INTELLEIGENCE IN INTEL
I for: Intel, Industry, and Information Systems
Hemal R. Patel
March 05, 2004
Business Analysis Paper
ISM158
-2-
Table of Contents
Objective
Section I: The PC Components Industry
A. Industry Profile
B. Competitive Strategies Within the Industry
C. Porter Model Evaluation of Industry Forces
D. Globalization of the Industry
E. Importance of Information Technology in the Industry’
Section II: Company Perspective: An Analysis of Intel
A. Company Profile
B. Business Leaders
C. Competitive Strategy
D. Market and Financial Performance
E. Significance of Information Systems
F. Strengths and Weakness of Intel
Section III: Structured Analysis of Information Systems
A. Strategic Option Generator
B. Roles, Roles, and Relationships
C. Redefine and/or Define
D. Significance of Telecommunications
E. Success Factor Profile
Section IV: Final Analysis of Intel
-3Objective
The primary objective of this paper is to analyze the important business strategies and
the use of information systems by Intel to gain a competitive edge in the PC components
industry. The paper deals primarily with the PC component industry, by correctly defining
its structure, the strategies, and trends within the industry. Secondly, it analyzes Intel
and its competitive strategies, financial standings, strength and weakness, and their use
of information technology. Third, it will look deeper into the Information Systems as Intel.
The final analysis looks Intel and their success with business strategies, in addition to
the use of IT relative to success to date and whether these efforts have prepared them
for future challenges.
To say Intel is in the semiconductor industry is semi-accurate. To say that Intel is in the
Microprocessor, Microcontrollers, and DSPs is defining the industry too narrow. Figure 1
below gives the break down of the semiconductor industry. Presently, it is not just about
microprocessor, rather it is also a broad range of products such as embedded and flash
memory components, compilers, networking and communication products,
motherboards and servers. For this paper however the main products that will be
discussed are: microprocessors, chipsets, and flash memory. It is worth to note that all
companies do not compete in all product categories. Because of the wide range of
products and their categories, the semiconductor industry has to offer, it is ideally best
suited to place Intel in the middle, namely, the PC component industry.
-4-
Figure 1
SECTION 1: THE PC COMPENENT INDUSTRY
A. Industry Profile
According to Wikpidiea.org, Semiconductors are materials with electrical conductivities
that are intermediate between those of conductors and insulators. They are the
fundamental materials in many modern electronic devices. As performance has
increased and size and cost have decreased, semiconductors have expanded beyond
their original primary applications to telecommunications systems, consumer goods,
automotive products, and industrial automation and control systems. Semiconductors
materials were first developed in laboratories as early as 1830. Roughly at the same
time the semiconductor industry was being to form in Japan. Over the post-war period
American-Japanese alliances reflected changes in technology, commercial competition,
the position of the US and Japanese semiconductor industries. Some domestic
companies were able to see and understand that Japan was onto significant
-5advancements in semiconductors and electronics. Seeing a trend, US semiconductor
firms realized their need to get in on Japanese growth. With joint ventures, marketing
and sales, distribution, service, and standards coordination, US was about to get
involved with Japanese semiconductor industry growth.
However, the true impact of semiconductors was taking place in the US. Domestically, in
1959, with the use of semiconductors, scientist were about to perform only one function
on all electronic components. New technology emerged and integrated circuits were
soon developing with various components (i.e. Transistors, resistors, and capacitors)
forced on the same chip. In that same year, Jean Hoerni and Robert Noyce, engineers
at Fairchild Semiconductor, enabled these semiconductor chips to diffuse on various
layer of a silicon wafer. By the end of 1960s, nearly 90% of all components
manufactured were integrated circuits, and thus started the revolution of semiconductors
and created a roadway for emerging technologies. The chart below shows the total
shares of the world’s production of semiconductor from 1974 to 2000. Since the
invention of the transistors, continuous improvements in semiconductor process and
design technologies have led to smaller, more complex, and more reliable devices at a
lower cost per function. A company that has dominated the semiconductor industry is
Intel Corporation.
-6The PC component industry is a day-to-day roller-coaster ride. It’s normal to see the
industry go from boom to bust and visa versa at a fast rate. Year 2000 for the industry
was great. It brought in more than $200 billion in sales worldwide 1 . Then came year
2001 when the industry saw the sharpest decline in the industry’s history. Moreover,
global semiconductors and pc component products has tanked more than 30% to
roughly $140 billion. Currently, the market capitalization of the PC component industry is
a staggering 550 billion.2 Weak sales in electronics, such as PCs, cell phones, and
networking products slowed down demand for pc components like processors, and flash
memory, and communication equipments. Today, Intel is by far the largest chip
company, which makes about as much money from its chips than the other competitors
like AMD, Texas Instruments, IBM Microelectronics, National Semiconductor, and
Fairchild Semiconductor (which was the existing company of National Semiconductor).
Figure 2 gives a clear picture of where Intel is positioned in the industry against its
competitors.
Market Cap
Fairchild Semicounductor
National Semicounductor
Texas Instruements
AMD
Intel
0
50
100
150
200
Figure 2 (in billions)
Clearly, with a market capitalization of $196.09 billion, Intel dominates the PC
component industry. The key competitor of Intel is AMD. Currently, AMD is
distant second in both microprocessor and flash memory. The bitter rivalry
between the two companies became more intense as AMD finally began to
squeeze in Intel’s unassailable microprocessor market share. As a result, this
leads Intel to slash prices and step up its manufacturing schedule. In addition,
-7AMD is now giving Intel a run for its money, by recently introducing its 64processor.
Semiconductor sales have increased significantly over the long term but have
experienced significant cyclical variations in growth rates. According to trade
association data, the TAM (total available market) increased from $17.8 billion in
1983 to $149.4 billion in 1999 .3 More recently, driven by the latest drop of digital
products like MP3 players, digital camera, cell phones, and laptops, are creating
much demand for flash memory, processors, and memory amongst other pc
components. Investors are predicating that the outlook1k for 2004 will be solid
just as long as the economy can hold its ground. Figure 3 demonstrates which
companies will be coming out ahead in its industry.
Company
2004 Estimated Sales
Market Value ($mil)
($mil)
AMD
$4,382
$5,201
Analog Devices
2,540
16,536
981
2,345
Intel
34,564
197,593
Taiwan Semiconductor
7,363
41,020
Texas Instrument
11,371
47,575
Cypress Semiconductors
Figure 3
As one can see, Intel should continue to dominant in its industry with highest
estimated sales and market value. Taiwan Semiconductor will still be holding
ground due to the demand overseas for multimedia products. All in all, it
should be a bullish year for the PC component industry as more demand in
multimedia, processing, and networking arises. Figure 4 demonstrates the
increased growth potentional in 2004.
3
http://www.fsa.org/resources/presentations/edelstone100903.pdf
-8-
Figure 4
B. Competitive Strategies with the Industry
The Business strategy model is often used to describe the strategies used to compete
within the industry. The business strategy model breaks down some of the strategies
and business processes the companies use to be competitive within the PC component
industry. Figure 5 is a business strategy model that gives you a clear overview about the
industry in a nutshell. The six strategies in the model are product strategy, price strategy,
customer/ market strategy, manufacturing, sales/distribution strategy, company
structure, and use of information systems. The markets and company structure are
generally related to the size of the company. Information systems play an essential role
in supporting the differentiation strategy, by providing everyone from management to
field sales agents with information and tools necessary for the supporting strategies of
growth, alliance, and innovation.
-9-
Business Strategy Model
PC Component Industry
Product Strategy
Microprocessors
Embedded
Chipsets
and
Networking
Servers and
Communication
Workstations
General Public
Flash
Memory
Customers Strategy
Large
Public
Small/Medium
System
Corporations
Institutions
Businesses
Integrators
Market Strategy
North America
Japan
Europe
Latin America
Asia/Pacific
Region
Manufacturing Strategy
Vertically Integrated
Vendor Emphasis
Outsourcing
Sales Strategy
Distributors
Internet
Field Sales Force
Company Structure
Independent
Joint Ventures
Alliance
Information Systems
Engineering
Product
Manufacturing
Business
Customer
System
System
System
Systems
Service
Figure 5
Product Strategy:
As mentioned earlier, the PC component industry is a sub category of the semiconductor
industry. The PC component industry specializes in a few distinct products. Those are:
microprocessors, flash memory, chipsets, networking communication, and
servers/workstations. Intel is the market leader of microprocessors, chipsets, and flash
memory. They make the best microprocessors, chipsets, and flash memory in terms of
- 10 speed, quality and cost. They focus primarily on those three products, while still
