Intel's Strategic Move Towards a New Opportunity of Mobile Convergence Market in Order to Succeed and Remain Competitive in the Rivalry World.

Intel’s strategic move towards a new opportunity of mobile convergence market in order to succeed and remain competitive in the rivalry world.

For many years the technology that Intel Corporation has developed supported the computer and Internet revolution which is changing the world. Intel Corporation founded in 1968 by Gordon Moore and Robert Noyce is the world’s largest semiconductor memory products’ company. These two people with some support from Andy Grove, who was in charge of the company through most of the 1980’s and some period of time in 1990’s (Calvo, R.2007 [Online]), have made this company as a world class organization.
Up to now, Intel is constantly developing and growing. Last year the company was in the top ten highest recognized brand’s. (Interband, 2008. [online]) Also Intel has created the reputation for being the ‘world leader in silicon innovation’ (Intel Corporation, 2005, [Online]) for a long period of time, what enabled them for the constant expansion and success.

Intel Corporation has an impressive product portfolio starting from microprocessors to Bluetooth chipsets, which has generated a constant income in 2008 around xxxxxxxxx
Intel’s main business is selling microprocessors (computer chips). As a world wide organization they sell to thousands of companies starting from very small one’s to multinational manufacturers; to distributors like Arrow.
Intel was proud to announce that its chip is inside four out of five PC’s and Laptops worldwide (Intel Corporation,xxxxxxxx. Also their products are used in such devices as the Xbox and Ipod. However, Intel products are not only in use of for the basic computers that each of us is using in every day life, but also they specializes in adding value and placing the niche in industries like education, healthcare and gaming industry.

