Intel
Brand Recognition: Through its ‘Intel Inside’ campaign Intel created a global brand which certainly adds to the bottom line of its business through the premium they are able to charge for their products. Innovation: Unequivocally Intel has been one of the most innovative company in hardware manufacturing industry. Intel has always been at forefront in terms of product innovation. NSP is a salient example of same. Business Strategy: A key strategy, core to Intel’s product cycle, implemented by Intel was application of Moore’s Law. Every 18 months Intel used to increase transistors in its CPU which gave its previous product ample time to capture market base and also gave partners enough time to develop an OS compatible with new Intel’s hardware. R&D: Setting up IAL (Intel Architecture Lab) entails Intel’s commitment toward development of innovative and user friendly products. Microsoft
Brand Recognition: Through its logo campaign Microsoft has established brand Windows which is basically alias for OS now. Monopoly: Microsoft occupies roughly 85% of global market share. Such unprecedented presence is enough to charge a high premium and thus drive the profitability. Partnership: Microsoft has key partners in terms of hardware suppliers and OEM. Such partnership indicates good synergy and thus better bottom line. Applications: Low cost development of applications has given incentives for developer to work on windows platform. This strategy ensured that there were enough developers willing to constantly develop applications for Windows OS. Competition annihilation: Microsoft being a giant firm has most of the times tried to discourage competition by acquiring them ensuring that their market share remains intact. CONFLICT
Microsoft and Intel ran into conflict yet again with Intel’s plan to launch NSP and Microsoft’s plan to launch Windows 95 when NSP was compatible only with Windows 3.0. Intel wanted Microsoft to hold the launch of Windows 95 until they come up with NSP version which was compatible with 95. Microsoft wanted to launch Windows 95 and Intel to hold the launch of NSP until they come up with 95 compatible NSP versions. There are several directions in which this conflict can go depending upon what option both the companies decide to choose to resolve this conflict. Option 1: Microsoft caves to Intel’s demand
Option 2: Intel caves to Microsoft’s demand
Option 3: Both of them hold their grounds
Option 4: Both of them arrive to a middle ground
Strategy for Bill Gate
Bill Gate would always want to go ahead with option 2 for following reasons: Any other option would result in huge opportunity costs for Microsoft Microsoft already has made contracts with partners to launch Windows 95. Backing out now would mean loss of reputation. Launch of NPS could slow down sales of Windows 95 as customer might want to stick to previous version to avail NPS services NPS could turn out to be a competitor product for Microsoft given it OS free execution capability Option 3 would hurt both the firms as the long term partnership would be destroyed if the resolve is not conflicted. Option 4 seems to be unrealistic as the scenario itself doesn’t provide opportunity for middle ground. Andy Grove’s Verdict
I would give in to Bill Gate’s demand and resolve this conflict through option 2 but I would develop NPS compatible with Windows 95 in 18 months and not scrap the product. It’s mainly because in all other options Intel is a definite loser in long term. If both the firms hold their grounds then Microsoft would part ways with Intel and probably look for another hardware supplier to work with. AMD is always ready to step up. If the NSP is scrapped then it would be a huge blow to Intel’s reputation and also extremely discouraging for IAL’s employees.
