Resources and Capabilities Essay
In the market, each of organization has to face with many of competitors. There are many elements could effect to exist and development of a company, and one of the most important elements is the innovation. “Not to innovate is to die” (Freeman, 2005, p. 266). We could define the innovation as “… (innovation) life cycle is an S-shaped logistic curve consisting of three distinct phases: emergence (the development of the product or service, its manufacturing capabilities, and its place in the market), growth (where the product family pervades the market). nd maturity (where the market issaturated and growth slows)” (William G. Howard, 1992). The satisfaction of customers are unlimited, they always want new products, new function, fashion… The mission of a company is satisfy the customer’s need, from that they could survive in the market. “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new” (Steve Job, 1989). Intel Corporation is one of the most successful companies in innovating.
With 50 year of history, Intel always is the market leader in microprocessors manufacture area; they have been made technology revolutions. Main strategy of Intel focus on innovation, the vision of them in official website is “Inspired Innovation that’s Changing the World” (www. intel. com). This essay will introduce the successful of Intel in innovation. Intel Corporation was founded in 1968 by Robert Noyce and Gordon Moore with the first name was NM Electronics. The innovation always parallel development with Intel’s history.
At the end of 1971, Intel hits the market with its first microprocessor, the 4004, the world’s first microcomputer, they called it is “A new era in INTegrated ELectronics”. In 1981, Intel’s 8088 microprocessor is chosen to power the IBM personal computer, this is a big turning point for Intel and the world. In 1993, Intel introduced the Pentium® processor, fifth generation chip, it is faster 300 times than the Intel 8088 processor. Fortune called Intel as the leading player in “The new computer revolution”.
In 1994, Intel had taken control the market with power 85 percent of the desktop computer. With the developing of handheld computing and communication devices, in 1998, Intel apply the Intel StrongARM technology for its first high-performance, low power processors. In the 21st century, owned a personal computer more and more popular, the customer always have high demand in the performance of processor. By 2003, Intel introduce Intel Pentium 4 processor which had an initial speed of 1,5gigahertz faster than 13800 times with the first its microprocessor.
Nowadays, more and more new products have been launched by Intel regularly. The history of Intel gives us an excellent innovates strategy with high competitive products. (www. intel. com). In this paper, this essay will apply the theories of innovation and example to explain the success of Intel’s innovation strategy. Also, it suggests some further area for Intel to develop. In present, Intel is still the leader of microprocessors products. Its products are famous for “safety,” “leading technology” and “reliability”.
Because Intel has experience of 40 year in microprocessors area, they have been applied innovation strategy in their product professionally. In 2009 within the annual report it stated: “Innovation throughout the computing spectrum is possible because of Intel’s ability to develop successive generations of manufacturing process technology that enable us—year after year—to build microprocessors that can cost less to manufacture, have improved performance and energy effi ciency, and offer more capabilities.
We now produce a substantial majority of our microprocessors using 45-nanometer (nm) process technology, and we have achieved high-volume production of the first products based on our leading-edge 32nm process technology. We have also already demonstrated the world’s first 22nm process technology, on track for production in 2011” (www. intel. com). The excellent advertising strategy contributed to help Intel become the market leader. Microprocessor is the brain and put inside the PC, so that not easy for customer could identify the Intel’s brand.
Therefore, Intel Inside® campaign was born in 1991. Intel paid the advertising fund for the computer makers if their PC print ads that included the Intel logo. In the end of that year, 300 PC OEMs agree to join this program. Moreover, Intel start advertising on the television. They add three second animated jingle, display the logo and playing a five-tone melody. In 1991, only 24 percent PC customer familiar with Intel’s logo, after one year, this number increase to 80 percent and by 1995, it met 94 percent. Nowadays, more than 2500 PC OEM maker have the right to use Intel’s logo (www. ntel. com). To understand innovation of Intel, this essay will mention about modeling of innovate process. Framework for defining innovation was developed by Henderson and Clark (1990), it showed in a matrix of four type of innovation, it is including: Architectural innovation, incremental innovation, radical innovation, modular innovation. The history of Intel point out which was the model of innovation that company had been chosen. Those are architectural innovation and modular innovation. Intel uses both of them for its products. They call this is Intel’s ‘tick-tock” model.