developing and working with networking communication, and servers/workstations.
Customers Strategy:
The PC Component Industry targets their products and services to large, medium, and
small business, as well as system integrators. Other industries look to the PC
Component Industry to solve most of their high-end technological systems. In addition
the industry is has a reputation for using information systems, to enable systems
integrators to integrate their own products and services.
Market Strategy:
The PC Component industry markets worldwide. Almost every major country either
competes, or is in partnership with the industry. Furthermore, many of the selling of
products happens overseas, and some countries, like Latin America are seeing a rise in
interacting with the industry.
Manufacturing Strategy:
The PC component industry is now recently seeing a trend of outsourcing their services
to countries like India. The industry finds it useful in hiring someone whose expertise
outside of their organization can perform a business function or activity better, with lost
cost, and a timely matter. It enables the companies within the industries to focus on its
core competencies.
Sales Strategy:
Most of the companies within the industry deal with sales through the Internet. After all,
the Internet is a telecommunication tool, and used as an information system. Through
the Internet, companies can: inform their customers about certain products and services,
and make purchasing/ordering efficient and easy. Furthermore, companies like Intel,
- 11 take advantage of distributors to sell their products. They form partnerships with
distributors to get their products out fast.
Information Systems:
Without the use of information systems, the PC Component Industry would not be so
popular. Companies within the industry use information systems in reengineering, and
re-manufacturing to create more efficient and effective business processes. It also
enables them to provide quality customer service to all their customers.
Given the overall strategies just mentioned, the following focuses on primary and
supporting strategies for the PC Component Industry.
Differentiation
The industry’s main focus is differentiating products, more than taking the least cost
approach. For example, Intel takes many approaches to differentiation, but the main
theme of differentiation is technological leadership. One of the ways they differentiation
their products is through a unique design and brand images. Intel leverages its brand
loyalty in the processor business based upon the perpetual need for faster processors.
Also, they focus on creating efficient and unique designs for the microprocessors to
make their product seem completely different. On example of such a product was when
they created x86, and upgraded from their x84 processors. In this, the possessor where
the same, but the layout of pins on the chip and the chips themselves were in different
places. With that, they marketed the x86 processor as a brand new processor. The
second form of differentiation is technology. The craze of the Intel’s Mobile Centrino
boosted sales, and was very popular for using an existing technology in a more efficient
way. The Mobile Centrino is a chip that has wireless capabilities, thus eliminating the
need for a network card, and wires. Intel seeks to make their products differentiable
through marketing techniques, unique design, and integrating new technology within
- 12 their products. Intel’s fierce competitor, AMD also takes on a differentional approach by
altering designs on microprocessors to better meet customers need.
INNOVATION
A PC component company can not have solid products in their line without the presence
of innovation. The industry produces different products, or various enhancements on
their existing products to create effectiveness and efficiency, while meeting customer’s
demand. In Intel’s case there are three main areas where innovation is created. First is
the Corporate Development Group. This group looks at the global matter to find
companies whom are using Intel products in the new ways. When a new procedure is
found, the CDG group connects with one division at Intel and takes care of investment to
either buy or invest or the support the company. Secondly, Intel enters a pool of largest
companies, in which they have created a venture fund. Third, they have their own VC
where they take a look at new ideas, set up teams, give facilities, time and money to
develop new companies. To sum up, Intel innovates by connecting various strategies.
Intel accomplishes this through: tight strategic alliance, developing know-how while
generating a profit, making sure its architecture is used in new areas, and educating the
user.
ALLIANCE
Whether it would be in obtaining needed resources, technology and products, to sharing
the cost and risk of developing new products or services, companies find the need for
alliance for variety of reasons. As a result, alliances can take many forms and
encompass a whole host of business relationships, from joint marketing/sales/teaming
agreements, to joint product development agreements, to more extensive forms of
collaboration approaching a "joint venture." The industry cannot stand alone, since some
of its product and services, depends on possibly other industries. However, more
internally, the companies within the industry rely on each to support there products. Intel
would not necessarily be famous if they did not have a customer relationship with IBM
- 13 when IBM used their microprocessors. In the same context, it would be possible for
AMD, or even Texas Instruments to stay alive, if computer companies such as HP or
Dell were not using their chips. Intel also forms strategic alliance with SAP and other
overseas countries to also capitalization on the global opportunities that Intel sees.
GROWTH
According to International Data Corporation, the semiconductor market will grow at 18%
in 2004. The growth will be driven by stronger than expected mobile phone, PC
shipments, and digital multimedia. A couple of key notes should be mentioned about the
growth of the industry. First, with booming products such as PDAs, laptops, PCs, more
is relied on Intel’s processors and microchips to enhance such products. The industry is
also focusing its strengths on emerging markets. They are working with countries such
as India, and Japan to better create their products, and services, and educate potential
future engineers to contribute to the growth and success of the PC component industry.
On a final note for business strategies, the Internet is one of the dominant business
strategies that leverage companies against their competitors. In 1998, when Intel started
putting together its Internet strategy it had one goal: to become a 100-percent ebusiness-enabled corporation in its relationships with customers, employees, and
suppliers. While the company isn't quite there yet, it has made real progress and has
gained many benefits in terms of the amount of business it does on the Web and the
savings in time and money it has created for itself and its customers.
- 14 -
C. PORTER MODEL EVALUATION OF INDUSTRY FORCES
Figure 6 shows a Porter Model of the PC Component Industry. The porter
competitive model is an outside-in business unit strategy tool that is used to
make an analysis of the value of an industry structure. It defines five critical
forces that control the competitive environment within the industry. It correctly
defines the industry, and the specific market that it is in, followed by identifying
the rivals. The model breaks down the industry analysis, its threats, dangers, and
competitive strategies, and then views it as a whole. In this case, the strategic
business unit is Intel, and its rivals are AMD, Texas Instruments, Motorola,
National Semiconductor, and IBM-Microelectronics. The model shows who the
potential entrants are, who has bargaining power from supplier’s point of view,
bargaining power from buyers’ point of view, and the threats of any substitutes
within the industry.
- 15 -
Porter Competitive Model of Industry Forces
The PC Component Industry: U.S Market
Potential New Entrants
Foreign companies in the semiconductor business, small/medium firms
Bargaining
Power of
Suppliers
IntraIndustry Rivalry
Bargaining
Power of
Customers
- Product
SBU: Intel
- Manufacturers
- IT Vendors
Rivals: AMD, IBM-Microelectronics,
-Raw Material
Texas Instruments, National
-Technical
Personnel
Semiconductor, Motorola, Taiwan
Semiconductor
Substitute Products and Services
New and emerging technology
Figure 6
Other Businesses
Small Businesses
Contractors
- 16 Intra-Rivalry
To say the least, competition between firms in industry can be very cut-throat, and this is
no different for the PC component industry. Highly completive industries generally earn
lower returns because the cost of competition is too high. When competition exists,
multiple firms exist to stay on top. There is also very little differentiation between the
products and services the competitors produce. The industry is marked by intense rivalry
between individual companies. Firms such as Motorola, Texas Instruments, AMD,
Taiwan Semiconductors, and National Semiconductors all compete against Intel to make
their chips, servers, flash memory, and communication devices much better, faster and
cheaper than it was months before. A classic example of this would when AMD and Intel
were at each other throats to gain top place in the microprocessor segment. When Intel
felt that AMD was catching up with them, one strategy move Intel made was to make a
substitution product of what AMD had. Intel had reversed engineering AMD’s best
microprocessor at the time, they reversed engineered the process and transformed it to
Intel Celeron which they sold for a fraction of the price. This sort of rivalry and
competition results in a continually producing cutting-edge technology while riding the
volatile cycle of the industry.
Threat of New Entrants
Threats of new entrants look at how easy or difficult it is for new entrant to start to
