Tuesday, May 4, 2010


Intel Corporation

Fact File:

Founders: Robert Noyce and Gordon Moore.

Distinction: Invented microprocessor, paving way for computer


Primary Products: Computer chips, networking and communications


Annual sales: $29.389 billion.

Number of employees: 70,200.

Major competitors: Advanced Micro Devices, IBM, Motorola.

Chairman Emeritus: Gordon E. Moore; Chairman: Andrew S. Grove;

President and CEO: Craig R. Barrett.

Headquarters: Santa Clara, Ca.

Year founded: 1968.

Web site: www.intel.com.

Some say Intel became the top computer-chip maker in the world simply

because it invented the tiny chips that now control everything from

computers and cell phones to toys and thermostats. Others contend the

firm's number-one position stems primarily from its manufacturing

prowess, which enabled almost flawless production of millions of chips

since they were first introduced some three decades ago. Still others

insist it comes from the brilliant management team that founded the

company long before high-tech was fashionable, and then kept it on the

cutting edge of a rapidly growing industry.

In retrospect, though, it actually may have more to do with a

revolutionary advertising campaign centered on two basic words-Intel

Inside. This little phrase transformed the once obscure corporation into a

hot brand well-known in the world. By using traditional marketing

techniques to spotlight a nontraditional item, Intel drove consumers to

insist that its hidden but critical products were central to the electronic

gear they began purchasing by the truckload. Its pioneering position,

exceptionally efficient production techniques, and extraordinary corporate

administration all played a significant part in the company's rise. But

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without an attention-grabbing ad campaign that began with dancing

technicians in colorful bunny suits and ended in the four musical tones

that became its audio tagline, Intel may never have achieved such worldchanging


With it, of course, the company captured more than 80 percent of the

market share for the driving force behind today's computers. It also

became largely responsible for making these now omnipresent

devices affordable yet more powerful than the room-sized units

once used to launch rockets into space. And it set the stage for

developments that led to other electronic gadgets, ultimately

reshaping our world in ways that could never have been imagined

when the company first opened for business during the social and

political upheaval of the late 1960s.

Like most companies that transformed the way we live and work,

however, Intel has never been able to rest on its laurels. Increasing

competition and major changes in the products they offer, have forced it

to steadily implement significant shifts in strategy and direction in order

to retain its lofty corporate perch.

A microprocessor is a tiny electronic circuit containing thousands (or even

millions) of interconnected transistors that work together to store and

manipulate data for various purposes. It commonly serves today as the

brains inside a personal computer, but is also responsible for the

mechanism behind a telephone's speed dial, an alarm clock's automatic

controls, even an automobile's electronic braking and door-locking

systems. Before its invention, the latter functions did not exist and

computer filled entire rooms. After Intel co-founders Robert Noyce

and Gordon Moore developed the first microprocessor in the mid-

1960s, everything changed-although the transformation certainly

did not occur overnight.


The breakthrough, which came while Noyce and Moore were working at a

company called Fairchild Semiconductor, enabled such integrated circuitry

to be so reduced in size that it could be placed onto a single silicon chip.

Many of their peers were initially skeptical of its feasibility, but the two

envisioned enormous potential at an ever-accelerating pace. Moore, in

fact, forecasted in 1965 that the performance of subsequent

circuits would rise exponentially but predictably over ensuing

years. His speculation, later dubbed Moore's Law, was that new chips

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released every 18 to 24 months would be approximately twice as powerful

as their immediate predecessors. Over time, his estimation proved

remarkably accurate.

Noyce and Moore left Fairchild in the summer of 1968 to start a company

that would manufacture these innovative circuits. The new enterprise,

initially named NM Electronics, opened in Mountain View, Ca., with

a dozen scientists who shared their vision. Among them was

Andrew Grove, a native of Budapest, Hungary, who was named

director of operations. The group soon changed its corporate

moniker to Intel, short for "integrated electronics," and moved

into high gear.

Intel intended from the start to make its designs commercially viable,

although at first they were at least 100 times more expensive than

prevailing technologies. Noyce, Moore, and Grove, however, felt confident

that their circuits' size, performance and minimal energy requirements

would soon draw interest from manufacturers. During their first year they

took in less than $2,700. But word spread and interest grew in the

company. Their big breakthrough came when a Japanese company asked

Intel to design a set of chips for a programmable calculator. Engineer Ted

Hoff responded with a new way to place the array of chips necessary on a

single platform, and the microprocessor was born. Most significantly-for

the future of Intel, and the industry it was initiating-his design could also

be used unchanged in other applications.

