The 1st category usually do not stray into the territory of politics or social philosophy. They are usually humble enough to keep their own opinions to themselves.
The 2nd category is all about politics, inside and outside of the companies. Their Politics is their brand name, they have to keep selling their brand name to make their products cool. Because they are the “cool nerds”, and that will create a following of loyal “nerds” who are willing to buy their products, (even if they are not really the best products on the market.
*But I must warn the 2nd category devotees: You are treading on the thin membrane of your own economic bubble. It used to be in the last decade that any company in the Silicon Valley that claimed to work on “optical network” would see their stocks sell like hot cakes in IPO’s, or lots of people with a “.com” domain name would get Venture Capitalist investments.
Granted, perhaps Apple and Google have had better results, but one has to ask, how much of Apple’s iPhone sales was really due to the fad of Apple’s “coolness”, and how much would one really pay for just to have the latest Apple iPhone, but really do nothing at all with it except to use it as a really bad phone?
*In the end, this is perhaps the social phenomenon that is the worst part of Western societies, the need for “coolness” and fad.
“Freedom” is grandiose and cool, but does it feed the starving?
Worshipping celebrities of all kinds is cool, but does it drive the economy?
I would prefer China to be great in humbleness. Granted, there are many Chinese today who show off their wealth too much, but I am glad that the worshipping of “cool” in China is still somewhat a youthful distraction rather than a part of the Chinese economy.
*As for Google, the clearest signs of its double speak is in fact, its “uncoolness” in its core. It violates people’s copyrights. It only hires the type that fits its historical Ivy league young Comp-Sci majors, like its Stanford University founders, and it fires anyone who seem too old for the company. And Google’s ridiculously long and silly hiring process is all about putting “coolness” into basic discrimination.
Make no mistake, Steve Jobs is a Ceasar, and Google is the “Revenge of the Nerds.” Both are more fiction than real.
I agree – PR and “brand” helps Google a great deal. But I think there is a stronger reason than wanting to be celebrities and being “Cool Nerds.”
I think in the long run, Google will have a hard time being a dominant player within any country outside the U.S.. Page ranking is a national issue. No country would want to fully subject their citizens to Google’s page rank (and bias) which is proprietary and secret.
Google knows that.
Google is facing backlash in Europe, in the U.S., and generally around the world. China the “bogeyman” is a great strategy for them. It’s great PR in the West.
Google thinks very big and wants to galvanize all the public support it can around the world for the company.
If Baidu is smart, it should counter-“smear” Google inside China. Like Dagong’s impeccable timing in releasing the sovereign credit report, now is a golden opportunity to highlight Google’s shady behavior.