Harvard Case - Intel's Mobile Strategy in 2015 and Beyond
"Intel's Mobile Strategy in 2015 and Beyond" Harvard business case study is written by Robert A. Burgelman, Debra Schifrin. It deals with the challenges in the field of Strategy. The case study is 19 page(s) long and it was first published on : May 6, 2015
This case study solution recommends a multifaceted approach for Intel to regain its mobile leadership position. This includes a shift towards a platform-centric strategy focusing on value creation through strategic alliances, disruptive innovation, and digital transformation.
2. Background
This case study examines Intel's struggles in the mobile market in 2015. Despite its dominance in the PC market, Intel faced significant challenges in the mobile space, losing market share to ARM-based processors. The case highlights Intel's efforts to regain its competitive edge, including the launch of the Atom processor and its foray into the smartphone and tablet market.
The main protagonists are Intel's management team, led by CEO Brian Krzanich, who are tasked with navigating the company through this challenging period.
3. Analysis of the Case Study
SWOT Analysis:
Strengths:
- Strong brand recognition and reputation in the technology industry.
- Extensive resources and expertise in chip design and manufacturing.
- Strong relationships with PC manufacturers and other technology companies.
- Extensive research and development capabilities.
Weaknesses:
- Slow to adapt to the mobile market, particularly in the smartphone segment.
- High power consumption of its mobile processors compared to ARM-based alternatives.
- Limited experience in developing software and services for mobile devices.
- Lack of a strong presence in the emerging markets.
Opportunities:
- Growing demand for mobile devices and the Internet of Things (IoT).
- Increasing adoption of cloud computing and data analytics.
- Potential for new business models in the mobile space.
- Emerging markets offer significant growth potential.
Threats:
- Intense competition from ARM-based processors and other chip manufacturers.
- Rapidly evolving mobile technology landscape.
- Potential for disruptions from new entrants and technological advancements.
- Increasing regulatory scrutiny and geopolitical risks.
Porter's Five Forces:
- Threat of New Entrants: High, due to the relatively low barriers to entry in the mobile chip market.
- Bargaining Power of Buyers: High, as mobile device manufacturers have multiple chip suppliers to choose from.
- Bargaining Power of Suppliers: Moderate, as Intel relies on a limited number of suppliers for key components.
- Threat of Substitute Products: High, as alternative mobile operating systems and chip architectures exist.
- Competitive Rivalry: Very high, as the mobile chip market is highly fragmented and competitive.
Value Chain Analysis:
Intel's value chain can be analyzed across the following stages:
- Inbound Logistics: Sourcing of raw materials and components for chip manufacturing.
- Operations: Design, development, and manufacturing of chips.
- Outbound Logistics: Distribution of chips to customers.
- Marketing and Sales: Promotion and sales of chips to mobile device manufacturers.
- Service: Technical support and customer service.
Business Model Innovation:
Intel needs to explore new business models to address the challenges in the mobile market. This could include:
- Platform-centric strategy: Shifting from a pure chip manufacturer to a platform provider, offering a comprehensive ecosystem of hardware, software, and services.
- Partnerships and Acquisitions: Collaborating with other companies in the mobile ecosystem to leverage their strengths and expertise.
- Subscription-based models: Offering mobile services on a subscription basis, generating recurring revenue streams.
Corporate Governance:
Intel needs to ensure strong corporate governance to navigate the challenges in the mobile market. This includes:
- Clear strategic direction: Defining a clear vision for Intel's mobile strategy.
- Effective leadership: Appointing experienced and capable leaders to drive the mobile business.
- Accountability and transparency: Holding management accountable for results and ensuring transparency in decision-making.
4. Recommendations
Shift towards a Platform-Centric Strategy: Intel should move beyond being a pure chip manufacturer and become a platform provider, offering a comprehensive ecosystem of hardware, software, and services for mobile devices. This could include developing its own mobile operating system, creating an app store, and offering cloud-based services for mobile developers.
Embrace Disruptive Innovation: Intel should actively pursue disruptive innovation in the mobile market, focusing on developing new technologies and business models that can challenge the status quo. This could involve exploring new chip architectures, developing energy-efficient processors, and investing in emerging technologies like AI and machine learning.
Strategic Alliances and Acquisitions: Intel should actively pursue strategic alliances and acquisitions to leverage the strengths of other companies in the mobile ecosystem. This could involve partnering with mobile device manufacturers, software developers, and service providers to create a more comprehensive mobile platform.
Digital Transformation Strategy: Intel should embrace digital transformation to enhance its operations, improve customer experience, and create new revenue streams. This could involve investing in cloud computing, data analytics, and artificial intelligence to optimize its manufacturing processes, personalize customer interactions, and develop new products and services.
