Wednesday, January 30, 2008
Intel Corporation
Introduction
Intel Corporation (NASDAQ: INTC; SEHK: 4335) is the world's largest semiconductor company and the inventor of the x86 series of microprocessors, the processors found in most personal computers. Founded in 1968 as Integrated Electronics Corporation and based in Santa Clara, California, USA, Intel also makes motherboard chipsets, network cards and ICs, flash memory, graphic chips, embedded processors, and other devices related to communications and computing. Founded by semiconductor pioneers Robert Noyce and Gordon Moore, Intel combines advanced chip design capability with a leading-edge manufacturing capability. Originally known primarily to engineers and technologists, Intel's successful "Intel Inside" advertising campaign of the 1990s made it and its Pentium processor household names.
Intel was an early developer of SRAM and DRAM memory chips, and this represented the majority of its business until the early 1990s.[citation needed] While Intel created the first commercial microprocessor chip in 1971, it was not until the creation of the personal computer (PC) that this became their primary business. During the 1990s, Intel invested heavily in new microprocessor designs and in fostering the rapid growth of the PC industry. During this period Intel became the dominant supplier of microprocessors for PCs, and was known for aggressive and sometimes controversial tactics in defense of its market position, as well as a struggle with Microsoft for control over the direction of the PC industry. The 2007 rankings of the world's 100 most powerful brands published by Millward Brown Optimor showed the company's brand value falling 10 places – from number 15 to number 25.
Origin of the name
At its founding, Gordon Moore and Robert Noyce wanted to name their new company "Moore Noyce". This name, however, sounded remarkably similar to "more noise" — an ill-suited name for an electronics company, since noise is typically associated with bad interference. They then used the name NM Electronics for almost a year, before deciding to call their company INTegrated ELectronics or "Intel" for short. However, Intel was already trademarked by a hotel chain, so they had to buy the rights for that name at the beginning.
Market history:SRAMS and the microprocessor
The company's first products were shift register memory and random-access memory integrated circuits, and Intel grew to be a leader in the fiercely competitive DRAM, SRAM, and ROM markets throughout the 1970s. Concurrently, Intel engineers Marcian Hoff, Federico Faggin, Stanley Mazor and Masatoshi Shima invented the first microprocessor. Originally developed for the Japanese company Busicom to replace a number of ASICs in a calculator already produced by Busicom, the Intel 4004 was introduced to the mass market on November 15, 1971, though the microprocessor did not become the core of Intel's business until the mid-1980s. (Note: Intel is usually given credit with Texas Instruments for the almost-simultaneous invention of the microprocessor.)
From DRAM to microprocessors
In 1983, at the dawn of the personal computer era, Intel's profits came under increased pressure from Japanese memory-chip manufacturers, and then-President Andy Grove drove the company into a focus on microprocessors. Grove described this transition in the book Only the Paranoid Survive. A key element of his plan was the notion, then considered radical, of becoming the single source for successors to the popular 8086 microprocessor.
Until then, manufacture of complex integrated circuits was not reliable enough for customers to depend on a single supplier, but Grove began producing processors in three geographically distinct factories, and ceased licensing the chip designs to competitors such as Zilog and AMD. When the PC industry exploded in the late 1980s and 1990s, Intel was one of the primary beneficiaries.
Intel, x86 processors, and the IBM PC
Despite the ultimate importance of the microprocessor, the 4004 and its successors the 8008 and the 8080 were never major revenue contributors at Intel. As the next processor, the 8086 (and its variant the 8088) was completed in 1978, Intel embarked on a major marketing and sales campaign for that chip nicknamed "Operation Crush", and intended to win as many customers for the processor as possible. One design win was the newly-created IBM PC division, though the importance of this was not fully realized at the time.
IBM introduced its personal computer in 1981, and it was rapidly successful. In 1982, Intel created the 80286 microprocessor, which, two years later, was used in the IBM PC/AT. Compaq, the first IBM PC "clone" manufacturer, in 1985 produced a desktop system based on the faster 80286 processor and in 1986 quickly followed with the first 80386-based system, beating IBM and establishing a competitive market for PC-compatible systems and setting up Intel as a key component supplier.
In 1975 the company had started a project to develop a highly-advanced 32-bit microprocessor, finally released in 1981 as the Intel iAPX 432. The project was too ambitious and the processor was never able to meet its performance objectives, and it failed in the marketplace. Intel extended the x86 architecture to 32 bits instead.
