STRATEGIES ADOPTED BY INTEL CORPORATION AS A B2B FIRM

Submitted By: Submitted To:

Group 2 (Marketing B) Prof. V. Sekhar

Harpreet Singh 08PG022

Nitin Malik 08PG039

Rochak Khanna 08PG116

Saurav Rawat 08PG126

Somyata Krishna 08PG133

Suchita Khanna 08PG054

1
ABOUT INTEL:

Intel is the world's largest semiconductor chip maker, based on revenue. The company is the
inventor of the x86 series of microprocessors, the processors found in most personal computers.
Intel was founded on July 18, 1968, as Integrated Electronics Corporation and is based in Santa
Clara, California, USA. The corporation was founded by Gordon E. Moore and Robert Noyce.
Paul S. Otellini is the present CEO of Intel Corporation. Originally known primarily to engineers
and technologists, Intel's successful "Intel Inside" advertising campaign of the 1990s made it and
its Pentium processor household names.

Intel was an early developer of SRAM and DRAM memory chips, and this represented the
majority of its business until the early 1980s. While Intel created the first commercial
microprocessor chip in 1971, it was not until the success of the personal computer (PC) that this
became their primary business. During the 1990s, Intel invested heavily in new microprocessor
designs fostering the rapid growth of the PC industry. During this period Intel became the
dominant supplier of microprocessors for PCs, and was known for aggressive and sometimes
controversial tactics in defense of its market position, particularly against AMD, as well as a
struggle with Microsoft for control over the direction of the PC industry. The 2009 rankings of
the world's 100 most powerful brands published by Millward Brown Optimor showed the
company's brand value rising 4 places – from number 27 to number 23. Intel has grown through
several distinct phases. At its founding, Intel was distinguished simply by its ability to make
semiconductors, and its primary products were static random access memory (SRAM) chips.
Intel's business grew during the 1970s as it expanded and improved its manufacturing processes
and produced a wider range of products, still dominated by various memory devices.

While Intel created the first microprocessor (Intel 4004) in 1971 and one of the first
microcomputers in 1972, by the early 1980s its business was dominated by dynamic random
access memory chips. However, increased competition from Japanese semiconductor
manufacturers had, by 1983, dramatically reduced the profitability of this market, and the sudden
success of the IBM personal computer convinced then-CEO Grove to shift the company's focus
to microprocessors, and to change fundamental aspects of that business model. By the end of the
1980s this decision had proven successful. Buoyed by its fortuitous position as microprocessor
supplier to IBM and its competitors within the rapidly growing personal computer market, Intel
2
embarked on a 10-year period of unprecedented growth as the primary (and most profitable)
hardware supplier to the PC industry. By the end of the 1990s, its line of Pentium processors had
become a household name.

CORE COMPETENCY:

Intel Corporation has three elements of its core competency:

 Underlying process technology

 Being able to manufacture in high volume
 Doing sophisticated high-volume design

This has helped the firm to achieve high brand loyalty and speed to market (ability to bring a
new product in the market much faster than competitors)

IMPORTANT STRATEGIC ALLIANCES:

 Emulex – technology initiative for processors

 Cisco – networking expertise
 Dreamworks – for created high end 3D animations
 Oracle – health care products
 Nokia – innovations in mobile computing devices, combine the performance of powerful
computers with high-bandwidth mobile broadband communications and ubiquitous
Internet connectivity.
 Close partnerships with DELL, HP and Gateway

CLOSE COMPETITORS:

The only major competitor in the processor market is AMD (Advanced Micro Devices). Other
top semiconductor companies include AMD, Samsung, Texas Instruments, Toshiba and
STMicroelectronics.

Competitors in PC chip sets include VIA Technologies, SiS, and Nvidia. Intel's competitors in
networking include Freescale, Infineon, Broadcom and Marvell Technology Group.

