CASE V-I

Intel Centrino in
2007: A New
"Platform" Strategy
for Growth

Introduction
Intel

2000 Intel

Desktop

Introduction
Mobile Computing Segment

Intel Intel Centrino mobile

technology 2003
Platform of components
2007 Platform

Introduction
Centrino Intel

Intel



Centrino
Intel
Centrino platform
Platformization

Got Gigahertz?
1980 1990

(PC: Personal Computer)

Frequency Clock Speed

MHz (1 million cycles per second)
GHz (1 billion cycles per second)
5

Got Gigahertz?
Intel

Intel
Intel 4004
1971
1990 Gordon Moore Intel
Transistors
2

Got Gigahertz?
Intel

2000 Intel
80%
2000

Intel

The view from santa clara

Centrino
2

1.
Santa Clara
2.
(IDC: Israel
Development Center)
8

The view from santa clara

Reorganizing in Good Times
2000

Advanced Micro Devices

(AMD) PC
processor 16.7% 2000 20.2% 2001
AMD 1GHz
processor
2
2000
9

The view from santa clara

Reorganizing in Good Times (continued)
2000

1. Microprocessor Group (MPG)

2. Intel Architecture Business Group (IABG)

2

Intel Architecture Group (IAG)
10

The view from santa clara

Reorganizing in Good Times (continued)
2
Intel Architecture Group (IAG)
Albert Yu Paul Otellini
IAG
11,000 3
EPG DPG MPG

TMG SMG

11

Intel Organizational Chart 2000

Executive
Office

ICG

EPG

DPG

MPG

SMG

TMG

12

Intel Organizational Chart 2000

EPG Enterprise Platforms Group
DPG Desktop Platforms Group
ICG Intel Communication Group
MPGMobile Platform Group
SMGSales and Marketing Group
TMGTechnology Manufacturing Group

13

The view from santa clara

Reorganizing in Good Times (continued)

Otellini
IAG
Anand Chandrasekher

Chandrasekher Otellini
MHz GHz (
)
Paul

14

The view from santa clara

Speed Had Become Less of a
Differentiator
Otellini Intel
Developer 2001

(Clock speed)

15

The view from santa clara

Hotter Than the Sun

Figure 1

16

The view from santa clara

Hotter Than the Sun (continued)

Gelsinger Intels Developer

2001

Figure 1 Intel
MHz
Intel

17

The view from santa clara

Hotter Than the Sun (continued)

Intels Israel Design Center (IDC)

Clock speed x Number of
instructions per cycle

instructions per cycle

(Frequency goal)

codenamed Banias
IDC
18

The view from santa clara

Then the Market Dropped (Continued)

Figure 2 Intel Selected Financial Data

1998-2000

19

The view from santa clara

Then the Market Dropped

Figure 3 Intel Selected

Financial Data 2001-2005

20

The view from santa clara

Then the Market Dropped (Continued)

2001 Intel
Figure 2 3 PC
Intels CEO, Craig
Barrett
(Strategic Long Range Planning
Process: SLRP) 2 themes
1. Jazz the PC PC

21

The view from santa clara

Then the Market Dropped (Continued)

2. Power Wall

Chandrasekher 2001 SLRP Mobile

products notebook computers
Intel
Figure 4 Notebook as % of PC Market by Region
2001 Product Line Business Plan, new Banias
microprocessor design mobile
computers Intel Roadmap
mobile products
22

The view from santa clara

Figure
Then
the 4Market Dropped

Figure 3 Intel Selected

Financial Data 2001-2005

23

The view from santa clara

A New Focus on Mobility
1998 Intel PC 80%

Desktop Group

Mobile market
Mobile Business Group
Desktop-oriented microprocessor designs
desktop
Desktop&Server
Business Group
24

The view from Israel Design Center

Israel Design Center (IDC) 1974

IDC
survival mode

(codenamed
Chopakaand Timna)
Chopaka Timna IDC

CentrinoTM Mobile Techmology

25

The view from Israel Design Center

The Timna Innovation

die size
clock speed
die area

Intels
future mobile strategy

26

The view from Israel Design Center

Banias is Born (continued)
Timna, IDC Banias chip design


Banias clock speed

Banias
Banias design

Banias design
Banias

27

The view from Israel Design Center

Four Vectors of Mobility
Mobility team

Mobility space
Platform
Mobility users
28

Notebook market trends

(driven by mobile msa)

4 Vectors of Mobility

1. (Performance)

2.

Mobile
PCs
3.


(> 70% MSA)

29

Notebook market trends

(driven by mobile msa)

4 Vectors of
Mobility
1. Best
Performan
ce

2. Thinner
and Lighter

3. Longer
FactorLife
Battery

4. Simple,
Secure
Wireless
Connectivity

in Form

30

HQ takes a new look

at

mobile

Conflict between Desktop and Mobile

Desktop Group (Clock speed)
Banias

Paul Otellini Banias
Banias New Mobility Platform
Otellini CEO Barrett Banias
Mobile Processor
Group
Banias Intel Roadmap

31

HQ takes a new look

at

mobile

Strategic Dissonance Revealed

Desktop Group

Mobile Group

Intel mobile

mobility
32

HQ takes a new look

at

mobile

Resolving Strategic Dissonance

Executives at the 2002 CSD laid out the
microprocessor roadmap Intel would follow:
1. ramp up the Pentium 4 during 2002, top to
bottom across all segments in the consumer
space
2. ramp up Banias during 2003, top to bottom.
This resolved the strategic dissonance: Banias
would indeed not be a niche product.
33