386 microprocessor
During this period Andy Grove dramatically redirected the company, closing much of its DRAM business and directing resources to the microprocessor business. Of perhaps greater importance was his decision to "single-source" the 386 microprocessor. Prior to this, microprocessor manufacturing was in its infancy, and manufacturing problems frequently reduced or stopped production, interrupting supplies to customers. To mitigate this risk, these customers typically insisted that multiple manufacturers produce chips they could use to ensure a consistent supply. The 8080 and 8086-series microprocessors were produced by several companies, notably Zilog and AMD. Grove made the decision not to license the 386 design to other manufacturers, instead producing it in three geographically distinct factories in Santa Clara, CA; Hillsboro, OR; and the Phoenix, Arizona suburb of Chandler; and convincing customers that this would ensure consistent delivery. As the success of Compaq's Deskpro 386 established the 386 as the dominant CPU choice, Intel achieved a position of near-exclusive dominance as its supplier. Profits from this funded rapid development of both higher-performance chip designs and higher-performance manufacturing capabilities, propelling Intel to a position of unquestioned leadership by the early 1990s.
486, Pentium, and Itanium
Intel Pentium 4 Processor
Intel introduced the 486 microprocessor in 1989, and in 1990 formally established a second design team, designing the processors code-named "P5" and "P6" in parallel and committing to a major new processor every two years, versus the four or more years such designs had previously taken. The P5 was introduced in 1993 as the Intel Pentium, substituting a trademarked name for the former part number (numbers, like 486, cannot be trademarked). The P6 followed in 1995 as the Pentium Pro and improved into the Pentium II in 1997. New architectures were developed alternately in Santa Clara, California and Hillsboro, Oregon.
The Santa Clara design team embarked in 1993 on a successor to the x86 architecture, codenamed "P7". The first attempt was dropped a year later, but quickly revived in a cooperative program with Hewlett-Packard engineers, though Intel soon took over primary design responsibility. The resulting implementation of the IA-64 64-bit architecture was the Itanium, finally introduced in June 2001. The Itanium's performance running legacy x86 code did not achieve expectations, and it failed to effectively compete with 64-bit extensions to the original x86 architecture, first from AMD (the AMD64), then from Intel itself (the Intel 64 architecture, formerly known as EM64T). As of November 2007, Intel continues to develop and deploy the Itanium.
The Hillsboro team designed the Willamette processor (code-named P67 and P68) which was marketed as the Pentium 4, and later developed the 64-bit extensions to the x86 architecture, present in some versions of the Pentium 4 and in the Intel Core 2 chips. Many chip variants were developed at an office in Haifa, Israel.
Pentium flaw
In June 1994, Intel engineers discovered a flaw in the floating-point math subsection of the Pentium microprocessor. Under certain data dependent conditions, low order bits of the result of floating-point division operations would be incorrect, an error that can quickly compound in floating-point operations to much larger errors in subsequent calculations. Intel corrected the error in a future chip revision, but nonetheless declined to disclose it.
In October 1994, Dr. Thomas Nicely, Professor of Mathematics at Lynchburg College independently discovered the bug, and upon receiving no response from his inquiry to Intel, on October 30 posted a message on the Internet. Word of the bug spread quickly on the Internet and then to the industry press. Because the bug was easy to replicate by an average user (there was a sequence of numbers one could enter into the OS calculator to show the error), Intel's statements that it was minor and "not even an erratum" were not accepted by many computer users. During Thanksgiving 1994, the New York Times ran a piece by journalist John Markoff spotlighting the error. Intel changed its position and offered to replace every chip, quickly putting in place a large end-user support organization. This resulted in a $500 million charge against Intel's 1994 revenue.
Ironically, the "Pentium flaw" incident, Intel's response to it, and the surrounding media coverage propelled Intel from being a technology supplier generally unknown to most computer users to a household name. Dovetailing with an uptick in the "Intel Inside" campaign, the episode is considered by some to have been a positive event for Intel, changing some of its business practices to be more end-user focused and generating substantial public awareness, while avoiding (for most users) a lasting negative impression.
