Is Intel advancing towards its doom’s day?

Is Intel advancing towards its doom’s day?

Dr. Avner Barnea

The mythical CEO of Intel, Andy Grove, has written one of the best business books: “Only the Paranoid Survive”, back in 1997. I’m using this book often when I teach academic classes in MBA programs about Innovation and also about Managing the Competition. Under Grove, Intel has become the world’s largest computer chipmaker, and one of the most admired and profitable companies in America. 

Grove attributed his success to the philosophy and strategy he has learned and implemented the hard way as he led Intel through a series of potential major disasters in the 1980’s. He called to pay special attention to Strategic Inflection Pointes (SIPs): the moments when massive changes occurred, which happens in any business, and it is desired to be warned about their existence in time. Grove has described in his book how he successfully overcame many crises, including the fierce competition from the Japanese and the fault of the Pentium. His focus was on the management of change, and his insights are relevant up to now. He is remembered also for his highly innovative campaign of Intel Inside which was so instrumental in building Intel as one of the strongest brands worldwide.

It looks that in the last few years, Intel is losing ground. It started with CEOs, which failed to lead Intel to the right direction. It looks that the new CEO Pat Gelsinger, is the exact person for the mission to save Intel. I tend to believe that Intel’s acquisition of Mobileye for 15.4 $ billion was done too late, and the price was too high. However, what bothers me more is that Intel lost the mobile market and did not become a significant supplier in this industry, which is still growing fast.

The recent massive challenge – after so many years of close collaboration, the new processor by Apple is a great competition with the potential to become a real threat to Intel. Apple has stopped using Intel processors for Mac computers in favor of its own chips based on ARM designs. It looks as if Microsoft and Google are heading to the same direction. Are they feeling that Intel is becoming weaker?

The phenomena of M&A’s among its direct competitors (AMD, ARM) is getting more momentum, and Intel looks to stay behind. The question is whether recent M&A’s by Intel - Alterra and the two Israeli start-ups – Mobileye and Habana Labs will be enough to keep Intel's competitive advantage. That is a big question. The organizational culture of Intel – to be paranoid in order to keep its advantage – has lost its strength may be because Intel is so successful for more than 40 years.

Finally, the accumulative impact of decisions taken by Intel in recent years is leading the corporation towards risks that can be alarming and a new strategy is more than required.

Dr. Avner Barnea (Ph.D.), is a scholar and a lecturer on Competition, Entrepreneurship and Business Strategy in various MBA academic programs in Israel among them the Netanya Academic College, the Academic College of Tel Aviv-Yaffo, and the MA program of the Department of Information Science, Bar -Ilan University.