3
PRODUCT PORTFOLIO OFFERED BY INTEL CORPORATION:

The company's first products were shift register memory and random-access memory integrated
circuits, and Intel grew to be a leader in the fiercely competitive DRAM, SRAM, and ROM
markets throughout the 1970s. Concurrently, Intel engineers invented the first microprocessor.
Originally developed for the Japanese company Busicom to replace a number of ASICs in a
calculator already produced by Busicom, the Intel 4004 was introduced to the mass market on
November 15, 1971, though the microprocessor did not become the core of Intel's business until
the mid-1980s. (Note: Intel is usually given credit with Texas Instruments for the almost-
simultaneous invention of the microprocessor.)

In 1983, at the dawn of the personal computer era, Intel's profits came under increased pressure
from Japanese memory-chip manufacturers, and then-President Andy Grove drove the company
into a focus on microprocessors. A key element of his plan was the notion, then considered
radical, of becoming the single source for successors to the popular 8086 microprocessor. When
the PC industry boomed in the late 1980s and 1990s, Intel was one of the primary beneficiaries.

Today Intel Corporation provides products in following categories:

 Processors (core processors, atom processors are the latest)

 MotherBoards
 Networking – Adapters for wireless and Ethernet networks
 Chipsets (enhanced capabilities for audio, video and communication)
 Consumer Electronics – media processing, demodulators and tuners
 Software Products – compilers, tune analyzers etc.
 Storage devices
 Health systems - comprehensive personal health system combines an in-home patient
device—the Intel® Health Guide PHS6000—as well as an online interface, the Intel®
Health Care Management Suite—allowing clinicians to monitor patients and remotely
manage care

Above line of products are extensively used in desktop PCs, servers, workstations, notebooks
and embedded systems.

4
PRODUCT RELATED STRATEGIES:

 Intel Corporation makes sure that its products (more specifically processors) hop
between introduction and growth stage. Intel’s pushes its own products into maturity and
ultimately decline stage with the introduction of newer technologies due to continued
demand of faster processing power. E.g. Pentium series is now completely replaced by
Core processors in new laptops. Specifically, Intel has forays in multimedia (the most
processor-demanding applications being video conferencing and gaming, but also rich-
media Internet content) and home networking (realizing the potential for users to buy
products that leverage the latent computer power available through a simpler way to
network PCs together). Today Intel provides breakthrough processing capabilities
WIMAX technology, centrino processors and vPro technology which adds to the
processing speed, increases security and enabled longer battery life.

 Commitment towards continuous improvement and investment in R&D enables Intel to

come up with newer products with speed of delivery of product in the market.

 Intel's competitive strategy is reflected in their startup or planning of entries into a

number of non-core businesses in order to help ensure continued growth in faster and
faster processors. E.g. venturing into consumer electronics, specialized health systems.

 Aims at developing customized products for specific markets. E.g. Intel’s India
Development Center develops products specific to the Indian continent. For example, for
rural areas it has developed a community PC that can function in hot and dusty
conditions and runs on a car battery for eight hours. They have an in-built remote
management system to save on the cost of a mechanic. For the future, Intel has designed
a new product—Classroom PC, aimed at public school students to communicate faster
with each other.

 Company adopts earlier Early Supplier Involvement. Its relationship with Applied
Materials has added to Intel’s success. Most companies would design a new chip and
then ask Applied Materials to design the machine to make it but Applied Materials

5
 participates in Intel’s chip design process, thus designing machines at the same time and
hence allowing Intel to bring a product to the market faster than other players in the
market.

 As part of its preemptive strategy Intel launched Pentium 4 within 3 months after the
launch of Pentium 3. This gave no chance to its competitors as they were dwelling out
strategies to compete with Pentium 3. Similarly it launched Atom processor for netbooks
(cheaper alternatives for laptops) before any other competitor.

PROMOTIONAL STRATEGIES:

 Pull strategy – “Intel Inside Campaign” - Every month more than 4 million billion (4 x
1015) transistors are produced; more than half a million for every human on the planet.
Most computer chips each comprise more than 7 million transistors. Twelve years ago
computer chips, in the eyes of consumers, were a generally unknown component of PCs -
a commodity product. From a competitive standpoint, a computer chip is a typical
commodity. Take one out; put another in, no performance difference. Chips are
something most customers don't see, many don't understand, and large numbers don't care
about. But Intel has built a brand around a commodity. Intel developed the chips which
set the standard for personal computing during the 1980s, beginning with the 8086 chip
and then developing a series of product improvements. Competitors rapidly adopted the
same naming convention, and Intel's product names - the 286, 386 and 486 could not be
protected. Intel had to find a way to become distinctive in what seemed to consumers to
be a confusing, commodity marketplace.