Intel Inside, Intel Systems Division, and Intel Architecture Labs
During this period, Intel undertook two major supporting programs that helped guarantee their processor's success. The first is widely-known: the 1990 "Intel Inside" marketing and branding campaign. This campaign established Intel, which had been a component supplier little-known outside the PC industry, as a household name. The second program is little-known: Intel's Systems Group began, in the early 1990s, manufacturing PC "motherboards", the main board component of a personal computer, and the one into which the processor (CPU) and memory (RAM) chips are plugged. Shortly after, Intel began manufacturing fully-configured "white box" systems for the dozens of PC clone companies that rapidly sprang up. At its peak in the mid-1990s, Intel manufactured over 15% of all PCs, making it the third-largest supplier at the time. By manufacturing leading-edge PC motherboards systems, Intel enabled smaller manufacturers to compete with larger manufacturers, accelerating the adoption of the newest microprocessors and system architecture, including the PCI bus, USB and other innovations. This led to more rapid adoption of each of its new processors in turn.
During the 1990s, Intel's Architecture Lab (IAL) was responsible for many of the hardware innovations of the personal computer, including the PCI Bus, the PCI Express (PCIe) bus, the Universal Serial Bus (USB), Bluetooth wireless interconnect, and the now-dominant architecture for multiprocessor servers. IAL's software efforts met with a more mixed fate; its video and graphics software was important in the development of software digital video, but later its efforts were largely overshadowed by competition from Microsoft. The competition between Intel and Microsoft was revealed in testimony by IAL Vice-President Steven McGeady at the Microsoft antitrust trial.
Another factor contributing to rapid adoption of Intel's processors during this period were the successive release of Microsoft Windows operating systems, each requiring significantly greater processor resources. The releases of Windows 95, Windows 98, and Windows 2000 provided impetus for successive generations of hardware.
Competition, antitrust and espionage
Two factors combined to end this dominance: the slowing of PC demand growth beginning in 2000 and the rise of the low-cost PC. By the end of the 1990s, microprocessor performance had outstripped software demand for that CPU power. Aside from high-end server systems and software, demand for which dropped with the end of the "dot-com bubble", consumer systems ran effectively on increasingly low-cost systems after 2000. Intel's strategy of producing ever-more-powerful processors and obsoleting their predecessors stumbled, leaving an opportunity for rapid gains by competitors, notably AMD. This in turn lowered the profitability of the processor line and ended an era of unprecedented dominance of the PC hardware by Intel.[citation needed]
Intel's dominance in the x86 microprocessor market led to numerous charges of antitrust violations over the years, including FTC investigations in both the late 1980s and in 1999, and civil actions such as the 1997 suit by Digital Equipment Corporation (DEC) and a patent suit by Intergraph. Intel's market dominance (at one time it controlled over 85% of the market for 32-bit PC microprocessors) combined with Intel's own hardball legal tactics (such as its infamous 338 patent suit versus PC manufacturers)[16] made it an attractive target for litigation, but few of the lawsuits ever amounted to anything.
A case of industrial espionage arose in 1995 that involved both Intel and AMD. Guillermo Gaede, an Argentine formerly employed both at AMD and at Intel's Arizona plant, was arrested for attempting in 1993 to sell the i486 and Pentium designs to AMD and to certain foreign powers. Gaede videotaped data from his computer screen at Intel and mailed it to AMD, which alerted Intel and authorities, resulting in Gaede's arrest. Gaede was convicted and sentenced to 33 months in prison in June of 1996.
Partnership with Apple
On June 6, 2005, Apple CEO Steve Jobs announced that Apple would be transitioning from its long favored PowerPC architecture to the Intel x86 architecture, because the future PowerPC road map was unable to satisfy Apple's needs. The first Apple computers containing Intel CPUs were announced on January 10, 2006. Apple initially planned to put Intel chips in all of their computers by the end of 2007, and later announced that it would be complete by the end of 2006[20], but Apple managed to have its entire consumer product line running on Intel processors by early August 2006. The Apple Xserve server was updated to Intel Xeon processors from November 2006 and is offered in a configuration similar to Apple's Mac Pro.
Corporate affairs
In September 2006, Intel had nearly 100,000 employees and 200 facilities world wide. Its 2005 revenues were $38.8 billion and its Fortune 500 ranking was 49th. Its stock symbol is INTC, listed on the NASDAQ.
