Intel Case

1 January 2017

How would you explain Intel’s initial dominance and subsequent decline in DRAMS? Intel was successful at the beginning because of their “Goldlocks strategy”, which they focused on mass production and something that competitors cannot copy easily. Because of this approach Intel was able to produce 1103, world’s first 1 kilobit DRAM. The 1103 was more cost effective to build, smaller and better in performance. The 1103 DRAM was able to replace magnetic core memory. Because of these innovations 1K DRAM was able to dominance the market for two years.

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Thanks to Noyce, Intel had enough patents to cross-license among established player to build specific DRAMs even though Intel was new. This is also one reason that Intel was successful at the beginning. Japanese larger firms entered in to DRAM business as the demand for DRAMs were huge. And the multibillion dollar Japanese companies like Mitsubishi and Hitachi were able produce more effectively than Intel, which directly impact the cost and these companies were well ahead of Intel in quality also. The close relationship with equipment manufactures helped Japanese DRAM producers to improve their manufacturing process to improve the yield.

Because of the large yield difference between Intel and Japanese companies, Intel started to lose the market. Intel’s process of new product introduction was slower than its competitors, such as TI or Mostek. According to Moore, Intel was more than generation behind in developing. Overall because of these issues Intel’s market share declined to a very low position. • Why has Intel more successful in microprocessors? ?Inetel’s success in microprocessors was started as they were able to sign a deal with IBM as IBM became a Fortune 500-sized company by their PC sales. But Intel’s portion of the total revenue was low.

So Intel strategically moved their position in to a strong position by cutting number of licensees. As a result of this, Intel was able to win large number of design wins which helped Intel to reinforce their position. After developing 80386, the first 32-bit processor Intel decided to be the sole-source manufacture. Because of these steps Intel was able to control price. Furthermore because of Intel’s advance in technology the second source supplier, AMD couldn’t copy Intel’s microcode which gave Intel full control of the market. The market willingness to buy CISC architecture chips helped Intel to concentrate resources in to CISC segment.

Intel’s success in its marketing, Intel inside campaign also helped them to be successful in microprocessors. Intel as an organization believed Moor low. This made them to invest on new technologies even in market downturn. • Evaluate Intel’s shift in strategy under CEO Crag Barrett and new CEO Paul Otellini Barrett thought that microprocessor no longer be the money maker. As he believed that in future market will be dominated by mobile devices such as smart phones, laptops he stared to change Intel’s strategy toward developing internet related appliances.

In Barrett’s period Intel fought with AMD by putting a chip in every price category. Otellini also believed in same way as Barrett. He highlighted a future where an American visiting Beijing could use a pocket-sized mobile Internet device to audibly and visually translate building signs, restaurant menus and conversations in real-time.

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