compete, and what barriers exist. The easier it is for new companies to enter the
industry, the more tougher the competition gets. Threats of new entrant can include:
having loyalty to major brands, incentives for sin a particular buyer, high fixed costs,
scarcity of resources, high cost of switching companies, and government restrictions. In
the early days of the semiconductors industry, design engineers with good ideas would
often leave one company to start-up another. As the industry matures, however, setting
up a chip fabrication factory requires billions of dollars in investment. The cost of entry
makes it painful or even impossible for all but the biggest players to keep up with current
technology. So, the established players have had a big advantage. Semiconductor
companies are forming alliances to spread the costs of manufacturing. Meanwhile, the
- 17 appearance and success of “fabless” chip makers suggests that factory ownership may
not last as a barrier to entry.
Substitutes
Threat of substitutes answers how easy can the product or service be substituted at a
cheaper price. If the cost of switching is low, and then the likelihood that someone will
switch to a competitive product is relativity high. Moreover, such a situation would cause
it to be a threat of substitutes. The main issue is the similarity of the substitution. In
addition, if the substitutes are similar, then it can be viewed in the same light as a new
entrant. In the PC component industry, it really depends on the segment. While some
patents and intellectual property protection might stop the threat of a new chips, within a
short period of time companies will start to produce similar products at lower prices. In
the same sense, suppliers who offer very similar if not same products would be another
problem. For example if a company spent billions on R&D costs to build a server or
motherboard, and if some other market player reverse engineers the system, that
company can market a similar product for a fraction of the price and have it be a
substitute.
Bargaining Power of Suppliers
Bargaining power of suppliers is how much pressure suppliers can place on a business.
If one supplier has a large enough impact to affect the company’s financial performance,
they hold great amounts of power. Bargaining power of suppliers exist for many reason.
One, there are very few suppliers of a particular product. Two, there are no substitutes.
Third, the switching cost is quite expensive. Fourth, the product is extremely important to
the buyer. Lastly, the supplier industry has higher profitability compared to the rest of the
industry. In the PC component industry, suppliers have little power. For example, Intel
keeps its bargaining power of any supplier to a minimum. The reason is because of
Intel’s large volume of purchases so they dictate what the terms and conditions for their
- 18 suppliers. However, with production getting expensive, many small microprocessor and
flash memory makers are becoming dependent on the large companies like Intel, AMD,
and Motorola.
Bargaining Power of Buyers
This is how much pressure customers can place on a business. If one customer has a
large enough impact on the company’s sale, they can hold a great amount of power. The
reasons why customers might have power are: small number of buyers, purchasing of
large volumes, switching costs are relativity inexpensive, the product is not extremely
important to the buyer, and customers are price sensitive. All the industry’s key
segments are dominated by large players. For example, Intel is sort of like a monopoly
when it comes to microprocessors, which would give buyers little bargaining power.
However, this is not to be assumed that buyers have no power. Case in point was when
Intel has seen customer backlashes because they were not being able to keep up with
demand. In that case, Intel had lost $250 million loss due to shortage of chips, and more
attention AMD for processing power.
Conclusions based on Porter Competitive Model Analysis
Many conclusions can be drawn from the Porter Competitive Model. First, the industry is
very fragmented, and competition is fierce. However it does not seem that Intel has a
very tough time being on top due to their competitors. Nonetheless, they have to be
aware of not only the big names in the industry, but also the small ones. It’s difficult for
new entrants to compete in the industry because of increased competition. Buyers have
the ability to bargain on certain things, which leaves them with bargaining power. This is
because Intel has dominated the market share in terms of their products. Although there
are many suppliers, there are lot product differentiation, which with they can bargain for.
The threats of substitutes are minimal, seeing that there are rarely any substitutions
aside from faster, cheaper products.
- 19 -
D. GLOBALIZATION OF THE INDUSTRY
With so many products and services the industry has to offer, it would be virtually
impossible for the firms in the industry not to go global. For companies like Intel, AMD,
Taiwan Semiconductor, they must rely on their counterparts overseas to create,
manufacture, distribute and sell their product and services. There are many benefits to
the globalization of the PC component industry. For one, manufacturing can migrate to
the countries that offer the most competitive cost of production, which lowers
semiconductor prices. In addition, globalization also helps prevent a single country or
region from completely dictating the direction of the industry. For example, the rise of the
South Korean chip industry stopped Japan’s rise in the memory business, and added
competitiveness in the DRAM market.
As Findarticle.com best puts it, “The main impact of globalization will be to ensure the
survival of the fittest.2 The industry knows it must take on an offense, as well as a
defense role when competing globally with its competitors. The main impact of
globalization will be to ensure the survival of the chip business, endowing it with a form
of immortality.
2
http://www.findarticles.com/cf_dls/m0DXS/14_7/76878010/p1/article.jhtml
- 20 -
E. IMPORTANCE OF INFORMATION TECHNOLOGY IN THE INDUSTRY
Now days, companies cannot exist and succeed without the use of information
technology and information systems. IT/IS is the backbone for companies to compete for
a competitive advantage in the PC component industry. For an example, Intel
recognized that if it wants to remain its market position, it has to come up with ebusiness strategy that will create effectiveness and efficiency for the people who do
business with the company. Going make the importance of the Internet, the company
has to show it understands the Web as well as the customers who buy Intel product to
drive their own e-business strategy. Furthermore companies have switched from
shuffling a lot of paperwork to have having processed customer orders in real-time.
Figure 7
In conclusion, the value chain for this industry demonstrates that for these internal
business processes to occur, each process much have added value to customers. Each
category from research and development to customers tracks a new product and/or
service forming a chain to through different departments all focusing on value to
customers. In order for value chain to work the companies within the industry must
understand the importance of IT/IS. The importance of IT/IS in this industry is to: gain
efficiency, effective, and competitive advantage.
- 21 -
Section II: COMPANY PERSPECTIVE: AN ANAYLSIS OF INTEL
A. Company Profile
History
In 1968, Bob Noyce, and Gordon Moore decided to quite their unhappy jobs at Farirchild
Semiconductor Company. The idea of Intel was bought by a venture capitalist named Art
Rock to back Noyce’s and Moore’s new venture. After raising $2.5 million dollars in less
than 2 days, the two engineers started to embark on what later became the biggest
industry over time. The two founders decided to name their company, “Intel” which is a
shortened version of “Integrated Electronics”. Intel’s first money making product was
their 3101 Schottky bipolar 64-bit SRAM (static random access memory). In 1969, a
potential client form Japan called Busicom asked to have twelve custom chips designed.
Intel at the time didn’t have the man power for the job, but have brainpower for it. Intel
engineer, Ted Hoff decided that one chip can do work of twelve, and thus the creation of
general-purpose logic ship. Soon after, they designed the 4004 microprocessor that
could deliver tremendous amount of computer power, in a thumbnail size chip. As result,
through innovated designs, and usability, Intel soon started to see more demand for their
products.
Present:
Today, Intel is the leader in semiconductor manufacturing with an emphasis on PC
components. For the fiscal year ended 12/27/03, revues rose 13% to $30.14 billion3. The
results reflect increased demand in computing-related business and lower amortization
and impairment of intangible charges. Currently Intel employs approximately 79,700
people in more than 48 nations worldwide.
The mission statement of Intel reads: “Do a great job for our customers, employees and
stockholders by being the preeminent building block supplier to the worldwide Internet
3
http://www.eweek.com/article2/0,4149,1437563,00.asp
- 22 economy.” There main objectives are: extend silicon leadership, deliver architecture
innovation for convergence, and purse opportunities worldwide.
Values
Intel has two types of value system. The first being the internal values for their
organization, and second being, the external values for their customers. Their internal
values consist of: customer & result orientations, risk taking, great place to work, quality,
and discipline. Externally they provided: better quality products and services, faster, and
cheaper products, common business solutions, and education about different
technologies. At Intel, these core values are held to the highest standard, to ensure good
quality of the organization.
Major customers and products
Customers:

Distributors

Original Equipment Manufacturers of computer systems and peripherals

PC users who buy Intel’s PC enhancements

Business communications products and networking products through reseller

Retail and OEM channels

Other manufactures

microprocessors

chipsets

motherboards

flash memory

application processors used in cellular handsets and microcontrollers

PDAs and

Networking and communication products like Ethernet connectivity
Products:
- 23 B. Business Leaders
Andy Grove, Chairman
When one thinks Intel, they probably think Andy Grove. Andy Grove, a native Hungarian,
lived through both the Nazi and Joseph Stalin eras in Eastern Europe and arrived in New
York City on a refugee ship in 1957 at the age of 21. Grove is a self-made success,
putting himself through college. As a chemical engineering major, he also worked as a
busboy during the summers. His academic performances further lead him to complete a
Ph.D. at UC Berkeley and joined a California start-up company called Fairchild
Semiconductor. Currently, Mr. Groove is the Chairman of the Board of Intel. He has
served as the company’s CEO from 1979 to 1997. He was initially given charge of
operations and spent the next 20 years developing a reputation for a notorious hands-on
manger of Intel’s product development and manufacturing operation. Andy Grove’s
accomplishments includes: being an author of four book, several technical papers and
columnist on management issues. He is also famous for his observations of growth in
the number of transistors just four years after the first planar integrated circuits were
discovered. In his “Moore’s Law” paper, he observed an exponential growth in the
number of transistors per integrated circuit and predicated that this trend would continue.
Through Intel’s technological advances, Moore’s Law has doubled every couple of
years, and his observation still hold true today. He has been the creator of the culture
and vision at Intel.
Craig Barrett, CEO
What makes Intel, Intel? For starters, Intel’s CEO Craig Barrett. BusinessWeek
described him as Intel’s Ironman. Mr. Barrett was born on August 29, 1939 in San
Francisco California. He attended Stanford University from 1957 to 1964 where he
received his Bachelor of Science, Master of Science and PD degrees in material
Science. Dr. Barrett is the author of over 40 technical papers dealing with the influence
of proctor of materials. Dr. Barrett joined Intel in 1974 as a Technology Development
manger. He was named vice president in 1984 then promoted to senior vice president
and executive vice president 1990. In 1998, he had become the chief executive officer.
Barrett has overseen Intel’s push into other applications such as communication chips,
high-end servers and web-hosting services. He overseas all aspects of the business
functions. In addition, he creates and implements the business visions, strategies and
tactics for the organization. Barrett has managed to come out of the semiconductor
downslide, and lead Intel into remaining the leader in its industry.
Paul S. Otellini, President and COO
Paul Otellini is Intel’s President and Chief Operating Officer at Intel. He is responsible for
overseeing Intel’s internal operations, focusing on development and delivery of new
products and technologies, and the efficiency and productivity of the companies
business. Mr. Otellini was responsible for Intel Architecture business and strategies
prior to becoming President and COO. He also served as the Executive Vice President
of Sales and Marketing. He received his bachelor’s degree in Economics from University
of San Francisco and a master’s degree from University of California.
Douglas Bush, Vice President and CIO
Douglas Bush is Intel's Vice President and Chief Information Officer. His responsibly are
“for leading Intel’s global IT organization in delivering infrastructure and business
solutions to enable Intel’s manufacturing and engineering operation, e-business process,
- 25 and a knowledge-worker productivity.” Intel IT/IS provides voice and data network,
information security all of which Mr. Busch overseas.
Busch joined Intel in 1987 and has held various technical and management positions in
manufacturing, logistics and information technology. He was the principal architect of
Intel’s intranet and drove the introduction of advanced technology to improve
manufacturing systems’ effectiveness.
Bush holds a Bachelor of Science degree in Mechanical Engineering from Ohio State
University.
C. Competitive Strategy
Intel’s primary strategy is differentiating their products within. The company strives to
focus on creating unique designs, and implementations that will best suit their customers
need. They are the leader in the PC component industry. They have seen a need to do
business globally and are doing so in countries like India, China, and Japan, Latin
American, and Germany. Intel is coming up with new innovated products and services to
further improve relations with their valued customers. Intel fights hard to keep potential
new entrants such as foreign firms, small business, government regulations, and high
fixed costs against them. They differentiate themselves by reengineering their products
for growth, forming alliances and new providing new innovation in their business. The
company also strives to keep strong relations with customers and suppliers but at the
same time reducing bargaining powers with them.
- 26 D. Market and Financial Performance
Intel has demonstrated its market leadership, year after year. Figure 8 demonstrates the
rapid growth of Intel in 10 years.
2002
2000
1998
1996
1994
0
5000
10000
15000
20000
25000
30000
35000
40000
Figure 8
Recently, Intel reported record results for its fourth fiscal quarter of $8.74 billion 4 . This
clearly indicates that its sector of the tech economy is back on the upswing. Currently
sales of microprocessors, chipsets, motherboards, and Ethernet products have reached
record levels. According to Eweek.com, for 2004, the company expects to shift more
chip manufacturing over to 300-mm wafer processing equipment. By the end of 2005,
five 300-mm fabs will be production. In addition Intel will also spend $4.8 billion in R&D
to prepare for next generation 65nm-process. To get a sense of what Intel has in store
for 2004, CEO Craig Barrett said in a statement, “In 2004, our focus will be to drive
double-digit growth through technology leadership and global market expansion, and by
pursuing adjacent opportunities in communications and the digital home, while using our
90-nanometer and 300-millimeter factories to reduce costs and improve profitability,"
4
http://finance.yahoo.com
- 27 said Craig Barrett, Intel's chief executive, in a statement.” It is apparent to see that Intel
will still be holding strong in their industry, while moving forward in technological
opportunities in the business and home sectors of the market.
E. Significance of Information Systems
When Andy Groove first started to lead Intel, he was not to thrill about the use of
computers. Now Mr. Groove, can’t image Intel being Intel without the use of d
information systems. Intel uses information systems as a strategic method to gain
competitive advantage. The performance of business transaction is constantly tracked to
have up to date information on all their products and services. This way, Intel has the
ability to make quick, calculated-risk decisions to move ahead of its competitors. In the
background of Intel, one will find high-automated, transaction-based, processes all
throughout the organization. In addition Intel also has a massive database which has
critical data that can be easily analysis regarding transaction process, and also has
