Intel has too much managers with ties.

When they created the P4, the ties ordered: "maximum clock speed".
The engineers then had to make a huge pipeline, resulting costly pipe stalls.
So the engineers designed the P4 with lots of ALU + FP capabilities to make it roll fast when supplied.
The managers complained about the cost and threw away half of the FP units.
The end product was horrible, but still sold in large quantities because companies liked "Intel Inside".

If AMD had had the production muscles, they could have taken over as largest manufacturer then and there, but the ties at Intel marketing did use bad tricks. For some time, they told Dell not to use any AMD processors or else their supply and price of Intel chips would be affected.

They told corporate purchasers that AMD server chips couldn't be trusted because they where not "the original". Seriously hampered Opteron sales until a couple of large US universities got huge Opteron supercomputers making the corporate market realizing that the Opteron isn't to be ignored.

The ties did agreements with Rambus, promising to not create any chipsets with support for non-Rambus memories and then they would get shares in Rambus. This did progress until they suddenly realized that the majority of Intel processors got installed in moderboards with third-party chipsets. Oops. Suddenly they had to drop the patent charges against VIA and very quickly write up some nice licensing deals. And while waiting for new chipsets with support for non-Rambus memories, they had to create glue chips resulting in motherboards that got the worst of both worlds - the lag of RDRAM without the extra burst bandwidth while streaming.

The Intel engineers may be great. But it's a long time since they had any real saying. So Intel forgetting about its engineering past isn't exactly surprising.