What are the sources of competitive advantage in the microprocessor chipindustry?
The sources of competitive advantage in microprocessor industry are New product innovationAbility to ramp up process and production facilitiesMarketing.Microprocessor industry is a highly technical field with new chips commandinghigher demand and premium. Manufacturing processes determine the quality of chips produced while ramping up production facilities means utilizing economies of scale togain cost advantage. These factors in combination with the ability to introduce newchips mean an increase in the profit margins.The other facet involves aggressive marketing. As Intel showed with project CRUSHand project CHECKMATE and later with the “Intel Inside” campaign, aggressivemarketing and building brand recognition played a major role in gaining competitiveedge.
What strategy did Intel use to gain and sustain market leadership inmicroprocessors for over two decades? .Why has Intel been able to sustain itscompetitive advantage in microprocessors, but not in DRAMs?
Intel pursued the strategy of “
Leadership at Product Development coupled withAggressive Marketing”
. Intel’s microprocessor business faced the dual threats of Clones and RISC architecture. Intel countered these threats by always being onforefront of the
. Intel kept on improving its products very fastand launched new better products quickly which helped it commanded premium on itslatest offerings. Intel also launched massive campaigns like project CHECKMATEand
“Intel Inside” campaign
which proved to be a critical factor in their success.Intel started well in DRAMs business but couldn’t sustain its competitive advantage.Intel’s
of ‘Leadership at Product development’ was
severely tested by theshrinkage in product life cycle of DRAMs
. Japanese firms viz. Fujitsu and Hitachiwere quick to launch higher memory capacity DRAMs and they beat Intel on severaloccasions.
with the development and
ramp up of its productionfacilities
in mid 1980s.
were pursuing the
strategy of investing heavily inmanufacturing
in addition to working closely with the production equipmentmanufacturers. All these factors combined made Intel lose its competitive edge over Japanese rivals.
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