Executive Summary
The purpose of this report is to take a deep insight of Intel Corporation and analyze its products, processes, operations and research areas that make Intel world’s best electronic hardware manufacturer of the world. The report will be divided into 8 parts in order to organize the information in headings and then subheadings. The report will start with an introduction which tells us briefly about the report, its purpose along with a brief introduction of the company. Then we will look onto the methodology of the report which will cover the information sources that were used in order to compile this report. Then the creative, innovative strategic competitive edge that the company has in its competitive industry will be discussed in different headings and subheadings. This would then be followed by the upcoming and new products based on the creativity, innovation and strategy that have already been discussed above. Moreover the report will also cover the challenges the company faces with respect, to old products, upcoming products and due to the growing competition in the industry. Lastly the conclusion presents an analytical over view of the company along with recommendations, suggestion and evaluation for the company.
Introduction
Intel Corporation was founded on July 18 1968 and was named as Integrated Electronics Corporation based in California USA. Intel is the world largest and one of the most famous companies that produce semiconductors and microprocessors that are the most basic component and hardware of all the personal and office computer machines. Intel products serve hardware needs in the technology sector world over by providing high quality mother boards, ICs, network adapters, graphic accelerator cards and many other hardware devices that fulfill computing and communication needs across the globe.
The company is headed by Paul S. Outellini as the Chief Executive officer along with Craig Barrette as the chairman. Companies revenue for the last year have increased to up to $38.3 billion whereas operating income and net income of the company have increased up to $8 billion and $7 billion respectively. The company currently employs around 86,300 employees and still Intel is known to be as one of the best employee managed companies around the globe despite the fact that it has a huge employee base. The company also resides at the 25th rank in the top 100’s list of most powerful brands across the globe.
Methodology
This report is drafted by using the resources from many articles, books, encyclopedias annual reports published by the company itself. These sources provide information about the architecture of the company, its evolution and the chronology of product development along with critical analysis of the company and its operations in light of the challenges it faces in the competitive market condition that have been there since 1990’s to today.
The literary resources are cited and referenced through out the paper and are thoroughly checked for authenticity with the help of other resources such as the internet and media documentaries. As the report is divided into different headings and subheadings, thus relevant information from each of the resources was first extracted and then compiled under each heading in order to include as much detail as possible.
It was kept in mind while using the literary resources that the information is up to date and not very old which makes it irrelevant with respect to the purpose of the report because since the company has been founded, there have bee many changes in the production, products and management of the company due to changing needs and high technological innovation in the industry.
Creativity
The company has come with different products and sectors in different phases from the day it was founded. For example, until 1980’s the company was producing and concentrating mainly in streamlining business that is SRAMs and DRAMs. However, along with maintain and producing its mainline business, the company came up with microprocessors in 1970 that got much appreciation after 80’s and in early 90’s.
However, when competitors in memory chips from Japanese industry entered the market, the company faced great competition in its mainline business and experienced huge downward plunges in the profitability of the business. Thus, keeping in view, the personal computers that were developed by IBM in 1983, the company thought of shifting its main focus towards micro processors from micro chips and a new era of development and innovation for the company started (Ghemawat, 1999). This shift or phase in the company’s strategy proved to be quite successful for the company because this shift enabled the company to enjoy almost a decade of exponential growth because with the production of high quality and unmatchable micro processors, the company became the top supplier of hardware micro chips in the technology industry world wide.
The Personal computer industry was booming in this era from 1990 and onwards, thus the company started producing its operations from three distinct geographic locations in order to provide its product to every household user who needed better quality micro processors for high quality and performance. Intel was the first company to produce micro processors and as soon as the Intel processor 8080 was finally completed in 1978, Intel started a massive marketing campaign with the name of operation crush in order to attract as many customers for the processors as possible. At this time, IBM launched its first ever PC and the chip were used in that system. Although the chip did not manage to get hype as it was intended to but as soon as Compaq entered the market with a clone pc of IBM, the competition became fierce, and both the companies were now using Intel chips for their systems. Intel under this fierce competition managed to emerge as the sole and key supplier of micro chips in the market and by 1981, the company launched its first 32-bit processor in the market named as INTEL iAPX 432.
