Protecting Business Innovations Via Strategy Watch Course Overview: https://youtu.be/mUja4iwbrTE Strategy can be useful for protecting business innovation when no other form of protection exist (e.g. copyright, patent & trademark). Strategy can also compliment and strengthen other forms of innovation protection. Understanding how to use strategy to protect innovation and limitation of strategy as a form of protection will be useful for business managers. This course is one part of a four course series focusing on protection of business innovations using copyright, patent, trademark and strategy, and these four courses may be taken in any order that is most beneficial to students interested in learning about protecting innovation.
2.3 Intel vs AMD
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來自 The Hong Kong University of Science and Technology 的課程
Protecting Business Innovations via Strategy
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The Hong Kong University of Science and Technology
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從本節課中
Move Fast or Get Passed
Small firms that lack resources of giants can create barriers by being faster and more flexible. Some large firms (i.e. Google & Amazon) also seek to use rapid innovation and change to create sustainable barriers to being copied.
與講師見面
Theodore Henry King CLARKAssociate Professor
Information Systems, Business Statistics and Operations Management Department
Welcome back to our course on Protecting Business Innovations via Strategy.
Today, we're going to talk about Chip wars,
but not Pretzel Crisps type chips and not, not Frito-Lay.
We're going to talk about Intel and AMD.
When we look at this, this has been a long battle between Intel and
AMD for dominance in the microprocessor market.
And Intel largely has won.
In terms of being the leader,
they've got about 80% market share today versus AMD
and the microprocessors that are running under Windows environments.
There are others out there like Apple is not playing
the same game and they're running their own chips,
and so they would take away some from this market share.
But in terms of the Windows PC based world,
Intel has dominated this market.
Now, one of the questions you might want to ask from a strategy point of view is,
what has Intel done to achieve this goal?
To achieve this level of dominance?
Because 80% is pretty impressive.
So, how did they do this?
And I'd like you to just free form
answer the question and then we'll give you some of the answers from
other students who have taken courses from me in the past or other people
looking at this question.
A couple of answers come back.
One is Intel was a first mover.
But you might notice that's not on my slide because they weren't.
Intel was not the first mover.
Intel was a microprocessor that came later.
Motorola had been out there with microprocessors long before Intel invented theirs,
but Intel developed an alliance.
An alliance with IBM.
An alliance with Microsoft,
to become part of a new standard of a new PC,
a PC to rival
the Apple Computer which had been built with a Motorola processor originally.
And so, this alliance helped them to gain a lot of market share.
It was an open standard.
And because of that openness of the standard,
because of the push between IBM and Microsoft and opening it up to other companies,
some of which are still big today,
like Dell started out early on in the history of the Windows PC world.
These alliances helped Intel to gain a lot
of market share in the microprocessor market and gain economies of scale.
With those economies of scale,
they're able to get the cost down and put
a lot of money into RND to make their products better.
They also gain some network externalities in
the sense that when people are writing software,
they're writing to the microprocessor to some extent.
And if the dominant player is Intel,
then you're more likely to write to the Intel chip.
And so that gave them some advantages that fed back into economies of scale as well.
So the demand side as well as the supply side of economies of scale.
They also have a number of patents that help them to stop competition,
stop people from being able to copy what they were doing and to help
protect their market position and their strength of their position.
And they did a marvelous marketing campaign,
that their IP protection was not just patents,
it was also trademarks.
And they invested in marketing to create a brand image for
Intel as being the valuable component inside your computer.
Intel Inside was extraordinarily successful marketing campaign
to create awareness of a microprocessor.
Something many people didn't even know existed or didn't know what it was.
Now, let me draw an analogy.
You may look and say, "Well, of course,
you know what microprocessors in your computer.
You wouldn't buy a laptop and not know who made the chip inside of it."
But do you know who made the memory chip?
Do you know who made the graphics processing chip?
Do you know who makes your modem in your laptop?
No, you don't.
You just know that it's got Intel Inside.
So they did some good jobs there.
Do you know when you buy an air conditioner,
who made the compressor inside the air conditioner?
You know it's a Samsung air compressor,
but you don't know who made the compressor.
Now you may think, "Well,
it's got to be Samsung.
It's a Samsung air conditioner."
Might be true with Samsung.
But what about a Whirlpool dishwasher?
Or a Whirlpool refrigerator?
Who makes the compressor in that?
Might be Emerson or Electronics.
Might be somebody else. You don't know.
Point is, nobody cares.
You're buying the machine.
But that's not true with the Dell.
You're buying the Dell with the Intel Inside.
So you're thinking beyond just the outside brand to the inside brand.
And that was a great marketing coup by Intel that helped build their brand.
They also use continuous innovation to come up with new product after new product.
They started out with very simple numbering of their product lines.
They went from their first chip to their second chip,
which they put a two in front of it.
The third chip, the three.
And then, they got more complicated with lots of names like Pentium and
many other names that have been used to differentiate their product from competition.
It made it harder to compare.
And that continuous innovation combined with aggressive marketing,
helped them to build a strong brand.
Now, what has AMD done to help break that?
How has AMD fought back?
You might want to do a Google search on what has AMD done to win.
A couple of things AMD did which are interesting and worth keeping in mind.
One: They sued Intel and they won some big judgments.
Many millions of dollars and big judgments against Intel because Intel was a monopoly.
And you might say, "Wait a minute.
I thought the whole idea of patents was to create a monopoly.
Was to create a competitive advantage." Well, it is.
But if you get too big,
too strong, too dominant,
too big for the economy,
you may be broken up or you may be forced to license.
And in this case, Intel was forced to license their chip technology to AMD.
They were forced to pay out for judgments,
for anti-trust behavior, for anti-competitive behavior,
and to license to AMD.
That helped get AMD into the market.
Then AMD worked to try and make their CPU faster than Intel.
And in some ways,
they did that and they focused on gaming,
and they worked with game designers,
popular games, to say optimized to our chip we'll make our graphics faster,
we'll make our chip better for gaming.
And gaming is very demanding on chips.
And so, your high-end computers which gamers like,
for a while tended to shift towards AMD.
And this was helped in 2006 when AMD bought a company that did graphical processing,
that helped dramatically increase the strength of AMD in the gaming world.
And that really helped to this point because of the combination of ATI and AMD,
they were able to do things Intel couldn't do.
And so their share increased up close to 50-50.
Intel was in trouble.
And so Intel had to innovate fast and come up
with answers to the AMD threat. And they did.
They did a good job of marketing and recovery.
But AMD also did an interesting alliance and acquisition.
Intel has also dominated the PC market and done very well,
but they're not a big player in the mobile phone market.
They've tried a little bit,
they haven't done a very good job.
They are trying now to get
in more with Apple and with others and do more mobile computing,
and they're making efforts.
But they're nowhere near dominant,
the way that they are in the laptop and desktop world.
But unfortunately for Intel,
the laptop and desktop world are declining and the mobile computing market is rising.
And so they're dominating a declining market.
Samsung has passed Intel now as the number one chip maker in 2017.
And Qualcomm is fighting with Intel for chips for modems, for phones.
Qualcomm is faster, Intel is not.
This is frustrating. But Intel has made
inroads with Apple because Apple doesn't like Qualcomm pricing.
That's a strategic alliance that could be very good for Intel in the future,
as well as good for Apple as well in fighting back
against aggressive pricing by Qualcomm.
So, that's it. Thank you very much for being part of our session today.
