Dominant Microprocessor Company Intel Adapts to Next Trend

With continuous innovation, ever-faster, more-powerful chip designs, and a business plan riveted on supplying the $300 billion personal computer (PC) and tablet industries, Intel Corporation dominates the high-end market in microprocessors. After being forced out of the dynamic random access memory (DRAM) chip business by Japanese rivals in 1986, Intel reinvented itself as the lead supplier of microprocessors for PCs. Intel has an 85 percent market share in the microprocessor chips for laptops. In addition, Intel sells 90 percent of the chip sets that control the flow of data from the microprocessor to the display screens, modems, and graphical user interfaces (GUIs). Its market dominance provides it with enormous economies of scale in production and increasing returns on its marketing expenditures because of network effects. The result is high markups and margins; for example, Intel has at times earned as much as 25 percent net profit margin return on invested capital in microprocessors.

Because intellectual property is the company’s most important asset, Intel protects its proprietary trade secrets about chip design and manufacture by using tight nondisclosure agreements with its customers. Some Intel chip bulk purchasers found, however, that Intel withheld vital information about technical specifications required to fully integrate the chips into new products unless it is given access to its customers’ new technologies. Intergraph, a maker of high-end workstations for media applications, alleged, for example, that Intel withheld information about subtle bugs in some Intel chips until Intergraph agreed to license its GUI technology to the chip supplier.

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Intel’s high-end chips are designed to run Microsoft’s complex software for PCs and tablets. In 2007, 261 million units were shipped on a 2.1 billion installed base of PCs. The market for digital telephones, handheld computers, video-game players, and set-top control boxes for digital televisions may be even bigger than the PC market. Such devices require inexpensive flash memory chips that quickly process data. Samsung and Advanced Micro Devices (AMD) are the leaders in this new chip segment. To break into this business, former Intel president Andy Grove says Intel must prepare to sell lower-end chip products for under $40, despite the fact that Intel’s chips previously sold for $87 to $200.]

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After reading the section titled “Dominant Microprocessor Company Intel Adapts to Next Trend”  List (3) reasons why Apple would depart from a dominant corporation like Intel. You must include an introduction that explains the course theory regarding monopolies – dominant firms. Although this assignment allows you to create a list, you must follow the APA style of writing and include research to support your list and place this information in your reference section.

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