As a lot of more companies emerged as microprocessor producers in the market, Intel faced competition while making microprocessors its new source business because customers wanted to see more companies in this hardware as they could not rely on only one vendor of microchips because in case of a malfunction the whole system and the whole supply chain from supplier to customer could be disturbed. Therefore the company decided not to license the 386 design to other micro chip producers and started manufacturing it from three different locations so that the customers could be ensured that the chips were not coming down from the same plant but, customers could also get them from different origins (Gawer, 2002). Compaq’s desktop pro 386 used this new processor by Intel and again gave Intel the rank of a market leader and sole supplier of Compaq in the early 1990s. Then the company came up with 486, Pentiums and Itantiums I the decade from 1992 to 2002 by introducing a new model every two years in order to keep the customers satisfied, bringing them the latest technology and more processing speed for their work so that the customer base could be retained and also flourished. Intel managed to become the most famous brand in micro processors and customers started to grade PC’s on the criterion that weather they had Intel chips or some other. This was only because Intel and its management was creative enough to come up with new ideas and technologies that were necessary to satisfy customers in the time when Personal Computers were on their all time boom and SRAMs and DRAMS were no more primary products for a company. It was wise enough for Intel to switch its main business from memory chips to microprocessors because it was necessary to forecast that the future computing based more on the micro processors.
Along with producing micro processors, Intel also started making mother boards on which the CPU of a system actually worked and which managed all the hardware of the system. Moreover Intel also started making complete systems for other PC manufacturing companies as their clones which aggravated the competition in the PC industry even more. Although the demand for PCs increased with respect to innovations that every PC manufacturer provided its customers, yet the customers still demanded the Intel processors and boards in their PCs regardless of the brand of the entire console. This campaign was run as ‘Intel inside’ which customers thought to be very important for their systems. Intel hardware labs came up with innovations as well, such as, PCI Bus, PCI Express Bus and the Universal Serial Bus (Berry, 2002). Video and graphic softwares and hardware were also introduced by the company along with fulfilling the need for communication which led to the invention of Bluetooth connectivity and wireless LAN modems.
Moreover, Intel creative department designed its chips and boards in such a way that these hardware fulfilled demand and needs of many system manufacturing companies for many years to come, thus a company like Apple came in to a contract of partnership with Intel that required all Apple Macintosh PC’s to run on powerful lintel processors. The power of Intel processors was such that it could support all sorts of operating system due to its creative design and performance and thus all the OS companies recommended Intel as the best compatible chipset for the use of their system softwares.
Apart from creativity in hardware, the company has a unique style of bringing creativity to its work from the management point of view. The management style of the company is not relaxed and informal like may other corporate giants, but the environment is strict, compensates good work quite generously and does not allow inefficient and un-productive employees to hang out around in the company for long. Most of the companies in Silicon Valley have had this trend of taking CEO’s from outside the companies and from the relevant industry, however, Intel has resisted this practice of the industry from the very beginning and only takes CEOs from with in the company who have already served and worked for the company. All the CEOs of the company are required to retire at the age of 65 in order to bring in fresh leadership with new ideas and to give the next generation a chance to lead. More over, at Intel, from CEO to lower management, the entire team of employees and officers sit in their cubical and there is no office for anyone (Ghemawat, 1999). The reason for this policy is to promote egalitarianism. This is to provide equal opportunity and playing field to all the employees to come up with new ideas without the hesitation of their rank or seniority in the company and thus the company does not waste even the smallest of ideas that come from their employees. Employees help each other in their daily work and feel free to go their boss for feed back and guidance at any time just as they are free to go to their colleagues and subordinate working under them.
In order to incorporate creativity in their management style and work Intel has also managed to use the concept of diversity in its management that require diverse groups to be employed in the company who belong to different sexes, races, religions and nationalities. This is done in order to adopt the best practices from all the cultures and amalgamated them to make the management and the operations of the company the best as ever.
As far as the advertisement campaign of the company is concerned, Intel invested heavily on its Intel inside campaign advocating how important it was to have Intel systems inside systems and PCs. The company paid half of the cost for advertisements which used Intel logos in their ads and gave sufficient exposure to it as described by the company in its advertisement policies. All the PC manufacturing companies who used on the Intel logo on their system casing got 50% of their advertising coast back from Intel as a reimbursement (Berry, 2002).
Moreover the centrino campaign which focused on the connectivity of internet and wireless communication any where and every where, the consumers made a schema in their minds that for all time connectivity they did need Intel systems and products in their computer systems. This campaign was also quite successful in the UK.
Strategy of Intel
The over all strategy of Intel can be analyzed from the innovation above that the company believes in adapting to changes as soon as they occur. We can see that when the company was a market leader in memory chips, it came up with extended memory chips just before the consumers actually though for extra memory. This lead Intel to become the market leader in memory chips, however when the company faced competition from similar hardware companies and the PC manufacturing companies, the company changed its strategy and came up with an entirely new product , micro processors. Although the company licensed its designs to other manufacturers as well in order to reduce the risk of faulty chips and supply breakdown of chips due to only one supplier, the company realized that its competitors were strengthening with time. Thus the company introduced a new 386micro processor and did not license its design to any of its competitors because the company started producing the processors itself from three different locations in order to over come the risk of faulty chips and at the same time satisfying the customers. This led to a boost in the sales of Intel chips because the company kept on innovating newer versions of micro processors every two years in order to retain their customers and providing them with more speed and quality with time. This strategy of keeping innovating newer designs and products led the company to a point where it became the sole producer and manufacturer of best micro processors that were compatible to all operating systems in the early 2000s (Intel, 2003).