historical transitions. For Intel, the combination of R&D, engineering, manufacturing,
marketing, sales and services is the primary reason why the need for IS exists within the
company. To integrate all these key values of a company, it must implement IS to gain a
competitive advantage, and Intel understands this process, and practices those
implementation on a day to day basis.
- 28 F. Strengths and Weakness of Intel
Strengths
Leadership
Leadership is the one of the key success factors that has put Intel on top. With the
vision, strategies, and tactics, created by the senior management, Intel has innovated
their ways of doing business. With Andy Grove, Craig Barrett, Paul Otenilli, and Douglas
Bush, they make up a solid and talented executive team that has the ability to lead their
companies in best and worst of times.
Manufacturing Capabilities & Volumes
With huge volumes, Intel has the manufacturing capabilities like no other. There
manufacturing systems are state or the art, and they serves as the backbone of the
manufacturing processes. More about Intel’s manufacturing is discussed in Section III.
Position of being trendsetter in the computer chip industry
One of the many strengths of the Intel Corporation was the fact that they have positioned
themselves as a trendsetter in the industry of computer chip manufacturers. Intel was
widely regarded as the first, largest and best manufacturer of microprocessor chips.
They also were “a leading manufacturer of personal computer, networking and
communications products,” “Intel’s success is based on constant innovation, huge
spending in marketing, production and cycle-time improvement, and relentless
challenging of copycat competitors by ‘pummeling rivals in court,’” While competitors
like AMD, Motorola, and Texas Instruments were playing catch-up with Intel, they were
all a step or two behind in terms of product development. These competitors tried to
- 29 imitate Intel by coming up with reversed engineering products once Intel’s latest chip
was released. “The Company's competitive position has developed to a large extent
because of its emphasis upon research and development. This emphasis has enabled
Intel to deliver products before they have become available from competitors, and thus
has permitted Intel's customers to commit to the use of these new products in the
development of their own products. Intel's research and development activities are
directed toward developing new products, hardware technologies and processes and
improving existing products and lowering their cost,”.5
Brand Image
The brand equity that Intel had built throughout the years of industry-leading service also
serves as a major strength. By educating their consumers about the benefits and many
uses of the Pentium, Intel was raising awareness for their brand and for their product.
This served as a major strength to the corporation because they were able to make
deals with several companies solely based on the reputation of the brand. Intel Inside
and Mobile Centrino are two examples of how well they have marketed their brands.
There brand quality and marketing qualities have becoming so good, that a “non-techie”
kind of person would opt for Intel, just because of their brand quality.
Diverse clientele
Another factor that serves as a major strength of the Intel was its diverse client base.
The following chart shows the major manufacturers of personal computers that were
using Intel Pentium chips in their computers during 1994. Not only does this table show
the massive amounts of computers using Intel Pentium, but also how diverse the
clientele base is. The more clientele they had, the more they would get to know what the
industry as a whole was looking for. Furthermore, this leveraged Intel into choosing who
to do business with and how, since they have a fairly good amount of companies to work
5
http://www2.hawaii.edu/~sidhu/Schools/intel_analyst_report.html
- 30 it. By establishing and maintaining professional relationships with only the most
respected personal computer manufacturers, Intel successfully spread their risk.
Manufacture
PCs Shipped (1999) in
% of which Pentium
millions
Compaq
7.46
9.8
IBM
4.97
7.0
NEC
2.85
0.7
Packard Bell
2.52
12.9
Dell
8.37
30.0
Hewlett Packard
Gateway
6.17
8.12
20.6
19.0
Figure 9
Strong financial numbers
The finance section of this paper demonstrates how strong Intel has been relative to its
competitors.
Weaknesses
Quality control
There is not much problem (if at all) with Intel’s product. However, there is a problem
when performing design-tests on their products to ensure super quality. The top
executives at Intel once said, “l have been away from design and engineering for so
- 31 long, that they seem to miss or equally concentrate on the technically aspects of their
products”. Many executives have technical backgrounds and started out their careers in
design, but design has become more complex. Thus, executives do not quite see the
major problems with the products. Intel has performed many tests to verify the floatingpoint on the Pentium processor. However, the lack of quickly addressing and fixing the
problems cost the company billions of dollars. If more money and focus would have
been available to engineering, the flaw could have been realized in design and handled
before it hit the market.
Budget war
One area of weakness related to the previous point is that too much money was given to
marketing, while engineering may have used the money to prevent these overlooked
problems. “The firm has spent $150 million taking two ambitious leaps in
marketing…First, it advertised its own name, with the ubiquitous “Intel Inside” campaign.
Then, it went a step further and launched an $80 million campaign to promote the
Pentium itself, hoping to speed the market’s acceptance of the new chip,” This
campaign that became the biggest marketing campaign in processing chip history came
back to hurt Intel when the flaw was publicized.
Other weakness
Intel has a business model which is less efficient than the foundry model. They may lose
market share to competitors using that as an advantage. The microprocessor market is
mounting challenges to the Intel way of doing things by separating design and
manufacturing. This allows competitors to avail themselves of bigger economies of
scale, shorter times-to-market, and greater market demand information than what even
Intel can produce. The mobile and wireless markets demand short product lifecycles, a
much larger product mix, and a much faster product innovation rate than Intel is used to.
- 32 Another weakness of Intel is that since it dominant in its industry, they have many
competitors. They have to be very fierce in their marketing, pricing, and distribution to
drive out the competition. A notable weakness would be that loss of Andy Groove. With
Groove gone, there is a sense of lost within the organization as well as personally.
Lastly, Intel seems to lack clarity as to the source of future growth, which can be a
negative sign.
- 33 Section III: INFORMATION SYSTEMS AT INTEL
The following section will focus on analyzing the use of information systems at Cisco
Systems to gain a competitive advantage. It will focus on the business strategies, the
implementation of information systems, and how Intel is a key player within the PC
Component Industry.
A. Strategic Option Generator
The strategic option generator can be used to identify multiple options that can be used
to focus the strategies of a company to gain competitive advantage through the use of
information systems. In this situation, the strategic option generator will be used to