Centrino is born

Microprocessor designs under development are

assigned codenames taken from geographical
features such as rivers, valleys or towns.
Once released to the public, an Intel product
receives and is promoted under a commercial name
and, hence, the brand name Centrino is a
commercial name for the platform that Banias would
become part of.
After CEO Barrett approved this brand name, it was
launched to the public on January 8, 2002.
34

Centrino is born

Putting Centrino Together

Intel Centrino mobile technology was essentially three
components that, working together, delivered platform
capability to use computing power on the go. These
components included:
1. Intel Pentium M Processor based on 90nm process
technology featuring 2MB L2 cache (the microprocessor)
2. Intel 855 chipset family (the circuitry connecting the
microprocessor and memory and communications elements)
3. Intel PRO/Wireless 2100 Network Connection (allowing
mobile communication)

35

Centrino is born

Developing an Interim Chipset

It is necessary to create an interim chipset
which included graphics so as to meet Intels
aggressive launch plan.
A chipset code-named Odem was developed
primarily for the desktop but tweaked for mobility
to meet the Centrino launch date demand.
Centrino was later shipped with more a robust
chipset code-named Montera, which included
fully integrated graphics components.
36

Centrino is born

Mobilizing the communications group

In early 2002, shipping wireless features with
Centrino became a hot topic.
Much needed clarity concerning the importance of
wireless features to Centrino was provided for the
Wireless Networking Groups team and the Mobile
team.
This realization put pressure on the wireless team
to establish clear priorities to deliver on time for the
platform launch and prepare to support around 20
OEMs simultaneously.
37

Centrino is born

Mobilizing the software ecosystem

Since 1996, Intel had been actively involved in
power consumption reduction and had been
working with the industry to reduce power
consumption across all aspects of the PCs,
including software.
Therefore, Intel asked key software vendors to
continue their work to reduce power consumption
and to make the mobility transition by developing
applications that smartly managed power needs,
reducing battery demands.
38

Centrino is born

Managing the branding of Centrino

A Centrino sign communicated to the consumer: Use
your Centrino technology here. But influencing the
industry would not be cheap or easy. Funding was
needed.
Initial acceptance of the larger Centrino brand was
mixed. Some of the OEMs wanted to focus on taking
markets from competitors. Some were early adopters of
the Centrino brand; others were more resistant because
they had their own unique wireless solutions. Ultimately,
consumer demand for Centrino resulted in significant
support from all our OEMs.
39

Centrino is born

Influencing the industry

In September of 2002, a $300 million budget was
approved to launch the Centrino brand, which
included money for an Infrastructure Enabling
Program (IEP).
The program goal was to reach 4,000 verified hot
spots by the time of Centrino launch to demonstrate
momentum, followed by a more massive hot spot
build-out worldwide. That objective was attained
between November 2002 and March 1, 2003.

40

Managing the pressure

to launch

By mid 2002, it was clear that not all components

were on track. Banias was ready. The chipset
was ready. The industry seemed to be ready, but
the wireless component was not. Pressure to
launch Centrino mounted accordingly.
Nevertheless, the decision was made to hold the
microprocessor launch back to wait for the
wireless components, despite enormous dissention.
In August 2002, the new position of platform
manager was created by Otellini.
41

Managing the pressure

to launch

That new position was responsible for coordinating

across Centrino platform to ensure that all the
components would be delivered and the new
manufacturing ramp achieved.
The wireless team succeeded in delivering the more
basic radio and the 802.11b Wi-Fi features for the
target market launch date.
In addition, MPG faced the new challenge of working
with OEMs, which resulted in changing some design
managers from personnel with channel experience to
people with OEM experience. Finally, Centrino was
launched on March 13, 2003.
42

The success of Centrino

Market success
By 2006, one measure of the market
success of Centrino was the attach
rate: the percentage of laptops sold
worldwide that contained the entire
platform (mobile microprocessor plus
the Wi-Fi capability)

43

The success of Centrino

Market success (continued)

Figure 5, while not Centrino-specific,
provides some insight into the rapid
growth of the success approach to
mobile computing.

Figure 5
44

The success of Centrino

Market success (continued)

Not surprisingly, Centrino quickly
repaid the confidence its supporters
placed in the platform

Figure 6

45

The success of Centrino

Market success (continued)

Intel believed that Centrino was largely responsible

for more than doubling the compounded annual
growth rate of note book sales after 2002, increasing
from a CAGR of around 10% between 2001 to 22%
in 2003 and beyond.
Further, Intel thought the premium pricing it was able
to achieve with Centrino, when average selling prices
for other chips made by Intel and its competitor
were declining, added $2 billion in revenue in the
two years following Centrinos introduction. (Figure 7)
This success meant that Intel could reduce the
amount of money it spent on marketing Centrino
over time.
46

The success of Centrino

Market success (continued)

Figure 7

47

The success of Centrino

Technical success
Intel was wrestling with finding the best avenues for
growth.
At the time of the 2003 SLRP, Intel produced three
different microprocessor architectures: Centrino for
mobile; Pentium 4 for desktop computers and
Itanium for servers.
The company was developing two new architectures
that promised to provide good future growth
opportunities: Merom (from IDC) and Tejas
(developed in the US).
48

The success of Centrino

Technical success (continued)

Being a much smaller and lower
power design than Tejas, Merom could
be the basis for dual core
microprocessors.
Going forward, Intel would align its
architectures for mobile and desktop on
Merom.
49

Conclusion
Intel Centrino technology was the companys first
attempt at developing a platform solution. The launch
of Centrino matched well with industry convergence
toward broadband availability and mobility consumer
demand.
Going forward, Intel planned to continue expanding
its platform strategy into, among others, the
enterprise and digital home market segments. Top
management wanted to make sure the key strategic,
organizational and managerial competencies collected
from its Centrino platform experience would be used
in future platform developments.
50