When Intel lost its battle for the "386" trade mark, they began the transition from a
microprocessor producer to a branded products company. In 1991, the "Intel Inside"
brand ingredient programme was launched with almost 200 OEM (Other Equipment
Manufacturers) partners with the objective of creating a consumer brand to make sense of
the rapidly changing product cycles. Intel already had an established reputation as a
quality producer of microprocessors amongst the OEMs. However, Intel needed to

6
 differentiate itself from its competitors and build a consumer brand. Intel believed it
could position its chips as a premium product, which it could in turn sell at a premium
price to computer manufacturers. To give computer manufacturers and their retail
customers more reason to identify Intel in their marketing, Intel chose to market its
product as a branded component. Hence Intel created brand awareness for Intel chips in
PCs amongst the manufacturers' direct customer (the dealer) and the end-user (consumers
and business purchasers). Intel launched the campaign in 1991, the advertising results
were stunning. For example, late in 1991, Intel research indicated that only 24 percent of
European PC buyers were familiar with the Intel Inside® logos. One year later that figure
had grown to nearly 80 percent, and by 1995 it had soared to 94 percent and continues at
these high levels today.

 Global Events - Intel Developer Forum (IDF) is held every year, allowing brilliant
minds to meet, collaborate, and learn from one another. The event offers an invaluable
opportunity to hear major announcements and get critical job training. Attendees can ask
questions and get answers from Intel Fellows and top engineers who come equipped with
extensive knowledge on next generation processor technologies. Includes lectures,
interactive panels, hands on lab and Q&As. Participants include technology partners and
even prospective customers. Intel Extreme Masters is a global PC gaming competition
inviting gaming professionals from all over the world and display their mettle.

 Corporate Responsibility Initiatives – Intel Teach Program and Intel World Ahead
Program. The former has till date provided training to 5 million teachers and latter aims
to educate children with technological knowledge. In India it is working closely with the
Government to improve rural education and to lower healthcare costs. It has co-
developed first digital hospital by providing WiMAX network and a telemedicine
program. The plan includes the donation of 10,000 PCs to state governments and training
one million teachers. Intel even sponsors study being performed by ―National Academics
of Science‖ regarding climate change so as to specifically assess the energy usage around
the world and how to control it. Such initiatives have enabled Intel to take its brand
acceptance and loyalty to higher levels.

7
  Trade Shows – Intel participates in trade shows aiming to display newer products and
prospecting newer clients. ―Computex‖ in Tapei, ―Gitex‖ in Dubai, ―Houston‖ Trade
show, ―Consumer Electronics Show Las Vegas‖ etc. are some global trade shows held in
2009 where Intel participated. Trade shows are of strategic importance for B2B sellers as
helps in developing brand awareness alongwith a platform of approaching newer
customers.

 Support Programs – Intel Software Partner Program, Participation in the Intel®

Software Partner Program provides independent software vendors, who develop
commercial software applications on Intel technology, with a portfolio of standard and
premium benefits to support them across the entire product planning cycle - from
planning, to developing, to marketing and selling of their application. Thus the program
focuses on developing better relations with software developers using Intel processors.

 Social Media – Intel Blogs, Inside Scoop, Software Network and Community
Discussions are some of the communities developed by Intel to help converse with the
corporation people and allow users and partners to share views over the social network. It
helps Intel also to gain good insights in the form of feedback about the product etc.
 Intel give financial incentives and rebates to its distributors and OEM (original equipment
manufacturers for example Intel $ 6 billion to Dell to use its processors in their products.