[pic] [pic] [pic]
Intel is a very successful company and has a global recognition in over 95% of the countries all over the world (Intel Corporation xxxxxxxx. The organization has approximately xxxxxx employees and is based in over 60 countries (xxxxxxxxxxxxx)
As every world wide company in order to keep and be competitive it should develop and expand itself. Intel applies the same practice in use. There are different new areas that Intel is involved and tries to establish themselves and take the same part of market segment as they are already on established markets. One of them is mobile industry. Intel made a decision to get together with the company like Nokia. According to BBC news two firms first announced their intensions to collaborate in June 2009. They were competing against such products like Android, Iphone and other smart phones leaders.
Mobile convergence is a new step for Intel which had to be done in order to maintain competitive in the technology market. Taking into the consideration today’s competitive and constantly changing environment it is quite challenging to the company to realize where the strategic issue lies and where to make long-term investment. Convergence is a complex phenomenon working at many levels-convergences of the telephone network and the internet; communication and IT technologies; consumer and enterprise technologies and many more processes that one device is able to perform. The overarching aim of this process is to contribute to the world mobile devises and also change the whole idea and concept of mobile phone usage.
We can see in our every day life that more and more people prefer to use smartphone instead of use the normal mobile phone set and what will happen in the future that we will no longer use the normal mobile phones and will move to use of smartphones and new generation of mobiles only. According ABI research last year a total of 1.2 billion phones were sold world wide. (xxxxxxx) This was one of the drivers for Intel to enter this market, as there is good chances to win it, however, we should not forget that this is a new market for Intel something they haven’t experienced before.
The main focus in this essay will be paid to Porter’s Five Force model. Porter’s five force analysis is used widely in different companies to provide the detailed analysis of industries. Porter’s Five Force Theory was created by Michael Porter of Harvard Business School in 1979. The basic concept of his theory was built on the framework of five forces which determines the level of rivalry within the industry, therefore the profitability of the market. Quite often we can hear term like ‘attractive’ and ‘unattractive’ industry or market. An ‘unattractive’ industry would be the one, when combination of all five forces would determine the negative slope in profitability. So every company is trying to enter that market, industry which would be attractive and profitable for the company and shareholders. Based on the analysis carried below we would be able to determine whether that was the right decision from Intel to enter the new market.
Also Porter’s Five Force Analysis is hard to imagine without SWOT analysis. This analysis is used in strategically evaluation of situation, when you can break down the situation into four categories (strength, weaknesses, opportunities and threats). SWOT acronym was first used in 1963 in Harvard on the business conference by professor Kenneth Andrews. This is very simple but much in use analysis that is able to provide you with a wide picture of situation, however, the downturn of it is its is not as detailed as it could be.
That’s why this essay will cover some other theories that are widely used in business. BSG model or (Boston Consulting Group) This growth share matrix was developed by BSG in 1968 that’s it has its name as well. BSG model helps for the company to allocate their cash/investment against other business entities.
The company would put the product under appropriate category and then move towards the star, as a primary goal.
There will be also some sub theories included in the report, which will be described along with the appropriate case.
As its already been mentioned this report will include one of the most powerful strategic management tools like Porter’s Five Force model, SWOT analysis which are linked and collaborate with each other in a wide business circle.
However, this report also will include some survey tactics that usually are excluded in university reports/essay. This would be interviews, which give an opportunity to have a deeper picture of the issues company has faced during the process of mobile convergence.
Threat of new entrants
Threat of new entrant is one of the key forces that determine the attractiveness of the market. The threat of new entrants can be used in both concepts as how hard to get into the market and reaction from existing competitors. Also there are plenty more barriers on the way to a new market, like economic, social, political etc.
As we are looking from Intel prospect of view then they are entering the market and we need to analyze the reaction from competitors and other barrier that has faced on the way to a new market.
The mobile industry is very intense market due to the quick change in the environment of technology.
Entering the new market Intel had some threats, but in the same time advantages as well. At the moment Intel has huge marketing campaign under name ‘Sponsors of Tomorrow’ the main concept of these marketing campaign is to create more brand awareness around Intel. By entering into mobile phone industry Intel puts themselves under the spotlights which is only beneficial at this stage of marketing.
On the way to the entrancy to this market Intel faced a number of barriers, the main one was not only the developing stage but competition as well. Competitors like Google with Android, Apple with Iphone and new overcoming companies as well.
The barriers of entrance consist of five sub categories like; economies of scale, product differentiation, capital requirement, cost advantages independent of size, access to distribution channel and finally government policy.
Economies of scale
Intel has a long experience in manufacturing mass consumer products, which already had similar softwares; so Intel was not adversely affected this barrier. However, new entrants not always will have this luxury and mobile phone market is defined by its consumption nature, which asks mass production and mass consumption.
2. Product Differentiation
Intel got a very good protection against the competitors. The overall trait side is on Intel’s side as well, because at the moment there is no such device in the market as Meego. Its is different to any devices that are out in the market at the moment. However, there are close alternatives to it like Iphone or Android from Google. Never the less the products within this industry are easy to copy to some point of level. Mobile phones have the same message behind it so the differentiation between each other is not high.
3. Capital Requirements
Intel is able fully enjoy the advantage here, however it may be lost relatively quickly. The competitors within the cell phone industry have a great advantage in experience and knowledge in making cell phones, but they don’t have much experience in making the software. In order to get the same level of performance companies would have to invest considerable amount of money to research and development. The hardware process would lay on the shoulders of Nokia. Nokia has a significant advantage in creating the hardware. On this phase Intel hasn’t experienced too much of the barrier as they are brilliant in software and Nokia is able to perform nicely presented hardware. Any future competitors entering the mobile phone arena are less likely to have this advantage that these two business titans have.

4. Cost Advantage independent of size
Intel has a significant number of manufacturing resources and channels available to it, so it was able to minimize the impact of the costs; when this would be a massive challenge/barrier for potential new entrants as they simply would not have these opportunities. Also the amount of money and time Intel invests into not only specific set of knowledge but overall education of employees is a big part of Intel finances, so for competitors it will more time and money to copy the product. Never the less Intel and Nokia are in possession to put some few patents for the Meego which will give them a short-term monopoly within the market.

5. Government Policy
The main two barriers that may scare competitors from entering the cell phone market is the strength of current players patents and obligations, approval requirements that Federal Communication Commission or FCC puts on television, radio and other communication technologies in USA (Intel is USA based company).

Threat of new Entrants

Intel and Nokia would have to get ready to receive the wave from the imitators who are ready to sell similar device at a lower price. These threats would come from established and well know companies in the cell phone industry (like Apple, LG) rather the small companies that are just trying to enter the market. Even though that is only assumption as the new entrants may be just around the corner. Also a big threat may come from the software companies like Google and Microsoft, trying to get their niche in the growing market. However, its too late to say that there a potential threat form Google its is already with Android. However, we would not see the threat from the collaboration of these companies, if they enter the market than it will be individually, as an evidence there is Android phone from Google.