Focus on Emerging Markets: Intel should prioritize growth in emerging markets, where mobile penetration is rapidly increasing. This could involve tailoring its products and services to the specific needs of these markets and establishing strong partnerships with local companies.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of Intel's strengths, weaknesses, opportunities, and threats, as well as the competitive landscape of the mobile market. They are consistent with Intel's mission to be a global leader in computing innovation and are designed to create long-term value for the company and its stakeholders.
Core competencies and consistency with mission: The recommendations align with Intel's core competencies in chip design and manufacturing, while also extending its reach into new areas like software and services. This is consistent with its mission to drive innovation in the computing industry.
External customers and internal clients: The recommendations address the needs of both external customers (mobile device manufacturers and consumers) and internal clients (employees and investors). By offering a more comprehensive platform and expanding into new markets, Intel can better serve its customers and create value for its stakeholders.
Competitors: The recommendations aim to position Intel to compete effectively against its rivals in the mobile market. By embracing disruptive innovation, forming strategic alliances, and focusing on emerging markets, Intel can differentiate itself and gain a competitive advantage.
Attractiveness: The recommendations are expected to be financially attractive, as they are designed to drive growth and profitability in the mobile market. The potential for new revenue streams, increased market share, and cost efficiencies associated with these recommendations makes them a compelling investment for Intel.
Assumptions:
- The mobile market will continue to grow in the coming years.
- Consumers will increasingly demand more powerful and feature-rich mobile devices.
- The adoption of cloud computing and data analytics will continue to accelerate.
- Emerging markets will offer significant growth opportunities for Intel.
6. Conclusion
Intel faces significant challenges in the mobile market, but it also has the opportunity to regain its leadership position by embracing a platform-centric strategy, pursuing disruptive innovation, and leveraging strategic alliances. By focusing on value creation, digital transformation, and emerging markets, Intel can navigate the complexities of the mobile landscape and create a sustainable competitive advantage.
7. Discussion
Alternatives:
- Continuing with its current strategy: This would involve focusing solely on chip manufacturing and competing on price and performance. However, this approach is unlikely to be successful in the long run, as Intel is already facing significant challenges in the mobile market.
- Exiting the mobile market: This would be a drastic step, but it would allow Intel to focus its resources on its core strengths in the PC market. However, this would also mean giving up on a significant growth opportunity.
Risks:
- Failure to execute the recommendations effectively: This could lead to further market share losses and financial setbacks.
- Competition from other chip manufacturers: Intel faces intense competition from ARM-based processors and other chip manufacturers.
- Rapidly evolving mobile technology landscape: The mobile market is constantly evolving, and Intel needs to be able to adapt quickly to new technologies and trends.
Key Assumptions:
- The mobile market will continue to grow in the coming years.
- Consumers will increasingly demand more powerful and feature-rich mobile devices.
- The adoption of cloud computing and data analytics will continue to accelerate.
- Emerging markets will offer significant growth opportunities for Intel.
8. Next Steps
- Develop a detailed strategic plan: This plan should outline the specific steps that Intel will take to implement the recommendations, including timelines, budgets, and resource allocation.
- Establish a dedicated mobile business unit: This unit should be responsible for driving Intel's mobile strategy and ensuring that the company's resources are effectively allocated to this area.
- Invest in research and development: Intel needs to invest in research and development to stay ahead of the curve in mobile technology.
- Build strategic partnerships: Intel should actively seek out strategic partnerships with other companies in the mobile ecosystem.
- Monitor progress and make adjustments: Intel should regularly monitor the progress of its mobile strategy and make adjustments as needed.
By taking these steps, Intel can position itself for success in the mobile market and create a sustainable competitive advantage.
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Case Description
"Intel's Mobile Strategy in 2015 and Beyond" examines the company's 2014 - 2015 strategy to become a more important mobile player. In early 2015, the semiconductor giant had virtually no presence in the smartphone market, and had only recently gained a real presence in the tablet market. Getting into the mobile market was strategically vital for Intel as the notebook market had been shrinking due to cannibalization from tablets. Flattening demand for notebook processors also meant that production volume in Intel's multi-billion fabrication plants was flattening as well. Intel's mobile efforts had led to losses of $5 billion by the first quarter of 2015. Most phones and tablets ran on a competing architecture designed and licensed by ARM Holdings, and Intel competitors Qualcomm, Apple, Samsung and MediaTek made most of the processors for mobile devices. Intel's efforts to gain market share included compensating its manufacturing customers for the cost of using Intel's more expensive chips. Its goal was to supply chips for 40 million tablets by the end of 2014 (which it exceeded). Intel was also engaging in new partnerships and investment tactics in China to sell Intel-branded chips for the low end of the tablet market. In pursuing the mobile market, Intel had encountered technology challenges and delays, as well as an internal resistance to selling the lower-priced, lower-margin mobile processors, despite having data showing customers' increasing desire for mobile products. Intel had very little time to establish a relevant presence in the mobile market, and the question was whether implementing these new strategies would be enough.
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