Currently Intel is experimenting with viral marketing, where students be creative and post
online videos spreading the word. This initiative was taken at Intel Developer Forum held on
22nd September this year in San Francisco. In India it is it is also teaming up with cyber cafe
chains to have onscreen advertisements.

DISTRIBUTION CHANNELS:

Intel corporation partners with VARs (Value Added Resellers) to sell their products or
solutions based on Intel. For instance Core Corporation is leading VAR in Japan and is partnered
with Intel to sell its server products. Core like other VARs coordinate the recruitment of
Deployment Value-Added Resellers (DVARs) servicing the Japanese market to provide
customers with a network of highly trained, regional and national technicians experienced in

8
deployments for Intel products. Similar to Intel Software Partner Program, there is an Intel
Channel Partner Program. Program helps in providing technical support, warranty
replacement, and demo and evaluation products which are critical for doing business.

There are authorized dealers for Intel products and are designated as IPD (Intel Product Dealer).
The Intel Channel Conference (ICC) is another support program for channel members, it is
targeted training road show designed to educate Intel Product Dealers (IPDs) on the latest Intel
product launches, technology announcements, and program benefits. Over the past several years,
thousands of IPDs have attended ICC two-times a year in multiple cities across the United States
and Canada.

SUPPLY CHAIN EFFICIENCIES:

Intel aims at achieving cost optimization by using efficiencies in Supply Chain, which mutually
benefits both the corporation, Intel’s Supplier partner and Intel’s customers. Engineers at Intel
Corporation have been refining Supply-Chain Management processes to provide greater
flexibility in planning, sourcing, making, and moving products globally with greater efficiency
and lower costs. Intel even follows a award system for its suppliers – SCQI (Supplier Continuous
Quality Award) to motivate suppliers to ensure quality supplies. The 2008 SCQI winners were:
Daewon Semiconductor Packaging Industrial Company; DEK International GmBh; DISCO
Corporation; Hitachi High-Technologies Corporation; Hitachi Kokusai Electric Inc.; ICOS
Vision Systems, NV; JSR Corporation; Kelly Services, Inc.; Moses Lake Industries (Tama
Chemicals); Munters Corporation; Nikon Corporation; STATS ChipPAC Ltd.; SUMCO
Corporation; and TXC Corporation.

Some features of Supply Chain adopted by Intel:

 Product transitions risk and uncertainty are addressed based on a planning

approach consisting of three methods; the Product Transition Index (PTI), the
Transition Playbook, and the Transition Dashboard. Based on case studies, the
PTI is a structured and repeatable method for evaluating the state and impact of
market, product, and marketing factors. The Playbook then helps the organization

9
 identify and determine how to respond to risks in a rapid and coordinated manner.
The Dashboard guides navigation through the Playbook.

 Capacity planning for expensive equipment with very long lead times and high
costs is done. Using a model similar to options instruments used by financial
markets, Intel purchases options for capital equipment. Options give Intel the
right to purchase an equipment tool in a reduced lead time at a certain pre-
determined price.

 An open architecture standard called OPENSTAR* for semiconductor test

equipment is used. The OPENSTAR architecture is a standardized infrastructure
definition used for combining instrumentation from multiple suppliers into a
common platform. The goal of this effort is to leverage standards at the
instrument interface level (power, cooling, communication, and device
interfacing)

 Create a unified global procurement solution. The program, termed ―e-

Procurement,‖ focuses on the global end state and targets three focus areas: tools,
people, and processes. e-Procurement has a single global Enterprise Resource
Planning (ERP) system as its foundation. An Internet negotiations tool was
introduced to achieve additional cost savings and negotiation efficiencies.

 New automated data systems and optimization tools based on Linear

Programming used to manage multiple divisions and stages of Intel’s supply
chain. These tools balance requirements to satisfy demand, achieve inventory
targets, and remain within production capacity to reduce costs and satisfy demand
across Intel’s supply chain.

 A new way of optimizing Intel Corporation's supply chain, from factories to

customers is the methodology that uses statistical methods to characterize the
order distributions of customers and the distribution of times to ship products
from different points in the supply chain (factories to customers). RosettaNet*
standard based on XML-based protocols to facilitate secure electronic exchange

10
 of trading entities over the Internet. Over the past five years, Intel has
aggressively pursued utilizing RosettaNet to support its supply chain.

