The Success Story Of Intel

Intel, primarily a manufacturer of semi-conductors, was founded in California in 1968 by Robert Noyce, Gordon E. Moore and two others. With an initial investment of $2.5 million, both the founders ,Noyce and Moore, wanted to name the company Moore Noyce, but later settled for Intel, which is an acronym for Integrated Electronics. During its initial phase, Intel’s business was primarily focused on DRAM. However, profits started falling as the competition from Japanese manufacturers intensified. Sensing a prospective market with the success of IBM, the company shifted its focus to microprocessors. The decision was later proved correct as Intel turned out to not only be a phenomenally successful enterprise but also a household name. Following its DRAM success, Intel became a public company in 1971. That same year Intel introduced the erasable programmable read-only memory (EPROM) chip, which was the company’s most successful product line until 1985. Also, because DRAMs were cheaper and used less power than core memory, they quickly became the standard memory devices in computers worldwide. Intel’s track record is due in no small part to the performance of its CEO and chief visionary, Andrew Grove. In his new book, Grove reflects on his experiences as the leader of Intel.

Intel’s history of close calls and spectacular successes suggests that there’s much to learn from Grove’s paranoia. At Intel, Grove, now 60, has experienced a series of crises and upheavals and survived. He was the one who took Intel out of the memory chip business and into microprocessors. Just after two years of its establishment, Intel decided to go public and completed their initial public offering at $23.50 per share, raising $6.8 million. However, its all too easy to forget that Intel’s success wasn’t always so assured. In 1972 it decided to enter the growing digital watch market by purchasing Microma. But Intel had no real understanding of consumers and sold the watchmaking company in 1978 at a loss of $15 million. In 1974 Intel controlled 82.9 percent of the DRAM chip market, but, with the rise of foreign semiconductor companies, the company’s market share dipped to 1.3 percent by 1984. In 1985, the company’s earnings were a mere penny per share and in 1986, Intel lost $173 million. Those two years were marked by layoffs, plant closings, salary cuts, and time off without pay. In fact, Intel is one of the few survivors from the early days of computing. But all losses aside, Intel corporation managed to push through and become one of the most successful companies in microprocessors, in the past two decades.

Intel corporation has the dominance when it comes to microprocessors and motherboards. Although there are other competitors in the market, none have managed to take away the mammoth market share of Intel. The Intel pentium series was the series which really made Intel a dominating power of the microprocessor industry. This was because the performance of the pentium series was beyond comparison and at the time. Coupled with its massive distribution channel, and its branding and marketing moves, Intel corporation has managed to penetrate the market much better than any other organization. Probably one of the longest running and smartest advertising tactics is the one employed by Intel. Intel, looking at its brand pull and its quality of products has tied up with all the major manufacturers of desktop and laptop computers. The microprocessors are mostly being provided by Intel. What this does is, it reinforces the brand image in the eyes of the consumer. If these top companies are ready to tie up with Intel, than the product must definitely be good. When you are buying a new Desktop or a Laptop, you will most probably think of having Intel as the motherboard as well as the processor. IBM) chose Intel’s 16-bit 8088 to be the CPU in its first mass-produced personal computer (PC). Intel also provided its microprocessors to other manufacturers that made PC “clones” that were compatible with IBM’s product. Of the many microprocessors Intel has produced, perhaps the most important was the 80386, a 32-bit chip released in 1985 that started the company’s commitment to make all future microprocessors backward-compatible with previous CPUs. Application developers and PC owners could then be assured that software that worked on older Intel machines would run on the newest models. Intel’s business strategy relied on making newer microprocessors dramatically faster than previous ones to entice buyers to upgrade their PCs. One way to accomplish this was to manufacture chips with vastly more transistors in each device. Intel’s famed technical prowess was not without mishaps. Its greatest mistake was the so-called Pentium flaw, in which an obscure segment among the Pentium CPU’s 3.1 million transistors performed division incorrectly.

Company engineers discovered the problem after the product’s release in 1993 but decided to keep quiet and fix the problem in updates to the chip. However, mathematician Thomas Nicely of Lynchburg College in West Virginia also discovered the flaw. At first Grove, who was the then CEO, resisted requests to recall the product. But when IBM announced it would not ship computers with the CPU, it forced a recall that cost Intel $475 million. Even with all these financial mishap of the Pentium fiasco, the combination of Intel technology with Microsoft software continued to crush the competition. By the end of the century, Intel and compatible chips from companies like AMD were found in every PC except Apple Inc.’s Macintosh, which had used CPUs from Motorola since 1984. Craig Barrett, who succeeded Grove as Intel CEO in 1998, was able to close that gap. In 2005 Apple CEO Steven Jobs shocked the industry when he announced future Apple PCs would use Intel CPUs. Paul Otellini succeeded Barrett as Intel’s CEO in 2005, and four years later Jane Shaw replaced Barrett as chairman. She held the post until 2012, when she was succeeded by Andy Bryant. The following year Brian Krzanich became CEO. In 2019 chief financial officer Bob Swan became CEO, and Intel ranked 43 on the Fortune 500 list of the largest American companies.