EXECUTIVE SUMMARY FOR INTEL CORP.

TO: FROM: XXXX DATE: 2003 All lists but implementation are in rank order, one being of utmost importance. Strengths: 1. Intel has experience in developing new technologies, as demonstrated by its successful development and marketing of DRAMs, microprocessors and high-powered servers. 2. Intel possesses a brand name that consumers recognize and associate with quality products. 3. Intel excels at marketing to the end consumer, as evidenced by its Intel Inside campaign. 4. Intel maintains close relationships with its complementors, such as Microsoft and game developers. Weaknesses: 1. Intel has spread its resources too thinly and strayed from its profitable microprocessor business 2. Fixed costs in the microchip industry are substantial, reaching nearly $2 billion per semiconductor manufacturing facility in 2000. 3. Intels complementors are not always on same technological pace, as is the case with Microsoft, whose operating systems routinely lag behind in harnessing the power of Intels most current microprocessors. Opportunities: 1. Consumers are becoming increasingly more reliable on mobile devices for access to the internet. In 2002, approximately 400 million cell phones were sold globally. This number can be expected to increase exponentially as citizens of less wealthy nations, such as India and Brazil, gain access to cheaper phones. 2. Internet traffic has doubled every year from 1998 to 2003. 3. Competitors, including Nortel and Lucent, are cutting back technical staff and on R&D. Threats: 1. Prices for new microprocessors, including the higher-performance segment, continue to drop, making Intels microprocessors less lucrative. As this stable source of income shrinks, Intel will have fewer dollars available for investment in R&D and in smaller companies. 2. Capital cost per semi-conductor manufacturing facility is increasing at an exponential, potentially unsustainable rate (1975-1990: $250 million. 1990-2000: $1.75 billion.) 3. Intels chief rival, AMD, offers a discounted 32 bit CPU with some of the advantages offered by Intels 64-bit CPU. Core Competency: Intel designs, produces, markets, and distributes microprocessors. Strategic Issues: 1. Intel must develop new ways to achieve growth in the microprocessor market. 2. Intel must reduce costs and inefficiencies. Options: A. Intel eliminates all product development that does not concern producing microprocessors for PCs and servers and divests businesses that do not relate to its core competencies. Pro: Intel would improve profitability, reduce costs, and avoid losing money on further dot com gambles. Con: Intel would miss an opportunity to gain a strategic technological advantage over R&D slashing competitors B: Intel invests heavily in R&D for silicon microprocessor for mobile communications. Pro: Intel provides itself the opportunity to be a first mover on mobile devices, such as PDAs and cellular phones, which provide on-the-go access to the internet. Con: Mobile consumers may not wish to use the internet as much as predicted and Intel loses billions in wasted R&D. Recommendation: Intel should capture the mobile device microprocessor market and reduce costs in its production of microprocessors. Implementation (Chronological Order): 1. Funnel half of R&D dollars into producing less expensive PC microprocessors and small business grade servers. 2. Funnel the other half into silicon microprocessors for mobile devices. Intel will gain a first mover and technological advantage over competitors who are cutting R&D, or those who ignore the mobile market altogether. Also, Intel will be prepared to move on emerging markets such as India and Brazil as consumers there acquire cell phones and also wish to have wireless internet service. 3. Produce a microprocessor that can serve both the low-end and mass market simultaneously. In addition to recapturing market share that AMD has taken, having one less SKU will reduce cost. 4. Except for Wi-Fi technology, divest companies that do not contribute to Intels core competencies 5. Horizontally integrate into Wi-Fi hardware and software for PCs and laptops. 6. Work more closely with complementors to produce microprocessors and software that sync technologically.