Leadership and corporate structure
Robert Noyce was Intel's CEO at its founding in 1968, followed by co-founder Gordon Moore in 1975. Andy Grove became the company's President in 1979 and added the CEO title in 1987 when Moore became Chairman. In 1997 Grove succeeded Moore as Chairman, and Craig Barrett, already company president, took over. On May 18, 2005, Barrett handed the reins of the company over to Paul Otellini, who previously was the company president and was responsible for Intel's design win in the original IBM PC. The board of directors elected Otellini CEO, and Barrett replaced Grove as Chairman of the Board. Grove stepped down as Chairman, but will be retained as a special adviser.
Current members of the board of directors of Intel are Craig Barrett, Charlene Barshefsky, Susan Decker, James Guzy, Reed Hundt, Paul Otellini, James Plummer, David Pottruck, Jane Shaw, John Thornton, and David YoffieFinances
Intel's market capitalization is $153.42 billion (October 31, 2007). It publicly trades on NASDAQ with the symbol INTC, and is a member of the following indices: Dow Jones Industrial Average, S&P 500, NASDAQ-100, SOX (PHLX Semiconductor Sector), and GSTI Software Index.
INTC is a widely-held stock, with almost 5.85 billion shares outstanding. Institutional investors and mutual funds hold 60% of this stock, and corporate insiders, including Gordon Moore and Andy Grove, hold only about 3%. Intel achieved its all-time high closing stock price on August 31, 2000 at $74.87. Since then, it reached a low closing price of $14.62 on September 23, 2002. As of late October 2007, the stock price was trading in a range between $25.50 and $26.50.
Advertising and brand management
Intel has become one of the world's most recognizable computer brands following its long-running "Intel Inside" campaign. The campaign, which started in 1990, was created by Intel marketing manager Dennis Carter.[36] The five-note jingle was introduced the following year and by its tenth anniversary was being heard in 130 countries around the world.
The Intel Inside program was very lucrative for advertisers and further served to broaden the company's awareness as a key ingredient inside PCs. Intel paid half the advertising costs for any ad that used the "Intel Inside" logo. If the ads didn't meet these requirements, Intel did not pay half the cost, and the advertiser was prohibited from using the "Intel Inside" logo. PC companies advertising products containing Intel chips are required to include the jingle in their film and television advertisements in order to receive the reimbursement.
The Centrino advertising campaign has been hugely successful, leading to the ability to access wireless internet from a laptop becoming linked in consumers' minds to Intel chips.[citation needed] In the UK this has caused some controversy, as the ASA upheld complaints that this was a misleading advert.
In December 2005, Intel phased out the "Intel Inside" campaign in favor of a new logo and the slogan, "Leap ahead". The new logo is clearly inspired by the "Intel Inside" logo.
In 2006, Intel expanded its promotion of open specification platforms beyond Centrino, to include the Viiv media centre PC and the business desktop Intel vPro.
In mid January 2006, Intel announced that they were dropping the long running Pentium name from its processors. The Pentium name was first used to refer to the P5 core Intel processors (Pent refers to the 5 in P5,) and was done to circumvent court rulings that prevent the trademarking of a string of numbers, so competitors could not just call their processor the same name, as had been done with the prior 386 and 486 processors. (Both of which had copies manufactured by both IBM and AMD). They phased out the Pentium names from mobile processors first, when the new Yonah chips, branded Core Solo and Core Duo, were released. The desktop processors changed when the Core 2 line of processors were released.
In March 2007, the Intel logo was shown briefly in one of the scenes of the movie, "The Last Mimzy."
Though some in the Macintosh community were concerned that Intel's branding, including the decals and jingle, would be used with the new Intel-based Macintoshes (see Apple Intel transition), this has not occurred.
As from 2008, Intel plans to shift the emphasis of its "Intel Inside" campaign from traditional media such as television and print to newer media such as the Internet. Intel will require that a minimum of 35% of the money it provides to the companies in its co-op program be used for online marketing.
Intel's "Intel Inside" campaign has generally been considered to be world class marketing. However, over the years there have been several plays on the Intel branding scheme which have appeared on the web. While such jabs at Intel are obviously beyond the company's ability to control, they do tend to show that not everyone believes that Intel's programs and policies are always world class. For example, there is the popular "evil inside" logo,the ubiquitous picture of a tombstone with "R.I.P Intel Inside"