Intel also used its Pentium 5 and Pentium 6 to gain o over all competitive edge in performance over its competitors. This strategy made Intel of the most reliable and high quality brands in the early 2000. Moreover to even more bolster their brand name, the marketing campaign ‘Intel inside’ was no joke in attracting so many customers who looked out for Intel inside rather then brand after watching the campaign.
Innovation Strategy
The innovation strategy of Intel has always been such that it focused on increasing its market share with every product that it launches. For that the product must have such innovational and technological advancements that the competitors could not meet, thus the engineers and technicians at Intel always came up with such innovations that enabled the company to come up with such innovations that helped it increase market share, increase sales revenue per product and increase profit margins. In order to get competitive edge over competitors on the basis of new innovations, Intel did spend massively on investments to enhance sales, to develop products, incur developmental costs, and incur marketing expenditures.
New products
Intel is mainly producing the following products.
Processor products, as we have discussed above are known as micro processors or the CPU in a computer system that is responsible for all the controls and processing of data in a personal computer. Intel also manufactures mother boards on which micro processors and chipsets are installed physically to make it a complete system.
Computer Enhancement Products, these products are the essential logic functions that are performed in the surroundings of a CPU( Gawer, 2002).
Networking and Communication devices, these devices enable the users to connect to servers and networks and make it more compatible with the use of Intel processors and mother boards rather the cross branding. Blue tooth devices and LAN cards are an example of such products that are offered by Intel.
Apart from these basic products, Intel offers its users with Intel’s own graphic accelerators, web cams, modems, sound cards and a lot of other hardware’s that are essential for consumers I order to make their computing as interesting as fast as possible.
Intel graphic chipset cards are known for giving gamers a real life experience of their game by bringing them closer to reality. The accelerated and detailed graphics that these cards support have changed the gaming scenario for gamers because without them 3D games and simulators cannot be supported by normal computer systems. Moreover Intel modems and communication devices make fast communication possible by enabling corporate to hold meeting on line with the help of Intel web cameras and streaming devices in order to communicate live. Intel sound cards and music devices help composers and musicians to digitally design their sounds and alter their voice to perfection and give listeners an ultimate experience with crisp clear and high sound quality (Intel,2003).
Challenges
One of the most common challenges that every industry faces and so does Intel is the growing competition from other competitors because due to globalization the ease of transfer of technology has enabled many new companies to come on the same level playing field as until. Companies like AMD are also producing micro processors and boards that offer same services to consumers and are capturing consumers with their own technology and innovation.
Many of the hardware’s that were previously produced by Intel are now being produced by many other companies in china and Japan as well. China is flooding the international markets with cheaper hardware products such as digital cameras, graphic cards, sound cards, mother boards and other essential hardware products where Intel was previously a market leader. Another challenge for the company is that the life of its product is decreasing because of outsourcing its manufacturing process to different companies and regions in pursuit of lo cost manufacturing, but this has led the company to face many quality issues reported by the consumers and customers.
Moreover when Intel launched its Centrino processors, Chinese government and law enforcement agencies prohibited the import of Intel centrino processors inside china because it did not meat the security of wireless connectivity laws inside china and thus Intel was not able to export to the humungous Chinese market with its new product whereas others in the industry did reap profits due to this advantage (Intel, 2003).
Conclusion
Intel has been a market leader in the information technology and hardware industry from almost three decades now and is providing new products as soon as they are innovated. Intel is committed to serve its satisfied consumers even better by investing heavily on its research and development programs in order to find ease, speed, quality and reliability for users along with a new experience every time that the customers would not find in a product from a competitive company. Although Intel has well defined strategies regarding it new products, consumers and competitors, still with the spread of globalization , Intel needs to work eve more on consumer needs and producing at cheaper prices in order to retain and satisfy its existing customers because other brands may turn out to be much cheaper and also reliable. Moreover Intel also faces many anti competitive allegations from a number of sources because of its advertisements that are aired on television and in print media and critics criticize Intel for using false information about its own and competitor products in order to give consumers a reason why they should go for an Intel product. Thus Intel does need to look after this issue in order to safeguard its reputation in the corporate world and retaining and maintain its confidence in consumers because activities like these do count as negative marketing for the company in the long run.
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