Final Case 2 Intel Memo

Sec 61

Group member: Robert Reed, Bonghyun Lee, Sankalp Kathuria,

Aditya Goel

1

1. What are the lessons useful for their future microprocessor business that you think

Intel should have taken away from their experience in the DRAM industry?

Continuous innovation: As a technology company and from the experience of DRAM, it is

necessary to continuously innovate to uphold the leadership position in the industry. Intel

was left behind after 1103 DRAM in innovation.

Multiple approaches: It is necessary to take the multiple pronged approaches especially in

the uncertainty of the technology business. In DRAM, Intel deployed three different process

technologies ‘Goldilocks strategy’ and decided whatever technology came to fruition would

be mass-produced. This is effectively hedging the risk in the business.

Competitive advantage: DRAM was a difficult market for Intel to obtain the added value

due to the heavy competition and difficulty in differentiating yourself from competition. It

was evident that such competition would be present in microprocessor industry as well. Fixed

costs being similar it was important to move fast on the learning curve. Intel couldn’t do

that vs. Japanese companies in case of DRAM because of less capital and funds but for

microprocessors it was important to do, given they secured capital from DRAM business.

Points, such as pricing, availability, and capacity were also important lessons for Intel.

Licensing: DRAM was driven by cross-licensing network due to inherent nature of the

industry. Though, Intel learning from this should divulge in active patents and limited cross

licensing to secure its market position in microprocessors.

2. In the early years of the personal computer industry (approximately 1980-‐‐1982),

who had the largest added value among the various participants in this industry? Why?

IBM added the highest value by moving the industry from vertically integrated to

horizontal.

In 1981, IBM introduced an...