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Intel Corporation
Robert Noyce and Gordon Moore founded Intel in 168. They both had previous experience in the semiconductor business when working for Fairchild Semiconductors as senior executives. Later they recruited Andy Grove, who was Assistant Director of Research at Fairchild. The three of them became the force behind Intel, a semiconductor memory chip business for mainframe computers and minicomputers. In 171, Intel introduced the 110, a l-kilobit dynamic random access memory chip (DRAM).
Intel's strategy from the beginning was to be the leader in product design with the newest devices. To achieve this, Intel had to stay on the leading edge of process technology. In order to achieve this, Intel had to invest heavily in new manufacturing equipment that would produce even more complex devices. This strategy worked well until around 17 when Japanese competitors began to introduce new products more rapidly. The Japanese competitors produced devices that had a higher memory capacity, which captured a significant share of the DRAM market. This translated into higher cumulative production volumes, and thus gave them the manufacturing cost advantage. Furthermore, Japanese competitors were much faster at developing process technologies and increasing production capacity. Intel's failure was due to its strategy on improving previous DRAMs instead of developing new and enhanced products. They did not have the means to keep competing with the Japanese competitors, and thus became a relatively small competitor in the DRAM market. As a result, mid-level Intel managers had begun to shift the company's production resources away from DRAMs and began to adopt a new process technology and strategy involving microprocessors.
Intel began to take production capacity away from the money-losing memory business and implemented it into the new microprocessor business. Personal computers had a huge role in the demand for microprocessors and it was up to Intel and Motorola to meet the demand for this emerging market. IBM decided that the fastest way to grow the PC business was to buy components, such as microprocessors, from third party vendors. Thus, Intel implemented strategies such as "project CRUSH" and "project CHECKMATE" to compete directly against Motorola for the IBM contract and other potential sales. Intel also used a manufacturing strategy in which they licensed other companies to produce the chips to meet the high demand for microprocessors. As Gove states, "We developed multiple internal sources, so several factories and several processes were making the chips simultaneously." This enabled Intel to meet the demands for the product while producing the product more efficiently and quicker.
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In order to further obtain a competitive advantage Intel did not license the 86 microprocessor to any other manufacturer other than IBM. This enabled Intel to be the leading player in its "horizontal" niche. However, when Intel introduced the 486 microprocessor, it had a new competitive threat - the RISC that had a speed and cost advantage over the CISC. Then again, Intel also had a RISC, but the problem was whether Intel should push the i860 (their RISC) as a substitute for the X86 line (a CISC). To overcome this, Intel decided to step up the R&D for new generations of the X86 line simultaneously (the Pentium and Pentium Pro) which were compatible with the CISC and the RISC. Intel was able to sustain its advantage in microprocessors because they were able to adapt current products, and develop new and improved products faster and before its direct competitors; something it could not do with the DRAMs.
To continue to lead the industry and sustain its competitive advantage over its competitors, Intel must explore new opportunities and ideas in which they have the first-to-market advantage. Possible prospects would be developing new, better and different components for PCs, new technologies, or exploring Internet capabilities. However, in doing this they have to be aware of threats such as clones from competitors such as AMD. To combat these threats, Intel should protect their developments through patents and licenses. Intel also should commit to R&D to take the leading edge in technological development and produce a large amount of volume faster than competitors while at the same time being cost effective. This will enable Intel to achieve an overwhelming advantage in performance over competitive offerings and therefore add to the overall success and profitability of the company.
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