Buyer Power

The buyers of the new Intel’s and Nokia product will be seeking for something more powerful. Overall the consumers as a group could be identified as by the principle purchase of buying a new gadget from in the cell phone industry. Also a claim that earn more trust is the fact that no large resellers will be selling this type of device. So the consumers tend to become more aware to price sensitivity and alternative choices. Taking into the consideration relatively high price for xxxxxxxxxxxxx it remains to be seen if the customers will be happy and willing to pay for the new converged device or will be happy to satisfy the needs by a cheaper alternative product.

Supplier Power
Fortunately for Intel the new converged device is something more than just boring set of technological parts, that are available from number of sources and substitutes, alternatives exist for most of the parts. The attractiveness that Intel gets is that the new converged device will allow the customer to interact on a new technologically advanced level. Also the fact that the software was designed and is owned now by Intel makes the company not to worry about any further integration with the suppliers. So under this case Intel is not dependent on any caprice from the supplier side.

Substitutes
The xxxxxxxxxxxx mainly will distinguish from the competitors over its advance software which combines main communication devices we use on a daily base. Intel tries to claim various patents relating to this distinguish feature. However, it is more than likely that pretty soon competitors will be able to deliver similar products. Nokia and Intel have not opened the details of the features of up coming device.

SWOT Analysis

|Strengths | Weaknesses |
|Style/Brand | |
|Technological advance |High price |
|Rich UI(Intet applications) | |
|First one to do |Some missing features |
|Outstanding build quality | |
| | |
|Opportunities |Threats |
|Moves closer to Intel Brand |Similar Devices |
| |Advanced market |

Strengths

Nokia’s and Intel’s new device has a number of features that add value and strength to the product. These are like unique look and good software operating system that definitely will make you feel different. It has multiple features that work together with new technology innovations, which is new patented technology. However one of the biggest strengths that could not be missed is the fact that Intel and Nokia are first one to deliver so high tech cell phone device, its gives the companies to outperform their competitors in the cell phone arena. Additionally marketing was provided from different sources including internet which helped Intel to save xxxxxxx on advertising fees.

Weaknesses

Just like every new product that is introduced to the market there will be a set of weaknesses. The phone will not be 3G, so it will not be supported in technologically advanced countries like Korea and Japan, as all the phones in these countries are supported by 3G. Also some of the features are not really impressive. These will include like it has a sub par camera, standing at about 2 mega pixels, when also the memory is not removable. The price for new device will be around xxxxxx and surveys have shown that 52% of consumers are happy with their current mobile device.
Also the distribution channel could be quoted as the weakness, as Intel and Nokia limited themselves to the distribution channel only within two organizations.
One and the final thing that must be mentioned the purpose of this new phone, doest it fulfill the regular duties and the rest is only entertainment.

Opportunities

Intel and Nokia are trying to combine two very strong devices computing and entertainment, as there is a demand for this kind of experience out in the market. There is also a linkage between Intel’s new marketing campaign called ‘Sponsors of Tomorrow’ and the launch of new converged mobile will get more attention to the company and will help to get customer awareness
Also the xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxx

Threats
The main threats are coming from the competitors like big fishes in the mobile industry. Companies like Google with Android and Apple with Iphone with their already well know products. Smartphones needs to be taken into deep consideration that stands to compete against Intel’s new product. The fact that generally these phones are running on the 3G network puts Intel behind as well in the consumer race. Even though that the economy is no longer in its extreme stages, the release of new relatively pricey product in the time where people are couscous to spend money.

As its already been mentioned in the report above this report will include the BCG growth share matrix. The BCG matrix is based on two dimensional variables: relative market share and market growth. They often are pointers to healthiness of a business (Kotler 2003; McDonald 2003). Basically what this means is products with a bigger market share or within the fast growing market are expected to wield relatively greater profit margins.
The best way to describe the model is to show it
[pic]
Relative market share
According to the followers of the BCG (Henderson 1972), it captures the relative market share of a business unit or product, but this would not be all. Also it allows to compare analysed business unit to its competitors. It has already been mentioned before this is due to the correlation between cash generated by product and relative market share. This phenomenon is often linked to the experience curve paradigm that when an organization enjoys lower costs, improved efficiency from conducting business operations overtime. The basic tenet of this postulation is that the more an organization performs a task often; it tends to develop new ways in performing those tasks better which results in lower operating costs (Cipher 2006).