PRICING STRATEGIES:

Experts say Intel has been instrumental in driving down PC prices, one of the key indicators of
competition. But there have been many controversies against Intel for giving illegal rebates to
dealers and OEMs and using anti competitive tactics. Intel is accused of paying computer makers
rebates to illegally maintain its monopoly power and preventing AMD from gaining business
with PC makers. But given the intuitive and easy to grasp nature of the consumer benefits of
discounting contracts in the Intel case, general public will be less likely to condemn these
practices without real proof of actual consumer harm. One of the most recent examples of steep
downward PC price pressure is Netbooks, which have been a hit with many consumers because
of their low cost, typically around $350. Intel, along with PC makers such as Asus, Acer, and
Hewlett-Packard, created the Netbook market, whose rise forced AMD to counter with a
technology platform for low-cost thin laptops that are, ironically, more expensive than Netbooks.
"Ultrathins"--a market that Intel also participates in and is sometimes referred to as CULV or
consumer ultra low voltage laptops--typically start at $500 and range up to about $900.

Intel pricing is strongly driven and influenced by competition from AMD. It was evident
from the price cut initiatives taken by company in mid 2009. The prices of five different versions
of the Intel Core 2 Quad processor were cut by as much as 40 percent, with the 3GHz Q9850
dropping from $530 (£380) to $316. Meanwhile the 2.33GHz Q8200 dropped in price by 16
percent, from $193 to $163. The Pentium Dual Core processor line also saw price cuts, with the
2.5GHz E5200 chipset having a cut of 24 percent from $84 to $64. Mobile Celeron processors
saw the biggest single fall, with the 2.26GHz Celeron 570 dropping by 48 percent from $134 to
$70. Four other chips in the range had smaller but still substantial cuts, ranging from 19 percent
to 35 percent. Other ranges saw more limited cuts. Intel's price cuts in this case were because of
last year's introduction of AMD's Phenom II and Shanghai processors, which have been gaining
ground against Intel's processors in the gaming market and the mainstream systems market. The
Shanghai processor has been adopted by large companies such as IBM, HP, Fujitsu and DELL.

11
Reuters reports that Mr. Jen-Hsun Huang, NVIDIA CEO, has talked about Intel's pricing policy
for the Atom processors which seems pretty unfair wherein Intel sells its low powered Atom
Chip for US $ 45, however as part of the bundle which includes three chip sets the atom is priced
at US $ 25.

Intel trims the price of its older generation product line while introducing a new product so as to
move out its inventory of older version.

From 2001 to 2006, Intel allegedly offered rebates and discounts to computer makers to
encourage them to use its products over those of its rivals. For instance it offered $6 billion to
DELL between 2002 and 2007.

PEOPLE – CORPORATE AFFAIRS

The firm promotes very heavily from within, most notably in its executive suite. The company
has resisted the trend toward outsider CEOs. Paul Otellini was a 30-year veteran of the company
when he assumed the role of CEO. Intel's goal is to frame HR (human resource) polices that
make it easier for people to manage effectively their personal and work lives. The company
believes in providing the best of amenities and opportunities for its employees. Famous for its
"paranoid" work culture, Intel's business model emphasizes consistent product innovation.
Employees are judged on performance, teamwork and making the company a great place to
work. Intel's policies emphasized providing equal employment opportunity for all applicants and
employees without regard to race, color, religion, sex, national origin, ancestry, age, disability,
veteran status, marital status, sexual orientation or gender identity

Intel's policies emphasized providing equal employment opportunity for all applicants and
employees without regard to race, color, religion, sex, national origin, ancestry, age, disability,
veteran status, marital status, sexual orientation or gender identity This is designed to promote
egalitarianism i.e. treatment of equals among employees and to minimize power distance. Intel
has a Diversity Initiative, including employee diversity groups as well as supplier diversity
programs. Like many companies with employee diversity groups, they include groups based on
race and nationality as well as sexual identity and religion. In 1994, Intel sanctioned one of the
earliest corporate Gay, Lesbian, Bisexual, and Transgender employee groups, and supports a

12
Muslim employees group, a Jewish employees group, and a Bible-based Christian group. Intel
received a 100% rating on the first Corporate Equality Index released by the Human Rights
Campaign in 2002. It has maintained this rating in 2003 and 2004. In addition, the company was
named one of the 100 Best Companies for Working Mothers in 2005 by Working Mother
magazine.

