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Intel project Report


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Group report on Intel for Capstone in marketing class.

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Intel project Report

  1. 1. Intel Intel Corp is a manufacture of semiconductor circuits; headquarter in Santa Clara, California. The company was created by Robert Noyvce and Gordon Moore, former engineers of the Fairchild Semiconductor Company. After leaving Fairchild, they decided to create Intel with the help of Art Rock which was able to raise more than 2 million dollars to help kick start the company. They then added Andre Grove, another former Fairchild employee, which later became the company’s chairman and CEO for the first three decades. Intel built its reputation in good quality and dependable PC chips. Intel created the first chip that could store plenty of information, and soon became the standard for memory devices worldwide. Unfortunately, due to Intel’s lack of innovation, revenue started to decrease. In 2006, revenue growth had dropped from an average of 13% to a measly 7% increase. Intel’s current CEO, Paul Otellini, had to reinvent Intel completely or risk future losses. Otellini decided not to focus only on microprocessors, but push Intel to play a key technological role in a half-dozen fields, including consumer electronics, wireless communications, and the biggest one health care.Otellini unveiled his strategy and immediately started working on new products. One of the first things to change was the Intel logo, then Intel’s work environment, and finally push his new team to build new products. His ultimate goal was to provide manufacturers with everything from laptops and entertainment PCs to cell phone and hospital gear with complete packages of chips and software. The problem lies here, their eyes may be larger than their stomach. Ontellini is killing off the old look entirely even though it is Intel is the fifth best known brand world wide. We all know that change is necessary, but is too much change bad? SWOT ANALYSIS
  2. 2. The SWOT analysis is used to perform a quick review of a company by analyzing its internal resources which include strengths and weaknesses as well as its external resources which are comprised of opportunities and threats. A company should therefore strive to maximize its strengths and opportunities while minimizing its threats and weaknesses. When analyzing intel, it is easy to see a few major strengths that include: an established brand name known internationally, a product selection that encourages strong brand loyalty by striving to be superior in both performance and power consumption, and a commitment to innovating new products and maintaining its status as the market leader of microprocessors for PC’s in the world. However, even huge companies like Intel have weaknesses. The biggest of which is the trend away from Intel’s “bread and butter”, the personalized computer, which has surely caused many sleepless nights for Intel’s top executives. The market trend is moving furiously towards the mobile segment which include handheld phones and other devices which offer many of the features that a PC does. Because of this change Intel is in a tough spot weighing the risks of standing pat and doubling down on their windows based PC products or taking a huge gamble on trying to penetrate a growing and very competitive mobile market. A few other weaknesses include large marketing costs that are necessary to educate consumers on the benefits of choosing a product with “intel inside” and convince them that it is worth it to choose an Intel product with a higher price point than its competitors. Opportunities exist in emerging segments such as the mobile market alluded to previously, but Intel has other potential long term plans that include venturing into the healthcare market with a plan to revolutionize it and maximize its efficiency. As referenced in the case, it has also established a partnership with apple, something which was not possible under previous leadership. This partnership will benefit Intel’s brand image as Apple is a sleek, cool, and innovative brand that is primed to become a leader in the rapidly changing
  3. 3. technology industry. Another opportunity exists in acquiring companies both big and small to reinforce their core business or take up a new venture under the right circumstances. Threats to Intel include fierce competition from other global brands such as AMD, IBM, and Dell which often times lead to price wars and loss of profits. Some other threats are dangers that apply to any company in the technology market, which is the volatility of the market, possible litigation issues and changes in the market that erode competitive advantages. The biggest threat is also the biggest opportunity which is the emergence of the mobile market as mentioned beforehand which can go either way depending on Intel’s choice of how to react to the mobile market and their execution of their plan. Potential alternative solutions with evaluations Entering the Mobile Era Intel needs to break into the mobile era. Blackberry is seemingly the way to go. Whether or not that pans out, it is undeniable that the technological shift many companies are seeing is in the way of mobility and handheld devices. Revenue averaged 13% for the past three years, but analysts figure Intel will see only 7% growth as of 2006. Profits have soared an average of 40% annually for the past three years, but now are only expected to rise a mere 5% This is evidence that Intel needs to work it’s way into this new era. Teaming up with Apple Along with the previous idea, Intel and Apple have decided to partner up which allows Intel to provide Apple with microchips for their PC line. We believe that Intel should find a way to balance its efforts and be able to provide companies like Apple the microchips that are in demand, but also further progress and push its innovativeness into new areas. Focus on Marketing
  4. 4. Intel continues bringing high level marketing executives from companies such as Samsung and Nokia. While these are wonderful additions to the team, it has led to a rift with engineers who are looking to stay top dog of the company. The shift to focus marketing over engineering is what we believe to be correct with the way that the market is changing. Intel needs to be careful and not get stuck in a corner as solely a processor or microchip manufacturer. They need to stay on the upswing of innovation and this is a great way to do so. Healthcare Industry Intel should be wary of spreading itself too thin. With so much of its focus already on building processors, it will be difficult for them to be strong in so many different markets. In order to be successful in this, we suggest that Intel focus primarily on the healthcare industry as it takes up 15% of GDP in the United States and has predictions of reaching up to 25% (as of 2006). This is a huge opportunity for a brand such as Intel to head into a market where they can provide the best technology for an efficient price. Decision Criteria Improvements To Employee management Employees are becoming unsatisfied with the changes and new direction the company is heading in. This is one area that Intel needs to consider when following through with the new marketing focus and shying away from just producing processors. Financial Feasibility With these new changes and Intel’s ambition to dive into so many markets, a question of financial feasibility comes into play. Intel is a very successful company, but no company wants to see a loss in profits. Intel must find a way to balance the financial responsibility of charging
  5. 5. into new areas of business, yet still being able to produce and sell the processors that are their cash cow. Improving Marketing Position Intel’s idea to reorganize the company from top to bottom in order to focus primarily on marketing aspects of business is a decision that comes with many benefits, but also many flaws. Intel will have to decide if this new marketing strategy is one where they can be the most successful as well as prepare for the ever changing future. Enhancing Technology Development Intel has been so much in the business of making processors, that it has lost focus on the future. Becoming too complacent is dangerous in terms of the ever changing direction of the business world. Intel really lacks the innovation that will send them to the next level of profits so it is imperative that they look at this when deciding what to do. Recommendation Upon evaluating the alternative strategies, the best course of action for Intel to take would be to build a close partnership with Apple. The sole reason behind such strategy would be to gain a huge market share almost instantly by supplying Apple with Intel’s microprocessors. Since the chips inside the devices are not physically bought by normal consumers, they must be sold through machines and devices from more better known suppliers. A partnership with Apple would mean higher profits, stronger brand recognition from the combined brands, and ultimately a relevant partner for Intel that stands by the shared mentality of innovation and drive that could open hundreds of opportunities in the near future.