The Decade of the Wintel PC: Intel's Aggressive Expansion

Strategic Insights -

Intel, the manufacturer of the 80386 and compatible microprocessors, has been instrumental in shaping the Wintel PC industry. Despite its success, Intel's increasing market share and aggressive expansion into new areas have raised eyebrows among critics. With annual sales reaching $11.5 billion in 1994 and an operating profit of $3.4 billion, Intel is poised to continue its dominance in the market. But should the company be allowed to move into other people's businesses?

Key Takeaways:

  • Intel's success has been built on the use of 80386 and compatible processors in the booming PC market, with annual sales growing from $1.3 billion in 1986 to $11.5 billion in 1994.
  • The company has invested heavily in a massive investment program to build chip plants all over the world, with capital expenditures reaching $2.4 billion in 1994 and expected to exceed $3.5 billion in the current year.
  • Intel's commitment to supplying the market for 60 million PCs this year, rising to over 100 million by 1998-99, has been deemed "unpossible" for other companies to match without investing billions of dollars in plant and equipment.
  • The company's mission statement is to be the "pre-eminent building block supplier," and it has taken on a broader role in the industry by developing silicon chips and investing in motherboard technologies.
  • Intel has increased its investment in motherboard technologies, becoming a supplier of a larger proportion of microprocessors in motherboard form, allowing assemblers like Gateway 2000 to build PCs around Intel motherboards.
  • The company has no intention of building and selling finished personal computers, but rather aims to provide the necessary components for others to do so.
  • Intel is set to launch the Pentium Pro processor, optimized for use in workstations and servers running 32-bit software, and a new generation of Pentium (P5 or 586) chips designed for multimedia systems.
  • The next major role for personal computers, according to Intel's Andy Grove, will be as communication devices, and the company is investing heavily in videoconferencing technology.

Statistics:

  • Intel's annual sales grew from $1.3 billion in 1986 to $11.5 billion in 1994.
  • Intel's operating profit was $3.4 billion in 1994.
  • The company will spend over $3.5 billion in the current year on capital expenditures, plant, and property.
  • Intel's current market share is not specified in the article, but its competitors' market share is low, with Apple's sales of fewer than a million Macs per year.
  • The PC market is growing at 20% per year.
  • Intel will supply over 100 million PCs by 1998-99.

Sources:

  • "The Decade of the Wintel PC" by Jack Schofield, no date specified.
  • Interview with Andy Grove, president of Intel, no date specified.
  • Intel's annual reports, 1986-1994.