Intel\'s Dominance of the Microprocessor

Intel's Dominance Of The Microprocessor Industry

The microprocessor industry is one of the driving forces behind the continued proliferation of computer technology throughout the world. The silicon CPU chips that serve as the brain-center for computer equipment of all strains have experienced an expansion in economic importance proportional to that of innovation in computing, telecommuting and media devices. Thus, as these categories have achieved mounting penetration of global markets, so too have business leaders in the area of microprocessor research, development and production. None have been so dominant in this field as has Intel. Indeed, as the profile on both the company and the industry which it shapes will show, there are no competitors which come close to Intel in terms of market share or innovation.

So is this demonstrated by recent financial reports extending from the microprocessor industry where, according to GS (2008), "in the third quarter of 2008, Intel accounted for 80.4 per cent of global microprocessor revenue, up 0.3 percentage points from 80.1 per cent in the second quarter of 2008. The company extended this gain on the year-over-year comparison, growing its share by 1.7 percentage points from the 78.7 per cent it held in the third quarter of 2007." (GS, 1) This points us immediately to the consideration of changes in the microprocessor industry.

Such is to say that the continued acceleration in its growth might best be explained by way of considering some of the forces of change within the industry itself. In the aftermath of the dot.com boom and the global permeation of high speed fiber optic cable, new foci on recreation, media and device-integration have helped to change the market landscape for manufacturers of the processors which must power these innovations. In large part, this has meant the penetration of new markets for Intel.

This is demonstrated in the article by a quick glance at the market, which includes only one other major participant. According to Goettler & Gordon (2009), "the industry is almost a pure duopoly with Intel and Advanced Micro Devices (AMD) comprising 95% of sales." (Goettler & Gordon, 1) and according to the research produced above in the source by GS, AMD actually saw its market share decline across the same sample period.

This denotes the relatively monolithic nature of the microprocessor industry. This also denotes an extremely attractive field from Intel's perspective. Horn (2009) advises using Porter's Five Forces as a way of understanding Intel's role within its market. Here, Horn notes that "Michael Porter's five forces analysis determines the attractiveness of an industry based on bargaining power of the supplier and buyer, threat of substitutes, threat of new entrants, and rivalry among existing competitors. In the microprocessor industry, buyer bargaining power, new entrants, and rivalry are all strong forces while supplier bargaining power and threat of substitutes are weak forces." (Horn, 1)