Intel, the largest PC chip maker, scrambled to appoint Chief Operating Officer Brian Krzanich as chief executive officer, leaning on an insider to accelerate a shift toward mobile devices as the personal-computer age wanes. But Intel indeed has been late in this mobile phone market behind another chip maker, ARM for almost 10 years. Nowadays, 90% of mobile smartphones are using chips based on ARM architecture, in which the Qualcomm (QCOM) currently dominates, leaving Intel almost nothing. Only 300 M chips for PC were delivered last year by INTC, while Billion of chips were delivered for Mobile phone devices last year. The shrinkage in PC market, as visioned by the traditional PC manufacturer Michael Dell, could eventually kick INTC out of the U.S. technology history by following the other dying giants, you name them.
You must be definitely asking how could this happen? Well, I was asked this question yesterday and would like to share some of my thoughts here, mainly from strategy perspectives this time. This in my opinion could be another classic case embraced by Prof. Christensen at Harvard based on his low-end or new market disruptive theory.
The Intel once focused on improving the single-chip or multi-core performance by emphasizing on the processor speed. The well-known Moore law, written in EE textbooks, was the motto of the ex-CEO Andy Grove. To maintain its market share in PC industry, it kept most of the investments in sustaining innovation, squeezing other competitors, such as AMD, out for crying. On the other end, the emergence of mobile computing devices, initiated by AAPL's iphone, required a different set of quality metrics, such as power consumption, mobility adaptability and flexibility. ARM's architecture rendered lower single chip performance compared to chip maded by Intel, however, provided superior measurements in terms of power consumption and support for mobility. Back then, the mobile smartphone was a non-consumption market, where huge uncertainty existed so that Intel can not allocate resources to fight in that market. Prof. Christensen said, this circumstance was a perfect setup for new-market disruption to happen. And it did happen.
Therefore, Paul Otellini, 62, went out to beg Bell, who has spent 16 years working on phone design in Apple, to help reshape Intel's organization. Bell created a new site which is 16 miles away from the Intel main campus. Why? because he doesn't want people in this
new site to have any connection with original Intel Structure. The pirate flag hang outside his office showed his determination to fight in mobile phone industry.
Could Intel Succeed in this shift? or Is it too late? huh, an interesting question.
Friday, May 3, 2013
How can Intel (INTC) fall behind, a strategic analysis
Intel, the largest PC chip maker, scrambled to appoint Chief Operating Officer Brian Krzanich as chief executive officer, leaning on an insider to accelerate a shift toward mobile devices as the personal-computer age wanes. But Intel indeed has been late in this mobile phone market behind another chip maker, ARM for almost 10 years. Nowadays, 90% of mobile smartphones are using chips based on ARM architecture, in which the Qualcomm (QCOM) currently dominates, leaving Intel almost nothing. Only 300 M chips for PC were delivered last year by INTC, while Billion of chips were delivered for Mobile phone devices last year. The shrinkage in PC market, as visioned by the traditional PC manufacturer Michael Dell, could eventually kick INTC out of the U.S. technology history by following the other dying giants, you name them.
You must be definitely asking how could this happen? Well, I was asked this question yesterday and would like to share some of my thoughts here, mainly from strategy perspectives this time. This in my opinion could be another classic case embraced by Prof. Christensen at Harvard based on his low-end or new market disruptive theory.
The Intel once focused on improving the single-chip or multi-core performance by emphasizing on the processor speed. The well-known Moore law, written in EE textbooks, was the motto of the ex-CEO Andy Grove. To maintain its market share in PC industry, it kept most of the investments in sustaining innovation, squeezing other competitors, such as AMD, out for crying. On the other end, the emergence of mobile computing devices, initiated by AAPL's iphone, required a different set of quality metrics, such as power consumption, mobility adaptability and flexibility. ARM's architecture rendered lower single chip performance compared to chip maded by Intel, however, provided superior measurements in terms of power consumption and support for mobility. Back then, the mobile smartphone was a non-consumption market, where huge uncertainty existed so that Intel can not allocate resources to fight in that market. Prof. Christensen said, this circumstance was a perfect setup for new-market disruption to happen. And it did happen.
Therefore, Paul Otellini, 62, went out to beg Bell, who has spent 16 years working on phone design in Apple, to help reshape Intel's organization. Bell created a new site which is 16 miles away from the Intel main campus. Why? because he doesn't want people in this
new site to have any connection with original Intel Structure. The pirate flag hang outside his office showed his determination to fight in mobile phone industry.
Could Intel Succeed in this shift? or Is it too late? huh, an interesting question.
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