Intel’s innovation always in the direct “performance new capabilities energy efficiency form factor advances. (www. intel. com) Modular innovation is the process by which technological concepts in components is change but the design architecture not change. This process named “tick” in “tick-tock”. Core I processor series ( include core i3, core i5 and core i7) introduced on the 32nm process technology but it still have the same architecture with core2dou processor series which introduced on the 45nm process technology. (www. intel. com) Architectural innovation is different with modular innovation.
It is a process changes the product’s architecture, but leaves components unchanged. In 2011, Intel introduced Sandy Bridge processor, this is 2nd generation Intel core processor family. Sandy Bridge still use the same 32nm process technology with 1st generation intel core processor. But, it uses the different technology. In core I series, CPU and GPU of processors in two sole but in Sandy Bridge, both of CPU and GPU put in a sole. It mean that graphics capabilities of Sandy Brige more powerful than core I series. Tick-tock model create a solid innovation for Intel to adapt the customer need. Using this model, Intel has successfully delivered next-generation silicon technology as well as new processor micro architecture on alternating years for the past several years”(www. intel. com). Intel is the leadership in the microprocessors market, therefore each of Intel’s innovation have a big affect to the market. Aberathy and Clark (1985) was the theorists who develop “compertitive implications of innovation. ” This theory could be describe in the matrix below: In 2007, Intel introduced Core 2 Duo processors base in 45nm technology.
It is a big innovation of Intel to ahead main rival is AMD. At the same time, Intel stopped selling Pentium processors bay in 65nm technology into the market. This is a revolutionary innovation of Intel. Following Abernathy and Clark, revolutionary innovation is “that disrupts and renders established technical and production competences obsolete, yet is applied to existing markets and customers”. In this innovation process, Intel disrupts Pentium processors and the existing product of main rival. It was made a new wave in the market. Besides, almost of time, Intel used the regular innovation.
Its definition could understand as ‘involves change that builds on established technical and production competence and that is applied to existing markets and customers’ (Abernathy and Clark, 1985). Couple of year after Core 2 Dou processors series, Intel introduces Core I processors series and develop both of them in the same time. The appearance of Core 2 Dou processors series is a big revolution and it had been affected by Technology push. Technology push could be define as “Technology-push products, on the other hand, do not begin with a market need but instead with a technology” (Aaron, 2007, pt. ). Before Core 2 Dou processors, single core processors are popular and had been used and develop by Intel and other competitor. But when Core 2 Dou processor appears, people know one more new definition “multi core processors”. With this innovative product, Intel prove it is the market leader which could adapt the Technology push. Intel could confident to launch a new innovative product without demand of market because it have famous brand, biggest market share and the reliable of customers. Different with Core 2 Duo processors, Core I processor series were appeared by Market pull.
The number of people use laptop increase rapidly, customer need the processors could save the energy and keep the long live for the laptop. Core I processor series use the same technology with core 2 duo processors but it saving more energy. The market pull could be define as “Market-pull product development usually takes place when some kind of need is discovered in the marketplace that currently is either being ignored, not well served, or just not recognized” (Aaron, 2007, pt. 4). The innovating process not only focus on new technology, but also the speed of innovations.
The speed of commercialization is effected by the supply and demand. The model describe speed of diffusion called ‘S-curve’. The Technology Diffusion “S” Curve = Market Diffusion Tipping Point Plateau Diffusion of an innovation including five step processes. It is including: knowledge, persuasion, decision, implementation, confirmation. Knowledge is give the first exposed to an innovation but lack of information. Persuasion is make the customer actively seeks the information about the innovation. Decision is launch the concept into the market; this is the most difficult stage because it could make customer reject the innovation.
