CASE STUDY 1
AMD vs. INTEL
21. Mar. 2010
DBA / MMU
AMD vs. INTEL
The competitive challenges between the top two-chip maker Intel and AMD took a new dimension due to different strategic initiatives taken by both the companies. It is obviously clear that in a condition like competition between these two giants the strategies taken by each can emphasize on the other side of market as it influence the success of the company and the competitive environment of the industry. Clarifying the Hyper competition environment of AMD and Intel or chip industry brings clear understanding of competitive advantage and taking good strategies. The reality that AMD is worried about Intel’s antitrust practice and blamed Intel with its illegal discount program due to which AMD’s PC market share dropped in Japan.
I ) The Hypercompetitive Environment of the Chip Industry
Hypercompetition describes the realities of the competitive landscape for semiconductor producers. In this industry, the notion of market stability is replaced by an assumption of inherent instability and change. Hypercompetition results from the dynamics of constant strategic maneuvering among innovative, global combatants. Rapidly escalating competition results from price-quality positioning, the frantic race to beat competitors to the market with innovative products and technology to establish a first mover advantage and competition to protect the position. Repositioning, competing successfully, overcoming competitors’ barriers, and overcoming competitors’ market-based moves are four major competitive strategies in hypercompetitive conditions. In chip industry the more relevant strategy especially in the case of AMD and Intel are over coming competitors’ barriers and overcoming competitors’ market-based moves. The major issues for these two are shortening life cycles, undermining strongholds, and countering deep packet advantages for the first and blocking first mover advantages and imitating product/market moves for the second. Another important issue in this approach is market share that indicates the place of the company in the industry. Moreover as a complementary industry the Chip Industry is depend on the PC industry and other related technologies. So the main customer of the Chip Industry is computer makers. The more company use each chips means the more market share for that chips maker. So the competition is on satisfying the PC makers to use server’s chips. II) Technology Diffusion and Disruptive Technologies
Spreading and development of new technology is a fact that all business and industries should accept it. Things change usually for the better, in electronics that usually means faster, smaller and cheaper. Now however things are changing faster than ever, raising consumer expectations and disrupting historic industry product development and market planning patterns. Technology shifts, shorter life cycles and other unexpected requirements have become part of the industry’s new dynamics, but chipmakers and other electronic manufacturers are clearly under growing pressure to produce new and compelling products with new features and better performance and at lower production costs. New technologies and applications have driven the semiconductor industry from the beginning and market research firm Gartner says that’s not likely to change. But most of these have been incremental developments. Anyway existing the internet from one side and mobile technology and wireless are among the most influencing elements for disruptive technology. Considering these realities are effective for taking the strategies needed especially in competitive models and also innovation trend.
III) Competitive Rivalry in the Industry
* Using the Competitive Rivalry Model
As a pioneer in the industry AMD should take the aggressive strategy for developing the market share and sustaining...
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