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Intel - the Silicon Gorilla December 2001. Louis V. Gerstner Jr. Scott Falzone Mona Hans Jake Hindelong Karan Mehta. Chip end-market structure. Mainframes – IBM UNIX Servers – IBM, Sun, HP, Compaq and Intel PCs – Intel, AMD and Cyrix Mobile devices – Motorola, Intel….

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intel the silicon gorilla december 2001

Intel - the Silicon GorillaDecember 2001

Louis V. Gerstner Jr.

Scott Falzone

Mona Hans

Jake Hindelong

Karan Mehta

Intel – Strategic Analysis

chip end market structure
Chip end-market structure
  • Mainframes – IBM
  • UNIX Servers – IBM, Sun, HP, Compaq and Intel
  • PCs – Intel, AMD and Cyrix
  • Mobile devices – Motorola, Intel…

Intel – Strategic Analysis

path to the present
Path to the present

1968

1970s

1980s

1990s

2001

  • Founded
  • 4004 to X86 line

-licensing of chip fabrication to others

-relationship with IBM

  • Threats from clones heats up

-problems with AMD

  • Pentium & Pentium II
  • Pentium 3, Xeon server chip

- focused expansion into Servers

  • IA-64 initiative (with HP)

-break into big leagues

Intel – Strategic Analysis

industry domination
Industry Domination
  • Intel sets the standard for PC chip architecture at the lower end
  • The server chip market has, until now, been out of the reach of Intel

Barriers to Entry

  • Hefty Capital Investment Requirements
  • Steep Learning curve
  • Entry Deterrence

MANIFESTATION

  • Judo Economics
  • Commitment
  • Product Proliferation

IMPLICATION

Intel – Strategic Analysis

threats to intel
PC market is slowing down

Intel needs to diversify to maintain profitability

Price competition is driving down margins

The continuance of AMD is a necessary evil for Intel and keeps anti-trust regulators at bay

Fabrication and other design technologies are becoming increasingly commonplace

We do not recommend IBM’s entry into the PC based MPU space

Threats to Intel

Implication for

Intel – Strategic Analysis

intel s competition
Intel’s competition
  • A potential entrant’s strategy will be determined largely by
    • The vendor of the technology
    • The computing platform it will appear in

Value

Performance

Prod. Range

Segment

AMD

Opportunity or conflict ?

PC

Focus

Secondary

Motorola

Diverse

Opportunity or conflict ?

Focus

Secondary

Opportunity or conflict ?

Sun

Server

Focus

Secondary

IBM

Server

Secondary

Focus

Secondary

Intel – Strategic Analysis

service and technology lead ibm
Service and technology lead IBM
  • Services profit contribution
    • 1995: 42%
    • 2001: 65%
    • 2003: 70+%
  • Technology leadership
    • Record number of patents
    • Process know-how
    • R & D depth
  • $5 billion planned investments in chip plants
    • Intel’s Itanium is here!
    • UNIX is the chip battle ground!!!!

Intel – Strategic Analysis

potential chip strategies
Potential chip strategies

High-end

  • Continue to promote the Mainframe market

Unix Strategy One

  • Increase promotion of Intel-based servers
  • Decrease fabrication investment and focus on licensing technology product

Unix Strategy Two

  • Continue co-opetition
  • Do not promote adoption of Itanium

Intel – Strategic Analysis

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