JIten_Intel TetraThreat FRamework

8/10/2019 JIten_Intel TetraThreat FRamework

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B Y

Bansi Parekh (MMS HR) 32Jiten Pujara (MMS MKTG) 33

Nikesh Savla (MMS MKTG) 40

Sonam Somaiya (MMS HR) 53

Intel Case


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Early years

Founded in 1968 by Robert Noyce and GordonMoore

Recruited Andy Grove as Director of Operations

Initial Strategy Develop semiconductor memorychips for main frame computers and mini computers


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Intel in the DRAM business

Introduced 2 products in 1969

3101 ( 64 bit bipolar static random access memory)

11010 ( 256 bit metal oxide semiconductor )

1972 1103 1 kilobit DRAM DRAM accounted for 90 % of the cos revenues

Strategy Push the envelope of product design

First to market its newest devices

Leading edge of process technology

Leadership strategy through Product design


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By 1979 Intel succeeded in introducing devices andprocess technologies that were ahead of competitionand commanded significant price premiums

But later product life cycle for DRAMs began toshrink

It was still working on the 16K DRAM, whenJapanese companies released the 64K.


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Japanese companies like Fujitsu and Hitachi enteredthe market

Japanese Strategy invest heavily in manufacturing

Since access to capital with lower interest rates

Japanese cos invested 40 % of their sales revenues

US cos 22% of their sales revenues

Japanese cos had technological advantage in

Photolithography Japanese cos production yields 70 % to 80 %

US cos production yields 50 % to 60 %

By early 1990s Japanese cos captured nearly half

the world market for DRAMs


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Intel and the Micro processor

1970 - Japanese co - Busicom contracted with Intelto make a set of chips for an electronic calculator

Came up with CPU

It purchased non calculator rights from Busicomthough the market for it was nor apparent

3 years later introduced 8 bit microprocessor 8080

Intel executives did not forseetheir true commercial

value Later on Apple, Radio Shack and Commodore

entered the desktop computer market


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Setting the Personal Computer Standard

Competition between Intel and Motorola

IBMs strategy

Project CRUSH and Project CHECKMATE


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Exit from DRAM

Success of the 1-megabit DRAM

DRAM technology driver

The middle management in action


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Reasons for DRAMs being less attractive

Difficult to patent

Easy to imitate

No microcode that could be protected


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INTEL as a microprocessor company

The 80386 Manufacturing Strategy

Compaq filling in IBMs gap

Risk for Intel delay in getting an operating system

for the 386 Transformation of the computer industry from

vertical to horizontal alignment


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Tetra Threat Framework

Threat of ImitationThreat of

substitution

Threat of hold-up Threat of Slack

Tetra threatFramework


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Threat of Imitation

Technology moved so rapidly that patents quickly becameeconomically obsolete

Companies used same technology hence it was not alwaysclear who might be infringing upon whom.

AMD and Cyrix produced microprocessors which werecompatible with Microsoft DOS

Intel responded by Intel developing higher capacity andcheaper microprocessors to compete

Intellectual Property Protection (IPP) against AMD

Intel Inside campaign: to differentiate Intel


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Threat of Substitution

Reduced instruction set computing (RISC) Threat:

Fast and Cheap as compared to CISC

Intel Responded by i-860 (a substitute for X86)

IBM decided not to sell any X86 based computersuntil it could develop a new architecture that used

Intel responded by partnering with compaq


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Threat of Substitution

Microsoft moved towards operating systems that were nottied to the x86 architecture

Intel responded by developing processors for Linux-Redhat

Sun Microsystems motto, "The Network is the Computer

Intel responded by programs like Intel inside


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Threat of hold-up

BUYER POWER

Intel Inside" PCs value increased with the Intel brand

Allocation of new products in short supply - Intel released all new chipsin short supply pricing them at a premium.

Chips preferentially as a function of OEMs' past behavior

Many buyers wanted RISC to become the standard architecture

Intel hedged with the i860 RISC processor and released the Pentium.Also, by introducing Intel Inside, it made the industry more dependent

on Intel's CISC chips


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Threat of hold-up

SUPLIER POWER

Suppliers were able to receive funds from Intel forthe development of new technology on condition thatthey would have first access to technology

Intel engaged in dual sourcing to avoid reliance on onesupplier

Suppliers made long-term contracts necessary for

custom solutions They wanted standard solutions that would be used by

the industry at large.


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Threat of hold-up

COMPLEMENT POWER For Intel, complementors like Microsoft can contribute

to the success or failure of a microprocessor.

Intel senior management routinely met with Microsoftmanagement to coordinate new developments.

Intel Capital - the idea was to create a market ecosystem fordevelopment, by investing in complementors.

Intel's strategy to pay $100 million to independent

software vendors to accelerate their product plans helpedIntel spread its roots with more software developers


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Sustaining the Market Position

90% Market share = Market dominance

Intels 3 strategies to defend the share Intel Inside

Systems Business Supplier Relationships


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A. Intel Inside

Reward Power (6% rebate)

Co Branding with major PC vendors (OEM)

Co Branding with software suppliers

Vendors Concerns and Opposition IBM & Compaq Opted out

Coercive & Expert Power

Intel had supplier power so Compaq & IBM opted-inagain (Cross-licensing and Outsourcing mbd)


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B. Systems Biz

Founded Systems Group

Manufactured and sold subsystems and complete sys Supercomputers

Specialized PCB Full PCs

Targeted End-users

Reuters

Carrefour


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C. Supplier Relationships

Largest buyer of Semiconductor chips (Supplier buyer)

Sole-Sourcing from best-tech supplier For Standardization

Improve cross-facility and to ramp up production Problem with sole-sourcing Supplier didnt respond to tech advancements and support

Back to Dual-sourcing


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Internet - Threat/Opportunity?

Intels competitive advantage was buildingtechnologically superior and faster uP which wasuseful for standalone desktops (P2P model)

Ext. Threat: with the advancement of networking, anew model of computing emerged (C-S model)

Sun uSys came up with N/w PC (nonWIntel)

Opportunities Open-Architechture languages & Tech that could support and

grow uP market

Banking on and investing in Internet companies


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6 Forces

Power and competency of-

Competetors

Suppliers

Current Customers Potential customers

Complementors

Doing stuff differently from current way


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THANK YOU

Documents

JIten_Intel TetraThreat FRamework