Intel Case Study Summary

Case study: Intel Corporation 1968-2003 Essay

650 WordsSep 11th, 20133 Pages

Case study: Intel Corporation 1968-2003
Intel has made numerous strategic changes to its business model over the last 30 years to address changing market conditions and therefore maintain its ability to add value, buttressing the organizations effectiveness at capturing profits. The technology landscape has been extremely dynamic over this period and companies that have not adapted rapidly have faced extinction. Intel is amongst the survivors while others such as Compaq no longer exist.
The first major course correction that is relevant to this discussion is Intel's transition from being a supplier of memory chips to designing and manufacturing microprocessors. Though Intel's exit from the low margin highly competitive memory chip…show more content…

Through this marketing Intel successfully differentiated its products from competitors and gained valuable mind share. The fact that Intel was able to essentially impose this requirement on OEMs was a manifestation of their superior ability to add value relative to the PC manufacturers.
AMD managed to mount a credible threat to Intel's hegemony of the PC microprocessor market. Intel reacted to this threat by increasing research and development and expending resources to recapture and maintain a technological lead over AMD. AMD's presence in the market negatively impacted Intel's ability to add value to and extract value from the PC industry. Per Exhibit 1 R&D expenditure grew to $3.9 billion during this period. Net income dropped from 10.5 billion to $3.7 billion between 2000 and 2001.
Microsoft and Intel were the two entities that extracted the most value from the PC revolution. Though there were moments of conflict between them, for example with regards to the RISC vs. CISC processor architectures, the two companies essentially enjoyed a symbiotic relationship which helped maintain this highly lucrative market. It is only in recent years that the alliance has begun to fray as a result of challenges from the mobile computing paradigm shift.
Exhibit 5B reflects “Wintel” dominance of the PC industry in the 90s with Intel capturing greater than 70% of the CPU market

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Introduction

Intel Corporation is the biggest semiconductor manufacturer in the world and has changed theglobal marketplace radically since it was founded in 1968. The first handheld calculators and PCs (PersonalComputers) were developed through the

innovation of Intel’s

microprocessors. In the earl

y 70’s increased

competition from Japanese semiconductor manufacturers had dramatically reduced the profitability of thismarket this made Intel to shift the company's focus to microprocessors.From the late 80s until the late 90s Intel had a 10-year period of unprecedented growth as the primaryhardware supplier to the PC industry, supplying microprocessor to IBM.

Intel’s product

lineof Pentium processors had become a household name.

Today at least 80% of Intel’s processors are used in

PCs globally. Their product line consists of: chipsets, motherboards, flash memory used in wirelesscommunications, networking devices, laser printers, industrial machinery, and cellular phone base stations.In June 1994, Intel engineers discovered a flaw in the P5 Pentium microprocessor. This resulted in a$500 million loss in Intel's revenue. Ironically the media coverage regarding this flaw gave Intel publicawareness and for the first time consumers realized the importance of microprocessors. Intel changedsome of its business practices to be more end-user focused.After 2000, growth in demand for high-end microprocessors slowed. AMD, Intel's largest competitor,gained significant market share and Intel's dominant position in the market was greatly reduced.In the early 90s antitrust allegations against Intel were made after AMD claimed that Intel wasmonopolizing the market, but the lawsuit had no definite outcome. In 2004 and 2005, AMD filed anotherlawsuit against Intel but with all this negative publicity caused Intel great profit loss, the companyannounced a restructuring that resulted in 10 % workforce layoff which was around 10,500 employees.Intel needed to regain the lost marketplace, with the launch of its new product development modelthe Core micro-architecture Intel regained the market lead. This new processor was considered to be anexceptional leap in processor performance.

Intel has become one of the world's most recognizable computer brands following its long-running

Intel Inside

campaign. The campaign, which started in 1991, was created by Intel marketingmanager Dennis Carter. The

Intel Inside

advertising campaign sought public brand loyalty and awareness of Intel processors in consumer computers.

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