Intel Case Study

Intel Case Study

2. How and why did Intel’s added value over time? Pay particular attention to the watershed moments, events, or decisions that affected Intel’s added value. Explain why those had big effects?

DRAM Exit

1n the early 80’s, Intel’s market share in memory chips (DRAM) was in steep decline. Intel’s existing capabilities, Circuit Design (CD) & Technology Design (TD) did not match competitive dynamics from the Japanese companies and exploration did not focus on manufacturing scale which was a large market. Intel’s share was barely 1%, and manufacturing was restricted to one fab out of Intel’s eight plants. A decision was made to exit the DRAMs market. This was the early watershed moment and the following events and decisions affected Intel’s added value.

Entry to Microprocessor

1980 - Project Crush and Design Wins (Intel and IBM)

To rush it’s product to market, IBM adopted an open standard that effectively made IBM-PC nonproprietary. Intel capitalized on the opportunity and intensely competed with Motorola to be the microprocessor architecture. Intel initiated “project Crush” in 1980, and intense sales and marketing campaign that boasted 2500 design wins, helped them secure the 8088 microprocessor that went into IBM’s first PC. IBM’s success between 1983-85 generating $5.5 billion in revenues, catapulted Intel to the market lead in microprocessors. The end users were largely consumers and individual managers who were relatively unsophisticated and willing to pay a premium for the service, support, and compatibility with the IBM brand.

1983 - License Control and “Checkmate”

Intel cut the number of licensees to four and initiated intense marketing and sales campaign called “checkmate”. This led to large number of design wins and reinforced position as industry standard.

1985 - Sole Source Strategy

Intel made bold decision to be the sole source manufacturer for the first time. They set out to convince IBM that they will build...