Abhinay Bandaru NIT Surat

Founders: Gordon Moore, Robert NoyceFounded: July 18, 1968Headquarters: Santa Clara, CaliforniaLargest Semi-Conductor Chipmaker

based on Revenue

The Interface Level

Market Segment

Intel

Facilitators

Buyers

Market Segments

Suppliers

Competitors - AMD- Nvidia- Texas Instruments Inc.

Market Share PC => 79.3%Mobile PC => 84.4 %

Product Mix &

Industrial Marketing Environment

Product Mix of INTEL

Processor Mobile Devices Networking Products

Intel-Atom-Processor-Z3570

Value Processor

Intel Core

Chipsets

Controllers

Adapters

Boards

Galileo

Edison

Intel-Atom-Processor-Z3736F

Intel-Atom-Processor-Z3530

Intel-Atom-Processor-Z3736G

Intel Xeon

Intel Quark

Pentium

Celeron

Switches

Optics

Cables

Workstation Server

Server Chipset

PC Chipset

Server Products

RAID

Server board

I/O device

Outline

About Intel Corporation

Initial dominance and decline in DRAMs

Success in microprocessors

Becoming the builder of the Internet

0

1

2

3

Conclusions4

Department of Business AdministrationCollege of Management

Intel inDRAM Market

Source: Intel Case Exhibit 4 Volume Trends in DRAMs

Intel first introduced 1K DRAM (Lead)TI and Mostek had better design and low cost.

Intel lost a full generation to Japanese (16K vs. 64K)

Intel faced strong price competition from JapaneseIntel introduced 1-megabit DRAM but has lost the market

Intel exited DRAM market.1985

Intel produced the world’s first 1-kilobit DRAM, 1103 (Goldilocks strategy).1970

1 Initial dominance and decline in DRAMs

Henderson and Clark (1990)

Models of Innovation

Teece (1986)

Who profits from innovations?

As first mover, why failed in the end?1. From radical innovation to incremental innovation…2. Appropriability and Complementary…

Department of Business AdministrationCollege of Management

12 October 2011 Fall 2011 MBA Management of Technology8

“DRAM gave us fame,but EPROM gave us riches.”

“We had microprocessors.”

---Andy Grove

Department of Business AdministrationCollege of Management

Intel in Microprocessors

2 Success in microprocessors

1971: Intel 4004 1972: Intel 8008 1974: Intel 808 1978: Intel 8086 y 8088

1980 “Project Crush” + Design wins (Intel + IBM)- IBM open standard- Success in format war- Being a free rider by design wins

1983 License control- Restrict licenses to four company- More design wins and more revenue- Set up the industry standard

Platform building: x86

1982: Intel 80286Second-source strategy

1985: Intel 80386 1989: Intel 80486Sole-source strategy: becoming proprietary

2 Success in microprocessors

Tom Dunlap, senior vice president and general counsel

Intel vs. AMD“AMD’s products were big, ugly, and late.” (mid-1980)“By the Pentium generation, AMD couldn’t get any trade secrets and couldn’tcopy our microcode, so our products developed quite differently.” (1995)

1991: AMD AMx86 1996: AMD K5

1996: AMD K6 y AMD K6-2

1999: AMD Athlon K7(Classic y Thunderbird)

1993: Intel Pentium 1995: Intel Pentium Pro 1997: Intel Pentium II 1999: Intel Pentium III

Industrial Marketing Strategies

Intel Inside Campaign (1991) “To educate both the retail sales associates and the

consumers about the value of Intel microprocessors, and to explain to them the differences between the

microprocessors.”Campaign Highlights:

Association with 200 OEM’s for Brand Recognition.1st Trademark in the Electric Component Industry.“Intel Inside” aka Quality & Reliable product for Buyers.

5 years later:Intel’s link with World Market Leaders : COMPAQ, IBM !

Current Scenario: Brand value quantified at US$35 billion (Initial investment

US$3.4 billion)

1990 Success marketing: the “Red X” campaign specifically against AMD, and the“Intel inside” end-user branding and advertising program to OEMs.