indicate the business opportunities of Intel. The options by Intel regarding to the targets,
thrusts, modes, and direction are summarized using the Strategic Option Generator in
Figure 10
Strategic Option Generator of Intel
Target
Supplier
Customer
Competitor
Thrust
Differentiation
Cost
Innovation
Growth
Alliance
Mode
Offensive
Defensive
Direction
Use
Provide
Execution
Strategic Advantage
Figure 10
- 34 -
Target: The strategic target for Intel was customers. They found more leeway and
profitability by meeting the needs and demands of their customers. For the most part,
many of their customers have been PC makers. Most of the PC makers rely on Intel’s
microprocessors for their computer, and servers.
Thrust: Intel’s primary strategy has been differentiation. They have focused their
attention on differentiating their products from their competitors, thus creating a separate
brand image. This has allowed them to be instantly recognized for their products. They
have gotten so good at differentiating and branding that, most non-tech individual buys
computer products based solely on the fact that the product is run Intel chips. In
addition, Intel has also pursed their dominant strategies of innovation, and growth. They
thrust upon innovating their microprocessors, motherboards, and chip sets. However,
they do not limit their innovations to products only. Intel has been known to innovate
their internal business processes to make it run more efficiently. In terms of growth, Intel
has recognized opportunities overseas, and continues to make efforts to compete on a
global level. Intel has not been dominate in the alliance strategy. More recently they
have done more alliances but historically not all that much.
Mode: As an industry leader focusing on customer, they are on the offensive. By
strategic decision making, superb quality, and high standards to meet customer
demands, Intel is truly ahead of its game.
Direction: Intel uses its IT/IS tools in both USE and PROVIDE modes. The USE is more
apparent in the way the business is managed and run. Intel’s primary use of information
systems is in its manufacturing, engineering, and B2B processes. The paper will go
more in depth of the primary functions for these processes in a later section. Also, Intel
uses IS for the customers and key suppliers. Intel’s website is designed for the
customers and suppliers. This way their customers have direct communication with the
company. Intel uses the information for not only selling their products, but to educate
- 35 their customers on hardware, software, and various business functions. As information
systems is used internally and externally, it can be seen that Intel takes on a PROVIDE
direction as well.
- 36 B. Roles, Roles, and Relationship
The roles, roles and relationship concept is three-fold. The first is that the role of
information systems is focused on competitive priorities. The primary reason why Intel
has an upper-hand in its industry is because they implement information systems
throughout their organization. This in turns results in an efficient way of doing business,
creating effectiveness in implementation of business process, thus leading to a
competitive advantage. Information systems have four main roles throughout Intel’s
organization.
1. Business Process Partner. Information systems give the ability for Intel to
integrate, and streamline their business process, to help create efficiency,
and effectiveness.
2. Provide Access to information. With the implementation information systems,
Intel can provide access to loads of information to their customers, suppliers,
and manufactures.
3. Enhance Communications. Since information system has the ability to
provide access to information, it results in obtaining enhanced
communications.
4. Provide Decision Assistant. Since the information is real-time, reliable, and
fast, with IS, decision makers at Intel can make quick, educated decisions
based on the information available to them.
More specifically to Intel, the IS supports diverse, globally disturbed workforce. For
individual user, IS enables the productivity of more than 80,000 globally distributed
employees by providing computing products and services, as well as cost management
and global communications. Providing information solutions to all Intel organizations,
including design engineering, manufacturing, sales and marketing, and administration
helps Intel’s business units become more efficient. Moreover, because Intel implements
IS, they can exchange knowledge, experience, and strategies with other IT organization
to expand computing technology. Finally, by working with external service providers to
integrate tools, capabilities, and solution into the Intel environment, Intel can do business
with the industry suppliers more effectively.
- 37 Secondly, the senior management plays a major role in positioning and prioritizing the
competitive role of information systems. It is the job of Craig Barrett, and his executive
team in making sure that major information systems are properly funded and staffed.
Furthermore, it is their job to motivate people throughout the organization to make things
happen. Craig Barrett, and the executive teams provide the long term vision for the
future of the business. They recognize the core values of the information to the
organization. Given that, the senior executives at Intel understand that they must
sponsor and participate in determining the role of information systems.
Lastly, there is an on-going working relationship between senior management and the
information systems organization to sustain the successful use of information systems to
compete. Senior management must work together with the information systems
organization for the IS to be implemented correctly. Figure 11 below depicts the cyclic
relationship of senior management and the information systems organization.
Senior
Management
Business
Leadership
IT
Leadership
Information
Systems
Organization
Figure 11
The senior management provides the business leadership to the information systems
organization. In turn, the information systems organization provides the IT leadership to
senior management. At Intel both senior management and the IS organization
understand the cyclic relationship, and they both work together to gain competitive
advantage for the company, in using information systems.
- 38 C. Redefine and/or Define
Jack Callon, professor at University of California, Santa Cruz, defines change as,
“making an essential difference often amounting to a loss of original identity or a
substitution of one thing for another.” Change can be a good or bad, depending on the
situation. In an increasing competitive environment, innovation, and change are key
factors in staying ahead. When an organization has been use to working in a specific
way, change can be very hard. Nonetheless, change is the norm in most businesses.
Information technology can be a catalyst or vehicle for change. In addition, employees
and management must understand and accept the need for change. What to change?
How to change? Why to change? These questions arise when facing possible
opportunity of changes. The primary focus of change is to bring value to customers. A
company must redefine, and/or define: the business, the products and/or services, or the
business process. For the purpose of clarification, redefine is the CHANGE while define
is to CLARIFY.
Companies that achieve a sustainable strategic advantage with information technology
generally redefine the factors of competition rather than using technology in a traditional
way. Case in point: Intel.
- 39 -
Value to Customer Analysis
Intel


