1. Intel – Strategic Analysis Intel - the Silicon Gorilla December 2001 Louis V. Gerstner Jr. Scott Falzone Mona Hans Jake Hindelong Karan Mehta

2. Intel – Strategic Analysis Chip end-market structure Mainframes – IBM UNIX Servers – IBM, Sun, HP, Compaq and Intel PCs – Intel, AMD and Cyrix Mobile devices – Motorola, Intel…

3. Intel – Strategic Analysis Path to the present Founded 4004 to X86 line -licensing of chip fabrication to others -relationship with IBM Threats from clones heats up -problems with AMD Pentium & Pentium II Pentium 3, Xeon server chip - focused expansion into Servers IA-64 initiative (with HP) -break into big leagues 1968 1970s 1980s 1990s 2001

4. Intel – Strategic Analysis Industry Domination Intel sets the standard for PC chip architecture at the lower end The server chip market has, until now, been out of the reach of Intel Barriers to Entry Hefty Capital Investment Requirements Steep Learning curve Entry Deterrence MANIFESTATION IMPLICATION Judo Economics Commitment Product Proliferation

5. Intel – Strategic Analysis Threats to Intel PC market is slowing down –Intel needs to diversify to maintain profitability Price competition is driving down margins The continuance of AMD is a necessary evil for Intel and keeps anti-trust regulators at bay Fabrication and other design technologies are becoming increasingly commonplace We do not recommend IBM’s entry into the PC based MPU space Implication for

6. Intel – Strategic Analysis Intel’s competition A potential entrant’s strategy will be determined largely by –The vendor of the technology –The computing platform it will appear in PC Server Diverse ValueProd. RangePerformance AMD Motorola Sun Focus Secondary Opportunity or conflict ? Server IBM Focus Secondary Segment

7. Intel – Strategic Analysis Service and technology lead IBM Services profit contribution –1995: 42% –2001: 65% –2003: 70+% Technology leadership –Record number of patents –Process know-how –R & D depth $5 billion planned investments in chip plants –Intel’s Itanium is here! –UNIX is the chip battle ground!!!!

8. Intel – Strategic Analysis Potential chip strategies High-end Continue to promote the Mainframe market Unix Strategy One Increase promotion of Intel-based servers Decrease fabrication investment and focus on licensing technology product Unix Strategy Two Continue co-opetition Do not promote adoption of Itanium