2 Success in microprocessors

Dennis Carter, head of corporate marketing

Pentium bug: good response to product flaw and effective end user promotion

Architectural competition: RISC vs. CISC (Intel)

1994

1990-1995

2 Success in microprocessors

DRAMs Microprocessors EPROMs

Patent Protection Law V V

Trade Secrets V V V

Copyrights V

Trademarks V

Chip Protection Act V

Why has Intel been more successful in microprocessors?Exhibit 6 Comparative Intellectual Property Considerations

Block

Run

Successful Protecting Strategies

Afuah (2003) Team UpIntel+IBMDesign Wins

Intel sole-source

BlockWintel PC + Intel inside

Fight against AMD

Team UpIntel+HP

StrongProprietary

Invention of themicroprocessor

Emergence of Intel’s architectureas the dominant design for PCs

Discontinuity fromRISC technology

Source: lecture slide

Intel inInternet Market

The PC was at the center of computing during the 1990s, but if you look at the next decade, it is the Internet. The PC is still very important in the Internet era, but there are lots of other things that are important as well. People are going to access the Net off their cell phones, and more cell phones are sold today than PCs. Networking is becoming more important, whether it’s in the home, small business, or enterprise. If you want to be involved in this new era, you have to look for the new growth opportunities. That’s what we are trying to do.

---Craig Barrett (1999)

Becoming the builder of the Internet3

Intel invested a large amount in such a short time, but not matured enough for the new competition and newbusiness. However, it could have been worse if Intel did do so.1. There was a recession and decreasing on world

PC microprocessor revenue (Exhibit 8).2. The competition in new business was even stronger

than its core business (see Exhibit 10b).3. Internally, Intel had a series of implementation errors

(p.15).2001-2002 Intel shut down businesses ranging from Web hosting, network switching,

and network appliances to Intel consumer products. Barrett introduced a back-to-basics program to achieve operational excellence.

Why? 新官上任三把火

Spring 1968 Robert Noyce and Gordon Moore left Fairchild Semiconductor to start Intel with the venture capitalist Arthur Rock. Later Andy Grove joined with a group of team from Fairchild.

Robert Noyce 1927-1990

Gordon Moore 1929-

Arthur Rock 1926-

Andy Grove 1936-

0 About Intel Corporation

1970s

DRAM1980s

MicroprocessorLate-1990s

Internet

Becoming the builder of the Internet3

Microprocessor32-bit Celeron (1999)

32-bit Pentium (1997)

32-bit Xeon (1998)

64-bit Itanium (2001)

2002 Intel successfully pulled a generation ahead of AMD.Intel had roughly 89% market segment share in mobile CPUs.

Do you think that Intel should maintain these strategy moves in 2003? Yes, because the strategic position was right to the future market and demand. The lost was temporary due toill-management and unfocused diversification strategy.

Value-based lower pricesfor higher volumes Mainstream High performance

32-bit Celeron (1999)

32-bit Pentium (1997)

32-bit Xeon (1998)

64-bit Itanium (2001)

Low-end consumer PC Mass PCLow- and mid-range corporate server and

workstationCorporate server

Client part Network connectivity Server/data farm

Convergence of computing and communications is the majorgrowth driver of the Internet, and we are in both.” – Craig Barrett

Conclusions5

Technology Strategies Maidique and Patch (1978)

DRAMs Microprocessors Internet

First-to-Market or Leader Strategy

Intel Lead Intel Lead Protecting PC and server platforms

Second-to-Market or Fast Follower Strategy Beat by Japanese Block

Establishing new standards in network and communications (WiFi)

Late-to-Market or Cost Minimization Strategy

No complimentaryassets Run and block ?

Market Segmentation or Specialist Strategy

Lost the marketIntel got the lead for segmentation (brand value)

?

Macro-Environment

6 Major Factors affecting Intel

Economic FactorsProduct demand• Customer product needs• Competitors pricing• Tax rates• Standard of living• Market acceptance

Ecological Factors

Design semi-conductor keeping environment in mind

Responsible operations(supply chain)

Engaging employees to reduce impact

Recycling- Follows WEEE directive

Chip life extended up to 10 years

Physical Factors

Obtaining the resources or products

Subject to theft, loss or misuse of personal data and components

Risks of global operations

Employees: Hardware and Software Engineers

Technological Factors

Complex process of producing integrated circuits

Response to technological and market developments

Third party threats

Process of Transition

Demographic Factors

Increasing

population

Age

discrimination

Booming IT sector

Government Regulations on I.T. and Hardware equipment

Conclusion:

Product, purchaser gets in exchange for his /her money

It can be offered to a market for attention, acquisition, use or consumption and that might satisfy a want or need.

A product is a bundle of utilities consisting of various product features and accompanying services.

So Intel also using the product knowledge proper and changing the features and product according to the advance technology requirement.