Design Systems
Manufacturing
Systems
Business Systems
ITIL
PC Components


Delivery Process
Product/Service




Better quality
Better Service
Ability to do
more with
technology
What
Customers Buy
Value Add
Process
Value to Customers
Figure 12
The figure above provides an analysis of the bringing value to the customers. On the left
right hand side, it shows what the customers buy as a result of Intel redefining its
business processes. They get better quality product, better quality of service, and the
ability to do more with technology. On the right hand side, it show what value added
process have been implemented to bring value to the customers.
Intel’s IS use has traditionally been used to reengineer, “ re-manufacture” systems and
more recently, provide B2B services since the manufacturing system links to customers.
They have also adapted and IT infrastructure called ITIL (IT infrastructure library) based
on Microsoft’s Operations Framework standards. A more in depth analysis of these
systems are as follows:
Reengineering the Design System
Intel’s most valuable information systems have been in its engineering systems. Intel
has faced a constant, on-going challenge to shorter the product development cycle. In
doing so, they have redefined their product cycle using Quickturn, hardware emulation.
- 40 Quickturn’s technology can build a model chip using programmable chips that pretend to
be transistors. As a result of this new hardware, Intel has a room-size collection of circuit
boards that reflects the performance of the design more faithfully and runs engineering
tests up to 30,000 times faster. Being able to perform many tests, engineers can quickly
catch numerous bugs before production begins. Furthermore, Intel has uses concurrent
engineering by getting customers and manufacturing involved early in the design.
Manufacturing Systems
Manufacturing processes at Intel consist of a number of major challenges. The products
are complex, extremely small in size, sensitive to contamination and voluminous in
numbers. For these reasons yield management is the difference between success and
failure with a product. A high yield results in quality products that can produce the
expected profit margins. Poor yields can kill a product with major financial
consequences.
Nonetheless, manufacturing systems at Intel are regarded as the best in the industry.
These systems are the backbone of the highly complex manufacturing process. These
systems control the automation of the activities in the factories as well as tracking of
materials in progress. Intel’s drive toward automation and use of quality controls such as
statistical process control has kept its manufacturing systems rivaling the best in the
industry.
The development of new manufacturing systems is constantly redefining the way in
which products are being produced. Factory automation at Intel, created lower cots, and
higher throughput processes. The CEAMS lot tracking systems is one example of the
factory automation system. This system has been critical to the streaming flow of
products through the factory.
Business Systems
In recent years, the business systems have become more significant. It supports a wide
variety of functions within Intel. Systems supports for sales, marketing, finance, human
- 41 recourses, administration, and training all encompassed within this group. The
improvements that Intel has made to its supply chain are paying off. The company used
to require at least 24 hours confirming orders through overnight batch system. Today, IS
replaced its legacy mainframe order taking system with client server technology, Intel is
able to confirm delivery dates as orders are placed. According to Van Hoser, Director of
Supply Chain Integration and Architecture at Dell Computer, “By optimizing the supply
chain everyone wins”6 So, clearly with Intel’s optimization of its supply chain everyone
does win.
ITIL
Intel has shifted its focused away from individual IT products and toward customer
satisfaction. This new focus emphasizes on cross-service IT operations standards.
Through the adoption of Microsoft’s IT Infrastructure Library, Intel IT has demonstrated
many benefit of standards, enhancing efficiency and bring value to customers, while
saving time and money.
The core strength of Intel has been the role of information systems. Without IS, Intel
would not be able to successfully execute any strategies on a timely and cost effective
basis. As result, without the right strategies, there would be no justification for these
systems.
6
http://www.fed.org/onlinemag/nov97/cotter.html
- 42 D. Significance of Telecommunication at Intel
Telecommunication is a necessity in this information age, and within Intel.
Telecommunication technology is evolving rapidly. It can provide connection to the
world, facilitating information exchange and development to and from an organization.
As the need for telecommunication moves towards higher bandwidth application, voice,
data, and graphics, Intel addresses the importance of managing the telecommunication
networks within its industry. Intel uses its telecommunication infrastructure to enhance
every aspect of its business. They use telecommunication to interact and exchange
information between employees, customers, suppliers, and manufacturers. At Intel, most
of its internal applications are integrated under a web-enabled interface. Since there
exist a telecommunication infrastructure, employees can share the same data and tools
allowing them to work more efficiently with the information given at hand. An example of
an Intel telecommunication technology would be their Signaling System Technology. It
transports any information required to set up and mange telephone calls by converting
signaling information to digital packets. With the system, communications systems
developers can create solutions that set up telephone calls more efficiently, offer
enhanced security, and make it easier to incorporate and manage advanced capabilities
such as call forwarding and wireless roaming service. In addition, Intel has created
web-interfaces and communication protocols with their main suppliers, and
manufacturers. This way, the suppliers, and manufacturers can replenish orders faster
using Intel’s integrated real-time supply and demand information.
Telecommunication is such an important aspect of the company, that they evolved (after
being bought) a company called, Trillium Digital Systems Inc. They provide software for
virtually every standard and protocol used in telephone today. Trillium’s solutions are
used in more that 500 projects by industry leading suppliers, of wireless, Internet,
broadband and telephony products.7 As of last August, the two companies have been
exploring the new possibilities opened by merging the chip manufacturers with many
communication technology companies.
7
http://www.isse.gmu.edu/~eschneid/infs612/projects/trillium.pdf
- 43 -
In summary, the role and significance of telecommunication with Intel is key to their
business success. To address the need to have real-time, concurrent, and reliable
information, Intel implements various telecommunication technologies. By integrating the
voice, data, and graphics into single components, it helps Intel run the business in an
efficient, effective matter. In addition, it also improves communication between Intel, their
suppliers, manufacturers, and customers. Furthermore, it is unthinkable that Intel would
run its business without setting up a telecommunication infrastructure both internally,
and externally. In failing to do, Intel can have detrimental effects throughout their
organization.
- 44 E. Success Factor Profile
This evaluation has been based upon key success factors of Intel’s business process
and the use of information systems. The following address four key success factors for
Intel:
1. Business Vision
2. Culture
3. IS Integral to Business
4. IS Marketing
Business Vision:
Leadership comes in two flavors. One is in the form of a business vision. When Craig
Barrett, Paul Otellini, and Douglas Burns create a business vision, their primary focus is
on customers. Information systems plays an important role when making a business
vision since it helps accomplish the goals set by senior management. The headlines of
PC World Magazines read, “Intel’s Vision: Faster, Mobile, and Smaller”. Those three
words have been created by senior management and instilled in every employee at Intel.
They are the fundamental key terms that must be applied by every member of the
organization to move towards that vision. With this vision, Intel has created a clear and
consistent picture of their future. Through the business vision, everyone at Intel works
hard in striving to meet their goals through the business vision.
Culture:
The second flavor of leadership is culture. Without culture, Intel would not hold any of
their products, services, or employees to its highest standard. Intel’s way of doing things
are more democratic, more systematic, and faster paced, in contrast to the traditional,
corporate core culture values. Furthermore, every individual is expected to withhold and
follow Andy Grove’s five key principals8:
8
http://www.soe.ucsc.edu/classes/cmps158/Winter04/lectureslides158.html
- 45 1.) Enjoy your work
2.) Be totally dedicated to end results
3.) Respect the work of all those who respect their own work
4.) Be straight with everyone
5.) Always, when stumped, stop and think your way through to your own
answers.
Intel’s culture is a key factor in making sure everyone knows their role in any given
business function, and to achieve their goals through a common ground.
IS Integral to Business:
Simply put, Intel would not be the PC component industry leader, if it were not for the
implementation of information systems in their core business processes and functions.
As result, implementing IS throughout Intel’s organization, they have achieved a
competitive advantage. Intel relies on information systems to do its day to day business.
It has allowed the company to completely integrate and streamline its operation from
customer service to supply chain management. They use information systems internally,
to help employees use, and exchange information in a more efficient manner. They use
information systems externally to do business with customers, suppliers, and
manufactures in a more efficient manner. In summary, IS is the backbone of the way
business process and functions run. If Intel had decided not to implement the many
different IS solutions they have right now, Intel would most probably end up at the
bottom of its PC component industry.
IS Marketing:
“Intel Inside”, “Unwire”, “Mobile Centrino” are all catch phrases and marketing gimmicks
that have made Intel successfully recognized. Intel’s marketing division is at the top of its
class. They have the ability to create a market, solely on their brand names. Information
systems have played a significant role in their marketing division. Using information
systems, they have been able to communicate, and have close relations with their
customers. As a result, they have better understood the needs of customers, thus
- 46 creating solid marketing foundations, to attract more customers and keep them satisfied.
Although some of Intel’s product might not be as advanced as AMD, more people
choose Intel, because simply, the product is produced by Intel. Clearly, Intel’s marketing
talents have proven to be a success factor in being an industry leader.
- 47 Section IV: A FINAL ANALYSIS OF INTEL
A. Success of Business Strategy and Information Technology use to date.
Information Systems have played an important role in the success of Intel. They have
successfully used IS to help integrate their business process which has resulted in
increased efficiency, effectiveness, thus leading to better services. They have created
and implemented successful business strategy despite the economic downtown turn of
recent years. The role of senior management and information systems organization has
also been proven to be a success factor in Intel’s success. Through the leadership of
Andy Grove, Craig Barrett, and the Intel executive team, they are paving the path of the
future.
The following is a summary of Intel’s major reasons for continued success:

