Intel: How a tech leader can lose its mojo

Intel - How a tech leader loses its mojoAs one of the powerhouses of the personal computing revolution, Intel, along with its partner in crime Microsoft, came to symbolize the Wintel era of increasingly powerful (read energy-hungry) and standardized (read price-driven) desktop and laptop computers.

Despite the rise of smartphones and more recently tablets – both requiring small, low-cost, low-power chipsets – Intel continued to back its PC-driven empire, which continued to crumble at a historic double-digit rate.

Following the release of it’s latest quarterly results on Apr 16, this translated to a -17% decline in net income, its 5th consecutive quarterly fall.

How did this tech leader like go from great to dismal and how could they recover?

Focusing on more of the same usually spells disaster

During the mobile revolution and then the tablet era, Intel continued its allegiance with Microsoft, who has found it hard to break into to both markets.

Attempting to satisfy user demands for mobile internet devices, they back the short-live ‘netbook’ movement,  just smaller and lighter, emasculated laptops. Their sales have since collapsed in favour of the tablets and other more adapted mobile devices.

Most recently, in order to compete with Apple’s Macbook Air line-up (powered by Intel CPUs), by setting asside over $300M they have tried to establish the ‘ultrabook’ segment of thin, high-powered devices, based on Microsoft’s Windows OS. In most cases, manufacturers have found it hard to offer a comparable performing device at a similar price, favouring Apple.

While the verdict is still out, it seems like more of the same.

Miss emerging market demands and thou shall feel thy fury

A critical error on Intel’s part was to mostly ignore emerging user trends, and continue happily on the Wintel bandwagon.

They focused mostly on developing and producing high-powered chipsets, which in today’s era of cloud computing is unnecessary for most users. Those who really need high performance processing capabilities can assemble their own array of servers cheaply, or better yet turn to the cloud.

They also turning a blind eye to users’ changing behaviour and their taste for smaller mobile devices, adapted to specific usage situations.Ask any of today’s users and they will tell you, “I love my smartphone, I can take it everywhere I go”, or “I can’t live without my tablet. I use it at home while watching TV or while cooking”. These are both situations that are unfit for traditional laptops.

Where Intel has missed out, companies like ARM, Qualcomm, Texas Instruments, Samsung and Apple have stepped in an taken the lead

Reviving a sleeping giant requires radical manoeuvres

In order to recover from it’s quickly falling position, a company like Intel must take action on several fronts, which include:

1 – Reconnecting with customers and emerging user demands

As it had done during the PC era, it needs to actively follow the changing market trends and work with client organizations and end-users across selected domains in order to understand what IT they really need in order to do their job as well as possible.

Possible focus areas might media, Internet, marketing, and high-tech, as well as other increasingly IT driven sectors like medical or elderly care.

2 – Innovating a new strategy and underlying business models:

Given evolving market trends they must revisit their original business model of designing and manufacturing PC chipsets and integrated devices for use in standard PC platforms.

In recent times Apple has been designing its own chipsets according to it’s unique needs, and it is rumoured that they may even link up with Intel for contract manufacturing of their latest A7 chipsets.

Assuming they could assemble the capabilities, by leveraging its brand equity Intel could also offer cloud computing services, much like Amazon’s AWS.

While such a move would likely alienate certain OEM computer manufacturers in the short term, it could offer a way of offsetting falling revenue from declining PC sales.

3 – Developing innovative and more promising partnerships

While Microsoft has been its no. 1 business partner, Intel should look beyond the software giant towards fresher, more open pastures. The possible link up with Apple is one possibility, but they must do more to thrive.

Promising new partnerships could come from players in non Microsoft-or-PC mobile device areas like Firefox OS, makers of smart devices and sensors, including smart energy solution providers.

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