Case study 11: Intel Corporation 1968 - 2003 Read the case study and answer the
ID: 345726 • Letter: C
Question
Case study 11: Intel Corporation 1968 - 2003 Read the case study and answer the questions below. Each of the question has to be at least 150words with clear justification.1) How would you describe the business level strategy of Intel with regard to the microprocessor market? 2) What are the source of Intel’s long term competitive advantage in the microprocessor business? 3) Given Intel’s historically strong competitive advantage, why is the company now facing significant challenges? 4) What should Intel do to deal with the new realities in the computer and communications industry given the rise of mobile devices? Case study 11: Intel Corporation 1968 - 2003 Read the case study and answer the questions below. Each of the question has to be at least 150words with clear justification.
1) How would you describe the business level strategy of Intel with regard to the microprocessor market? 2) What are the source of Intel’s long term competitive advantage in the microprocessor business? 3) Given Intel’s historically strong competitive advantage, why is the company now facing significant challenges? 4) What should Intel do to deal with the new realities in the computer and communications industry given the rise of mobile devices? Read the case study and answer the questions below. Each of the question has to be at least 150words with clear justification.
1) How would you describe the business level strategy of Intel with regard to the microprocessor market? 2) What are the source of Intel’s long term competitive advantage in the microprocessor business? 3) Given Intel’s historically strong competitive advantage, why is the company now facing significant challenges? 4) What should Intel do to deal with the new realities in the computer and communications industry given the rise of mobile devices? Case 11 Intel Corporation: 1968-2013 Charles W.L. ill School of Business, University of Seotle, WA 981095, June 2013 INTRODUCTION operating system that ran on ARM chips, rather than Intel chips, creating a potential threat to Intel's core PC business In 2012 Intel was the leading manufacturer of micropro- cessors for personal computers in the world, a position that it had held onto for more than two decades. Over 80% of all personal computers sold in 2012 used Intel microprocessors. The company reported revenues of S53 billion and net profits of $11 bilion. Meanwhile, OF INTEL Intel's only viable competitor, AMD, which in the early 2000s had been gaining share from Intel, lost $1.2 billion Two executives from Fairchild Semiconductor, Robert on sales of $5.4 billion. Noyce and Gordon Moore, founded Intel in 1968. Despite its historic dominance, the future looked Fairchild Semiconductor was one of the leading semi- uncertain for Intel. The rise of mobile devices had led conductor companies in the world and a key enterprise to a strong substitution effect, with sales of PCs fall in an area south of San Francisco that would come to ing as consumers switched to smart phones and tablets be known as Silicon Valley. Noyce and Moore were no for many of their computing needs. In the first quarter ordinary executives. They had been among the eight of 2013, global PC sales fell 14% on a year over year founders of Fairchild Semiconductor, Noyce was gen- basis according to the research firm IDC. This was the eral manager at the company, while Moore was head worst yearly decline since IDC started tracking PC sales of R&D.; Three years previously, Moore had articu- PC sales had lated what came to be known as Moore's Law. He had in 1994, and the fifth quarter in a row that fallen. At the same time, sales of smart phones and tab- lets were booming. ID would grow almost 60% in 2013, a ments would exceed those of portable PCs observed that since 1958, due to process improvements the industry had doubled the number of transistors that could be put on a chip every year (in 1975 he altered this C predicted that sales of tablets nd that tablet ship to doubling every two years) The crux of the problem for Intel is that most tablets Fairchild Semiconductor had been established irn that are based on 1957 with funding from Sherman Fairchild, who had nd smart phones echnology licensed from ARM Holdings PLC, a British backed the founders on the understand Semiconduc Camera and Instrument Corporation on New tor would be a subsidiary of his Fairchild York. By Moore were chaffing at the bit under mpany whose chip designs are valued for their low Intel has a line of chips aimed at mobile devices-the 1968 Noyce and Atom c consumption, which extends battery life. While in 2012 both decided it was time to strike out on their own. Such reputations of Noyce and Moore that they were ver, able to raise $2.3 million to fund the new venture "in an afternoon on the basis of a couple of sheets of paper C-173 om chips-microprocessors incnt practices imposed from New ogy were found on 95% of smart phones over 30% of all mobile computing devices, a cate were the and gory that includes tablets and PC notebooks: Moreov of its Windows 8 2012 Microsoft issued a version
Explanation / Answer
Intel showed two different types of strategy. Initially they started without doing any kind of marketing and thus it led to not many people or companies being aware of it and later when the marketing was done it became huge success. The Microprocessor was created by Intel in the year of 1971 with the inquiry of Japanese company. Intel never went directly to the market. Initially it was asked by Japanese company and formed their own and later IBM came asking for microprocessors and they were not even what the microprocessor to be used for. Then Intel realised that there is a need for marketing of the product. Intel ran an intensive marketing strategy and sales campaign and it became huge success and attracted many OEM’s to use Intel’s version.
2) Intel understood very clearly that there is a huge need in the market for microprocessor and especially due to rapid change in technology Intel started increasing the prices new chip and when it becomes success the market prices they reduce by 30 – 50 % in one year. This way many of the competitors were side-lined by Intel. The company was spending a lot of money on research and development of the chip design to stay strong in the market. By 2012 the company was spending 10 billion or 19% of the sales amount just for R&D and spending on improving the manufacturing process. Intel never compromised on the quality and design they manufacture and made sure that they are far ahead of their competitors.
3) It happened during the Craig Barret ERA where to maintain the greater competitive advantage the company started acquiring the internal ventures and spent more than 12 billion for it. Barret failed to click in this aggressive push and it did not yield any return to the company. By 2004 Intel lost its market and had only 6% of the market chips and 7% in market for processing chip for mobiles. This is where the down trend started. Also during Barret period there had been major product delays, capacity constraint that made some customers to withdraw and move on to others. Due to this growth rates started slowing down when compared to 1990’s. After that Intel ran in to stiff competition with major competitors like Texas Instrument and Qualcomm both also had strong market in the sector.
4) It was all known that Intel had already started its down trend. On the other side there had been a huge technological innovation and the rise of mobile phone devices which led to reduce the demand for computers. Intel should have thought about it and could have manufactured something for the mobile microprocessors where they can still stay in the market and compete with competitors. Since the downfall started for computers and the demand started reducing atleast not like the earlier days. People started using mobiles more than the computers. Intel could have just shift the focus towards what is there for the future which they did not do. Instead of still focussing on the staying in the market, finding the new segment which has future could have been a best option. Since technology is always recurring when it comes to advancement and Intel should have moved ahead with market condition in mobile phone sector