Introduction
The purpose of this paper is to look at the logic that underlies Intel's product diversification strategy. Moreover, the paper will also consider the greatest threats to Intel's competitive advantage in the current day. The conclusion section will present a summary of the main points from the discussion.
Logic Underlying Intel’s Product Diversification Strategy
Intel, being the world’s biggest chipmaker that dominates the entire market for semiconductors, which run the traditional computers, is looking for ways to diversify as consumers increasingly utilize tablets and smartphones that do not have the Intel processors. In this regard, with the PC market expected to decline for three consecutive years and the Intel Company failing to gain a considerable market share in phones, efforts are being made to make sure that the company does not miss on fresh opportunities such as wearable devices among other personal technology. The rationale behind is that personal computers are slowing down, and this needs to be offset with something else (King 1).
Greatest Threats to Intel’s Competitive Advantage Today
One of the greatest threats that Intel faces currently, other than the slowing PC chip sales, originates from an increasing group of rivals, which are led by a puny upstart. Foreseeing a tectonic change in the manner in which data is transferred across the computer networks, three years ago, Applied Micro Circuits Corp. started to develop an energy saving server chip, which targets the internet-based companies’ needs such as Google and Facebook (Johnson 1). At the present, the product is almost getting to the market, and the Intel Company, which is dominant in this part of the chip, is getting ready for war.
Indeed, this competition is setting in at a tough time for Intel Company, which has been leading the personal computer-chip business for several decades. Apparently, the company’s sales surged for several years; however, they flattened early in 2013 as consumers turn away from PCs to tablets and smartphones. Ostensibly, this is an indication that Intel is not going to let go its server-chip business without engaging in a battle.
Notably, those chips form a larger part of the Intel Company’s data-center products that account for twenty percent of its sales worth $10.7 billion (Johnson 1). Undeniably, that amount of money is even more critical in the midst of the slowdown in the company’s sales of personal computer chips, which offer sixty-four percent of its revenues. However, the analysts point out that Intel's firm grasp of the server market, in which it sells ninety per cent of microprocessors, could become weak with the movement to cloud computing (Johnson 1).
Conclusion
Works Cites
Johnson, Steve. Intel faces threat from chip-making upstart, 2016. Web. 11 June 2016. <http://phys.org/news/2013-10-intel-threat-chip-making-upstart.html>
King, Ian. Intel tries to diversify as smartphones and tabs have no need for its processors, 2014. Web. 11 Jun. 2016. < http://articles.economictimes.indiatimes.com/2014-01-07/news/45956708_1_krzanich-intel-processors-new-chips>