Intel University and other career training courses offer in-person and online opportunities for
learning and applying new skills. Whether one wants to develop new management abilities,
improve computing skills, learn factory-specific information such as machine processes, or
enhance personal organization, Intel University has a course in its kitty. As an Intel employee,
one also has access to an extensive online library of the latest management, leadership, business,
and technical publications through Books 24x7. Intel researchers throughout the world are
working at universities (ParLab at UC Berkeley and UPCRC at Univ. Illinois), in labs, and
in the field to create technology to improve every facet of life — from agriculture to
manufacturing, microbiology, space exploration and beyond. Technical expertise and university
tie ups helps Intel follow an efficient R&D program. Research@Intel Day is a yearly program
conducted to display newer technologies on which personals are working. Intel has its own
institutes for specialized areas:

 Intel Visual Computing Institute at Saarland University

 Open Cirrus™ -an open internet-scale global test bed for cloud computing research

VALUES AT INTEL CORPORATION

Customer Orientation

Intel strive to listen and respond to our customers, suppliers, and stakeholders; clearly
communicate mutual intentions and expectations; deliver innovative and competitive products
and services; make it easy to work with us; and be a vendor of choice.

13
Discipline

Intel strive to conduct business with uncompromising integrity and professionalism; ensure a
safe, clean, and injury-free workplace; make and meet commitments; properly plan, fund, and
staff projects; and pay attention to detail.

Quality

Intel strive to achieve the highest standards of excellence; do the right things right; continuously
learn, develop, and improve; and take pride in our work.

Risk Taking

Intel strive to foster innovation and creative thinking, embrace change and challenge the status
quo, listen to all ideas and viewpoints, learn from our successes and mistakes, and encourage and
reward informed risk taking.

CONCLUSION:

Intel is in B2B segment right from the time of incorporation. Intel® is an ingredient brand. Its
products and processors form part of products that consumer purchases. The aim is to provide the
manufacturers of products such as laptops, mobile phones and entertainment personal computers
with integrated packages of chips and software. To hedge against any future risk, it has started
diversifying into related business. Its new strategy is based on identifying and creating new
markets by playing key technological role in a range of field including consumer electronics,
wireless, communication and healthcare. To cope with the changing world in which the business
exist and counter to the slowing growth of computers in this very competitive environment,
Intel® has started developing several technologies. Its strategy is to create lots of different types
of chips and software and then combine together into platforms. This will provide people and
businesses with improved communication and computing capabilities. Ultimately, it's all about
picking those market segments (products) that are likely to grow the most in which you already

14
have or can gain a foothold and Intel Corporation exactly did the same and is doing the same.
Systems are continually updated giving the user greater freedom. Intel’s strategy is to be at the
heart of new developments in home entertainment, security, medical care, etc. Its strategy today
is about:

• Working with customers to share a vision of future technologies

• Developing new customer focused technologies

• Giving people new products that are easy to understand and use

• Communicating clear messages about these new products

Intel® built its early success on providing ingredients for personal computers with its prime
driver being technology. It was dominated by engineers and worked closely with Microsoft and
PC manufacturers such as Dell, Compaq and IBM. The strategy today continues the emphasis on

producing excellent products. However, there is now a strong focus on marketing – finding out
what customers want and then meeting their requirements. Customers need to know what these
new products can do for them. Clear communication is therefore essential.

With this growth strategy platform coupled with effective strategic planning and effective
tactical execution of plans, Intel Corporation is a Real Winner when it comes to a brand in the
technology market.

15
Intel

16