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  • Inception of "Intel Inside"

    Let me start with a quote:

    “Competition is always a good thing. It forces us to do our best. A monopoly renders people complacent and satisfied with mediocrity.” – Nancy Pearcy

    By the end of post, it will be quite evident that it was the competition that led to one of the classiest campaign “Intel Inside” for its processors. As I mentioned in my previous post about Japanese taking the lead over DRAM market, most American companies felt the threat, and Motorola was one of them [1]. This started in 1981 - Six sigma program.

    Below table will help understand sigma level and what it means in terms of “number of defects”.

    Article: Intel Opens a New Front with ASML-1.jpg

    Nevertheless, Japanese also started similar program, though not as good as Motorola, but were still ahead due to ‘past perfections’. All said and done, this program helped US in preventing quality problems and Japanese got beaten in their own game of ‘quality’.

    That was not all: In 1987,SEMATECH (a non-profit consortium) was formed, that brought together US semiconductor manufacturers, chipmakers, material suppliers to address technical challenges, reduce manufacturing defects and costs
    [2] –This was one of Japanese popular route to success.

    Intel was the first companies to market memories that had allowed Intel to charge high. But after facing threat during 64K market from Fujitsu (who entered into 256K market very quickly), Intel decided to exit DRAM industry by 1986 and focused into micro-processors, for which Intel were (and are still) pioneers.
    [3]

    By 1981, IBM first microcomputer used Intel 8088 with a clock frequency of 4.77MHz
    [4] (although, in1971, Intel had introduced 1st commercial microprocessor). This was a huge success and it became Intel’s primary business.

    If that’s not all, NEC (who in1979, used to manufacture Intel’s 8086/88 microprocessors), used their designs to create its own Intel-compatible microprocessors and called them NEC V20 andV30
    [5] While this was allowed, but a NEC software engineer disassembled Intel 8086/88 microcode. This led to a series of court cases, and Intel claimed that microcode be copyrightable. Eventually, it was not proved in court of Lawand Intel lost the copyright case to NEC in 1989. [6]

    But guess what happened next: In1991, “Intel Inside” campaign was launched. It represented Intel’s way of directly communicating with computer buyers about its “quality and reliability”. Ever Wondered what was the result of this kind of advertisement. It was stunning!!


    A good example of this is, would you buy a PC without the logo “Intel Inside”? Intel co-op marketing programmes Director, Jami Dover, mentioned in 1997, about US$3.4 billion had been spent on marketing and advertisements by Intel and PC makers, since 1991
    . The result of this is also evident in below chart

    Article: Intel Opens a New Front with ASML-2.jpg


    By 2007, Intel was leader in semiconductor market with 12%, while overall US semiconductor share was about 49% [7]

    So its confirmed “Competition brings out the best in products”!!

    On a side note, the reasons mentioned above, were not the only one's that led to sharp decline in Japan semiconductor share. There were others too, like decline in investment, Samsung entry to DRAM market, too much dependency on home market, etc. which will a point of discussion in next post.

    Notes:


    1. “The Motorola six-sigma story” can be accessed at http://www.managementstudyguide.com/...igma-story.htm
    2. “Lessons from SEMATECH” can be accessed at http://www.technologyreview.com/news...from-sematech/
    3. Intel” can be accessed at http://avierfjard.com/Machine%20Lang...M%20Market.pdf
    4. “Intel 8088” can be accessed at https://en.wikipedia.org/wiki/Intel_8088
    5. “NEC vs INTEL: Breaking new ground in the law of copyright” can be accessed at http://jolt.law.harvard.edu/articles/pdf/v03/03HarvJLTech209.pdf
    6. “Intel loses copyright case to NEC” can be accessed at http://www.nytimes.com/1989/02/08/bu...se-to-nec.html
    7. “The US semiconductor industry” can be accessed at http://www.semiconductors.org/client...2002032015.pdf