Continuous and successful implementation of information systems.

The business vision, strategy, and tactics implemented by senior management.

Reengineering their information systems to bring value to their customers

Top-Notch Manufacturing System.

Improve quality of service for customers.

Integrating and streamlining their business process to make the company run
smoothly.

Close relationships with their customers, suppliers and manufacturers.

State of the art technology.

Stellar financial performance throughout the years.

Tremendous marketing skills.
In conclusion, Intel’s success can be attributed to the list mentioned above. Despite
stiff competition, Intel has dominated the PC Component Industry from every aspect.
- 48 B. Have the Above Factors Properly Positioned Them for the Future?
Intel is a role model company. Intel posses all the characteristics of a solid industry
leader. Intel’s position as the top manufacture in the PC Component Industry will
continue as long as Intel’s performance outperforms that of any other company its in
industry. Today, the world’s largest semiconductor manufacture drives near-term
advances in computer and communication through a corporate culture that drives up
on innovation and risk taking. The company’s goal is to create a digital foundation
that both businesses and consumers can benefit from. In response to AMDs 64-bit
possessors, Intel will come full fledge when they come out with their own 64-bit
processors.
One reason Intel has been so successful is that it focuses on how computer systems
develop, rather than just on chips. According the Information Week’s article, Intel’s
Crystal Ball, “Intel plans to invest $200 million this year in emerging companies
developing technologies to create networked homes that let people access music,
photos, and other digital content.”9 However, with strong factors listed from Section
III, it has still hard for Intel to predict the future. In the article, Craig Barrett quoted,
“"Today we're in kind of the Internet business. Ten years from today ...” 10Although
Intel has a tough time predicating its position in the future; they have no second
thoughts about their performance, and the drive to maintain their industry leader
postion.
9
http://www.informationweek.com/story/showArticle.jhtml?articleID=17800050
10
http://www.informationweek.com/story/showArticle.jhtml?articleID=17800050
- 49 -
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
Intel Annual Report, 2001

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
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
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
Examining IT Business Processes at Intel by Intel
http://www.intel.com/business/bss/infrastructure/managing/examine_process.pdf
- 50 
Trillium Digital Systems, An Intel Company by Shramik Jyothula
http://www.isse.gmu.edu/~eschneid/infs612/projects/trillium.pdf

Intel’s Crystal Ball by Larry Greenemeir
http://www.informationweek.com/story/showArticle.jhtml?articleID=17800050
- 51 -