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AMD vs. INTEL

AMD vs. INTEL. Case depicts competition in a fast cycle market AMD has migrated upwards in terms of product offerings and internal capabilities Intel is a leader now being challenged being an underdog Pressure on both comes from the commodization of PCs and computer chips

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AMD vs. INTEL

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  1. AMD vs. INTEL • Case depicts competition in a fast cycle market • AMD has migrated upwards in terms of product offerings and internal capabilities • Intel is a leader now being challenged being an underdog • Pressure on both comes from the commodization of PCs and computer chips • No brand loyalty among end users • No switching cost for intermediate customers • Price and performance are key isssues • Performance easily imitated though route to achieving it may differ

  2. INTEL’S APPROACH • Short product life and catching up behaviour of competitors makes development cost higher and margin lower • Relied on planned obsolescence to fetch premium price and discourage imitation • Has resorted to use of discounts to seal off market • Had also used the Intel Inside campaign to create brand loyalty to Intel’s processor

  3. AMD’S APPROACH • Has shifted from being a renovator to being an innovator • Has also expanded core competencies through acquisitions • Now matches Intel in ability to offer new products • In 2003 exceeded Intel by introducing 3 new products • Had traditionally offered lower price than Intel • Product performance has reached parity with Intel • Range of product offerings also increased to cover microprocessor, memory and connectivity solutions • However, highly dependent on PC business.

  4. STRATEGIC CONSIDERATION • How can far can both parties rely on price for competition? • Is product innovation sufficient to create competitive advantage? • Is the use of discounting by Intel sustainable? • Are there forms of inimitable relative advantage each can rely on? • How can business and competition be redefined?

  5. POSSIBLE AMD FUTURE STRATEGY • Tap into other PC manufacturers category to get volume • Need to consider tailoring marketing for small manufacturers • Diversify into non PC products especially in communication and digital equipments • Seek alliance with chip users like Nokia for development of future flash memory • Consider marketing products as a suite that offers competitive price • Enhance speed of R & D further

  6. POSSIBLE INTEL FUTURE STRATEGY • Consider asset unbundling to improve cost and create more slack resources • Increase speed of R & D • Develop processors for niche application • Go for exclusive arrangements with customers through long-term contracts • Create long-term commitment through mutual investment • Offering lower price from beginning more viable than questionable discounting practice

  7. CONSIDERATIONS FOR AMD • Should and could AMD sustain a head on clash with Intel? • Sun Tzu would recommend avoiding head-on clash with a bigger force • However, AMD has also grown into a formidable competitor capable of challenging a giant • Decision will depend on assessment of external opportunities and internal strength. • A likely possibility is that will be convergence in terms of capabilities of AMD and Intel leading to more intense competition

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