Intel Corporation: 1968 – 1997

Brief Summary

From Intel’s beginning in 1968, the company strategy was to “push the envelope of product design and to be the first to market with the newest devices.” By 1973, the company had the world’s best selling semiconductor product (1103 DRAM chip). From 1979 into the 1980’s the industry began to change as competition became fierce and the PC market began to take hold. Intel executives later made a dramatic decision to exit the DRAM business and focus resources on the Intel invented microprocessors. In January 1997, Intel was ranked among the top five American companies. For the most part, Intel’s success had been due to its microprocessors. Notwithstanding the company’s remarkable history and success, company executives worried about the challenges ahead. Almost thirty years later, the questions are, “How can Intel increase and maintain its profits while sustaining or expanding its market share in an increasingly turbulent and aggressive market?” and “Where does Intel go from here?”

The Issue at Hand

In 1997, Intel faced two major cross-currents: the company’s core business was becoming more segmented and its growth appeared to be slowing. Intel was still the leader in the microprocessor industry, and maintained its position as one of the most influential companies in the computer industry. However, the unexpected explosion in the use of the Internet created uncertainty whether Intel’s technical trajectory would continue to be as lucrative as in the past. Furthermore, there was a widely held belief that processor power was not important for Internet browsing.

The Internet was causing revolutionary changes in the computing industry. These changes presented both threats and opportunities to Intel. The primary driver of PC sales was shifting from faster and faster microprocessors to the demand for Internet connectivity. With the Internet also came some potential opportunities which gave Intel a place to go, a direction. The Internet explosion caused the demand for processors, that were both fast and powerful, to rise rapidly. The servers that distributed the on-line content demanded better and better processors. This demand should continue into the foreseeable future. By continuing to stay on the cutting edge of technology in its microprocessor production, Intel should continue to outperform its competitors.

Recommendations

Life Cycle

The lifecycle of Intel’s product becomes shorter and shorter over time due to the rapidly changing world of technology. Intel must continue to price its new-generation products at a premium in order to limit demand. These higher prices should allow the company to generate profits early in the life cycle. As the threat of competition develops, the company would gradually reduce its prices.

Research and Development

Intel’s strategy is to push the envelope of product design and to be first to market with the newest devices. Therefore, Intel should continue to invest heavily in R&D. A focus on microprocessor development should be maintained.

Internet

With the growing significance of the Internet, Intel may be able to increase its market share by investing in internet technologies. Acquisitions or partnerships perhaps could help Intel continue to maintain or expand its market share. An “Intel Inside” caliber marketing campaign focused on its internet technologies could help move Intel forward.