sample presentation. who is intel? world’s largest producer of semiconductor microprocessors...
TRANSCRIPT
Sample
Presentation
Who is Intel?
• World’s largest producer of semiconductor microprocessors
• Tremendous growth under Andy Grove as CEO
• Craig Barrett became CEO in 1997
Latest Annual Revenue
1, 3, 5, 10 yr. Growth in Revenues
84% market in PC processors
100% of profits
90% of revenues
Growth in Processor market slowing Down
PC Components
Intel & the Changing LandscapePC at the center of computing universe in
the 90’s
Next decade INTERNET IS IT!Implications: Old rules of Computerdom no longer hold
8% compound growth rate over the past two years
Revenue growth slowed to 5% from
30% Blunders in 1999: chipsets delivered months late
embarrassing design bugs
supply shortages
Transition-Related Bumps
PC Pothole
•Earnings declined for the 1st time in a decade
•Low Cost PCs
•Stock down 30% and off its peak for most of 1998
•Industry Consolidation
Changing PC Dynamics & IntelIntel Assumption: Customers would clamor for more power to run fatter software programs
Reality: Customers wanted cheap PCsto go online. Competitors grabbed 20% of the market share in 1997 (highest in half a decade)
Previous Corporate Mission: Leading Purveyor of PC technology
Existing Corporate Mission:Provide Building Blocks for the Entire Net Economy
The Creosote Bush
• Drips poisonous oil, kills everything around it
• Dominant microprocessor strategy was Intel’s creosote bush
• No other businesses could sprout around it
Intel at Crossroads, Again??Business Goes To New Heights
Business Declines
Inflection Point
Memory Chip Business
Microprocessors
1985
Valley of Death
Intel at Crossroads, Again??Business Goes To New Heights
Business Declines
Inflection Point
Microprocessors
Internet appliances
1999
Valley of Death
Responses to Crisis
Copy Exactly
segment the microprocessor market
reorganize
Think big, broaden the pond,
10X Rule
ObjectivesGrowth Rate 15-20% a year
New businesses to be No.1 or No. 2
Grow faster than the industry
Technology leader
Profitable
Every plant is identical –Down
to the colors of paint
easy to roll-out new
production Techniques
dramatic Boost in
productivity & Quality
Copy Exactly
Segment the Microprocessor MarketCeleron: Inexpensive PCs
Pentium III: Middle Tier of Market
Xeon: High-Powered Servers and Workstations
Results:Celeron market shareUp from 30% to 62%
60% gross margins
Revenues from Xeon chips to double
ReorganizeDismantled previous centralized management structure
Break Intel into five groups and themanagers of these groups report directly to himNetworking Chips
Communication Products
Computer Processors
Information Appliances
New Business
Think Big, Broaden the Pond, 10X Rule
Seminars for top 400 Managers
Day 1: Develop and nurture an entrepreneurial spirit
Day 2: Disruptive Technologies
Day 3: Business Ecosystems
Develop and Nurture an Entrepreneurial SpiritThinking Green: figure out how to grow
new businesses in the shadow of the “creosote bush”
OLD NEW
Disruptive Technologies
Cheap steel reinforcing bars (rebars)
Dismissed as insignificant by industry giants
Rebar companies nibbled their way into the market for higher value steel
PCs and mainframes
Japanese automakers and small cars
Digital Rebar
• Cheap PCs could nibble up the high end computers
• Aggressive Celeron marketing even at
the risk of cannibalizing sales of pricier chips
• Intel Capital
• Opening of the minds
Business EcosystemsConstruct new webs of relationships
Help seed emerging business ecologies
Invested $6 billion to acquire companies
Providing seed money of more than $1.2 billion
Launched in 1991
To invest in companies that created “waves of excitement”
To expose the company to every facet of the Internet economy
1. Intel Capital
Think Big, Broaden the Pond, 10X Rule
Think Big, Broaden the Pond, 10X Rule
1a. Intel Capital
Fund has increased from $300 million
in 1997 to $1.2 billion in 1999
Has stakes in more than 350 software
and internet companies
Notable hits: Red Hat, Inktomi, eToys
Holdings valued at more than $8.2 billion
$327 million in pretax income
Think Big, Broaden the Pond, 10X Rule
2. New Business Group
New rules for funding new projects
No more tight budgets
No more rigorous reviews of internal startups
Similar to venture-capital financing
Launched about 25 seed projects
Spent more than $50 million on these projects
Web-hosting for clients (Citigroup)
Vivonic: digital handheld health planner
PassEdge: technology for protecting digital content
Installing 3,000 information terminals on the back of seats of Madison Square Garden
Equip doctors with secure Ids to encourage online medicine
2a. New Business Group
Web War
Unfamiliar Territory
VS.
New Competitors
Think Big, Broaden the Pond, 10X Rule
3. Information Appliances“Move Intel into the home, somehow”
Screen phonesE-mail terminalsTV set-top boxes
Think Big, Broaden the Pond, 10X Rule
4. Communication Products
Home NetworkingBroadband ModemsPC-based TelephonyServer AppliancesEthernet HubsSmall Networking SwitchesSpecialized Servers for Web Trafficand speeding up e-commerce
Think Big, Broaden the Pond, 10X Rule
5.Networking ChipsFastest growing category among chips
Used in modems, network interface cards, switches, and routers
Acquired a lot of companiesLevel One Communications($2.2 billion)NetBoost ($215 million)Softcom Microsystems ($149 million)
The Future of Intel
• Many skeptics
• The creosote bush is no longer thriving at Intel
• Enormous potential for growth
• Moving in the Right Direction??