Implementation is determines the useful of the innovation and could seek some information about it (Roger, 1962, pg. 79). Confirmation is the process of decision to continue using the innovation or not. To success the diffusion process, the manager should use some element to improve the product. It could be: improve the quality and performance of product, increase the compatibility with other products and network effects, ease or complex use, demonstrate benefit to create bandwagon effects, early adopters as proportion of market.
An example with Intel, they launch Pentium 4 processors at 2000, an innovation with strong tipping point. Tipping point is the explosive time of a product. Pentium 4 has the high compatibility, it could use in the old system and quicker than older processors. It was meeting the demand of customer and had a high jump. Speed of development of technology at 21st century is rapidly, Intel must have a innovation road for the feature. The process of innovation was showed in the ‘Conventional Technology S-curve. Conventional Technology S-Curve Product Performance Time Intel changed S-Curve into its own style; it was called Tick-Tock.
Tick-tock was predicted by the founder and technology visionary Gordon Moore. It called Moore’s Law. The nature of Tick-tock is same with the S-Curve. “Tick” cycle every two year, the new processors will “increase in transistor density enables new capabilities, higher performance levels, and greater energy efficiency”(www. intel. com). It will be smaller and more capable than previous “tock” microarchitecture. “Tock” is keep the technology of ‘tick’ but change the architecture, it will focus in support video transcoding, encryption/decryption, and other intergrated capabilities.
For example, core I series processors is the Tick, it keep the architecture of core 2 dou processors but changed the technology, core I processors mor saving energy. Sandy Bridge is Tock, it have the same 32nm platform technology but it changed in architecture. Intel combine CPU and GPU in the same socket. The performance of Sandy Bridge is more powerful than Core I series a lot. (www. intel. com). The innovation of Intel is very effective so that the is no chance for the competitors. The pie chart below show Intel and other competitor in the market within 2007. The two major players in the CPU market globally are Intel and AMD…The latest numbers from IHS iSuppli show that Intel was first for the full year of 2010 in global revenue with 81% of all sales. That is a slight growth of 0. 4% from the full year 2009 results Intel posted. AMD ended 2010 with 11. 4% of the global processor revenue. That was a decline of 0. 8% compared to the 12. 2% AMD finished with in 2009. ” (www. dailytech. com). From the number in the chart, Intel still success to keep lead player position, the revenue in 2010 was lager 7 times than main competitor is AMD.
This point out the innovation strategy of Intel is exactly. Sustaining technologies could be define is a “most new technologies foster improved product performance” (C M. Christensen 1997, pg. 15). Intel is the leader ship of technology in processors area for 40 years. Almost the products of Intel satisfy the demand of customers. With Tick-tock model, the technologies of Intel are always in the top of market. For example, the appearance of multi core processors was a revolution of processors manufacture. Intel always focus on the new technology but they should careful which their main competitor- AMD.
AMD focus on the low-end of the market. In spite of, when Intel create the innovation, if customer want to used the product, they have to nearly change whole of existed system. Sustaining technologies can be shown through the ‘impact of sustaining and disruptive technology change’ model (C. Christensen et al, 2003): Impact of sustaining and disruptive technology change Intel AMD The performance demand byhigh end customer PerformanceThe performance demand bylowend customer Time Intel always go adapt the demand of high end customer and always a “technology leader”.
Intel could do that because they has the reliable of customer and believe on the rapidly development of technology. This paper was mention about the history of Intel, a microprocessor company. Beside that, the essay pointed out the strategy innovation of Intel. With the vision: “Inspired Innovation that’s Changing the World”, it always is the market leader in microprocessors area. In 2010, they got global revenue in 81% all of sale. Intel use the both architectural innovation and modular innovation, Tick-tock model is really a powerful innovation for the firm.
This was made the special of Intel. It have a effective adverting campaign named Intel Inside, and they are well-know on over the world. Customers believe that Intel production is “safety,” “leading technology” and “reliability”. In 2005, 85% of customer process payment through the internet(www. intel. com). Intel has sustaining technologies but they must be careful with its main competitor is AMD. AMD always focus on the low-end market. The manager must improve the innovation strategy and advertising to keep Intel still is the market leader in the feature.