After that, Intel took off. It developed a "dynamic random access

memory" or DRAM chip in 1970, which quickly became the world's

best-selling semiconductor device. To keep up with future demand,

the company relocated to larger facilities on a 26-acre pear orchard near

the town of Santa Clara. Within months, Intel unveiled its 4004

microprocessor. This remarkable device delivered as much computing

power as the world's first electronic computer, ENIAC, which needed

18,000 vacuum tubes spread over 3,000 cubic feet to perform 60,000

instructions per second-an astounding feat at the time. Intel's offering, on

the other hand, could do the same thing with 2,800 transistors packed

into a space smaller than a thumbnail and cost just $200. With its

introduction, both Intel and the computer revolution were on their way.


In 1972 the company introduced its 8008 microprocessor, which was

twice as powerful as the previous model. Novel applications quickly

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appeared, and the 8008 was soon a part of grocery store scales,

restaurant inventory control devices, and stop lights. Two years later, it

was used in the fist personal computer, the Altair. The idea took off, and

Intel rose with it. Within a few years, Fortune magazine named the

company one of the "Business Triumphs of the Seventies."

By 1981, Intel's microprocessor selection had grown to include the 8086

and 8088. These grabbed the attention of IBM, which was secretly

planning its own personal computer. At the time, Intel was happy with

accounts yielding 10,000 orders a year. The IBM-PC, which ultimately

employed the 8088, eventually generated more than 1,000 times that

number of microprocessor sales. And, with it, Intel hit the big time.

The company didn't stop there, of course. In 1982 it introduced the 286

chip with about three times the performance of other microprocessors. Its

386, which appeared in 1985, was capable of handling more than 5

million instructions every second. The 486 followed in 1989, and was not

only 50 times faster than the original 4004 but could equal the

performance of most mainframe computers. And then in 1993 Intel

introduced the Pentium, which utilized 3.1 transistors to perform up to 90

million instructions per second-or about 1,500 times more than its original

model. Grove, by then president and CEO, knew he had a landmark

product and wanted to tell the world about it. He earmarked $100

million for a unique marketing campaign and began extensively

advertising Intel's products on TV and in print. Most observers

thought he was crazy. After all, consumers couldn't go out and buy an

Intel processor even if they wanted to.


Andy Grove was responsible for the Intel Inside campaign, which

was an effort to aggressively market their chips. Intel was the top

manufacturer of microprocessors at the time, but clone makers were

starting to cut into the market with low priced knock offs. The ads were

designed to make consumers demand their name brand chips, and it also

indirectly rewarded computer manufacturers who touted their association

with Intel. When Grove became CEO in 1987, there was no promotional

budget for the consumer market; by the late 1990s it exceeded $100

million annually. Its operation continues, as evidenced by the way they

rolled out the Pentium III chip in 1999. The global ad campaign was

estimated to cost as much as $150 million. It was designed to position

Intel as a hip dotcom company and simultaneously tie the new chip to

more full enjoyment of the Internet experience.

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The effort did generate tremendous name recognition, though, and

suddenly everyone wanted a computer with "Intel Inside." Soon, in

conjunction with the domination Microsoft was attaining with its Windows

operating system, the public began referring to the duopoly driving the

vast majority of all personal computers as "Win-tel."

Grove became corporate chairman in 1997, a few months before being

named Time Magazine's "Man of the Year". Grove eventually turned over

the other top spots to Craig Barrett. Intel unveiled new technology

designed to enhance a PC's multimedia performance, and reinforced its

brand image by further deploying the colorful characters made famous in

its commercials. The company also split into three divisions-

Enthusiasts/Professional, Performance, and Basis PC-to match the market

segments developing throughout the industry.

Nonetheless, momentum stalled after a decade of continuous growth.

Attempts to enter new areas such as video conferencing failed, while

consumers began demanding less complex devices to simply access the

World Wide Web. Even more ominously, the Federal Trade Commission

initiated an antitrust suit charging Intel with suppressing competition. The

combination did result in new competition from upstarts, such as Cyrix

and Advanced Micro Devices, though, and in 1998 earnings declined for

the first time in more than a decade.

Barrett responded by breaking up Intel's centralized management and

freeing up cash for a series of acquisitions. The days of solely

concentrating on PC microprocessors ended as Barrett began reshaping

the company as a supplier of semiconductors for networking equipment

and information appliances as well as computers. He also explored new

areas including e-commerce and consumer electronics.


When the new century began, Barrett reinforced those moves with

additional acquisitions and expansions-although PC components still

accounted for 90 percent of Intel's revenues all of its profits. It

accordingly kept releasing faster and even more powerful chips to

continue building upon the impressive developments that helped it change

the world. As co-founder (and now chairman emeritus) Gordon Moore has

noted: "If the auto industry advanced as rapidly as the semiconductor

industry, a Rolls Royce would get a half a million miles per gallon, and it

would be cheaper to throw it away than to park it." If Intel had been in,

charge, he implied, that just might be the case.

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