Intel Corporation: The DRAM Decision
Introduction Morison’s (2004) essay, “Gunfire at Sea: A Case Study in Innovation”, is a commentary on the social implications of technological change that surrounded the introduction of continuous-aim firing in both the British and American navies. Morison discusses (1) conditions that foster technological innovation, (2) reactions to the changes produced by innovation, and (3) the elements of an adaptive society. The Cogan and Burgelman (2004) case, “Intel Corporation: The DRAM Decision”, paired with the aforementioned reading, recounts Intel’s encounter with technological change and how they came to exemplify the idea of an adaptive society. Discussion
DRAM Decision Throughout its history, Intel has centered its strategy on the tenets of technological leadership and innovation (Burgelman, 1994). Intel established its reputation for taking calculated risks early on in 1969 by pioneering the metal-oxide semiconductor (MOS) processing technology. This new process technology enabled Intel to increase the number of circuits while simultaneously being able to reduce the cost-per-bit by tenfold. In 1970, Intel once again led the way with the introduction of the world’s first DRAM. While other companies had designed functioning DRAMs, they had failed to develop a process technology that would allow manufacturing of the devices to be commercially viable. By 1972, unit sales for the 1103, Intel’s original DRAM, had accounted for over 90% of the company’s $23.4 million revenue (Cogan & Burgelman, 2004). By 1984, a combination of factors had contributed to lowering the profitability of the DRAM industry. As the DRAM industry matured, DRAMs began to take on the characteristics of a commodity product (Burgelman, 1994; Burgelman & Grove, 2004). Competitors had closed the gap on Intel’s lead in technology development causing the basis of competition to shift towards manufacturing capacity. Gaining market share in an industries where product features had
DRAM Decision Throughout its history, Intel has centered its strategy on the tenets of technological leadership and innovation (Burgelman, 1994). Intel established its reputation for taking calculated risks early on in 1969 by pioneering the metal-oxide semiconductor (MOS) processing technology. This new process technology enabled Intel to increase the number of circuits while simultaneously being able to reduce the cost-per-bit by tenfold. In 1970, Intel once again led the way with the introduction of the world’s first DRAM. While other companies had designed functioning DRAMs, they had failed to develop a process technology that would allow manufacturing of the devices to be commercially viable. By 1972, unit sales for the 1103, Intel’s original DRAM, had accounted for over 90% of the company’s $23.4 million revenue (Cogan & Burgelman, 2004). By 1984, a combination of factors had contributed to lowering the profitability of the DRAM industry. As the DRAM industry matured, DRAMs began to take on the characteristics of a commodity product (Burgelman, 1994; Burgelman & Grove, 2004). Competitors had closed the gap on Intel’s lead in technology development causing the basis of competition to shift towards manufacturing capacity. Gaining market share in an industries where product features had