By: Riley Dipucchio and Sophie Puccetti
Intel Corporation
Background:
·
Intel
is an American corporation based out of Santa Clara, California that
specializes in the manufacturing of multinational semiconductor computer chips
·
They
are considered to be the world’s largest and highest valued semiconductor chip
maker based solely on their revenue
·
Intel
was founded July 18, 1968 and worked its way up to having and sustaining a
monopoly power in the microprocessors industry
·
Through
their founders and executive leadership committee, Intel uses advanced chip
design and innovative manufacturing capability to separate themselves from the
other competitors
·
Using
new ideas for advertising like “Intel Inside” and the Pentium computer processor made Intel a house-hold name brand for
personal computers (laptops and
desktops)
Pure Monopolyà“exists when a single firm
is the sole producer of a product for which there are no close substitutes”
How They Gained Monopoly Power:
Legal Barriers:
·
As
Intel entered the semiconductor chip manufacturing industry; the founders and
executive board were filled with ideas as to how they can become the best in
their market. With their innovative ideas, Intel decided to receive patents on
their products to make their technology and ideas untouchable to other
competing companies.
·
This
allowed Intel to have an exclusive right over their memory chips and
semiconductors making it difficult for other companies to compete as well as
giving Intel significant monopoly profit.
·
There
are not many companies that have patents that interfere with the ideas put
forth by Intel in an attempt to be patented for their own brand
·
Although Intel had many patents, they were faced with many law suits
from their main competitor AMD (Advanced Micro Devices)
as it was to believe
that their patents had infringed on some of their ideas. This lead to Intel and
AMD coming to a cross-licensing agreement in 1976 allowing both companies to
use the others technological innovations without charge.
Economies of Scale:
·
Intel
started off as a very small company with patents on its new technological ideas
for semiconductors and processors. In 1971, Intel created its first
microprocessor chip which later became its primary business idea as a result of
PC’s success. During the 1990’s Intel was aggressive in their innovation
towards the chips and became the dominant supplier of all PC computers. Intel
and PC had a ten year deal in place to ensure the brand name of Intel would
grow being PC’s number one supplier. As a result of this partnership (which is
still going on), Apple decided that they would need the new x86 processor from
Intel to power all their Macintosh computers.
- This relationship between Apple and PC with Intel made it very difficult for other companies with new ideas to enter the industry as Intel supplied the 2 largest computer manufactures with semiconductor chips
· As
well, the production of these chips are a very expensive task and new companies
with low budgets have a tough time competing in the market with Intel and other
mid to large sized companies
Pricing and Strategic Barriers:
·
Intel
has very unique price and strategic barriers when it comes to the way they are
able to “create” barriers to ensure they stay a monopolistic company.
o
Intel
has been in constant law suits with many companies about their patent
infringement on their computer architecture and other technologies. In an
attempt to save the business, Intel sued the companies back for using their
patented ideas. Both companies would drop the law suits and Intel was given the
right to use the current and future patented idea
o
As
well, they would arrange agreements with competing companies to allow a
cross-licensing to ensure both companies would profit from the innovative idea
Do They Still Have a Monopoly?
1.
Intel
has been able to keep their relationship with PC and Apple to maintain their
monopoly power. Even though they have been sued by many rival companies; Intel
has branded their name into being a household company for computer chips.
Bibliography
Videos:
Websites:
"Intel
Monopoly." University of Notre Dame. Web. 13 Apr. 2012. <http://www.nd.edu/~mgrecon/datafiles/articles/intelmonopoly.html>.
"Intel
CanadaEnglish | Français." Intel Canada. Web. 13 Apr. 2012. <http://www.intel.com/en_CA/index.htm>.
"Intel."
Wikipedia. Wikimedia Foundation, 13 Apr. 2012. Web. 13 Apr. 2012. <http://en.wikipedia.org/wiki/Intel>.
"IT
News Post - The World's Technology News in One Place." Windows-on-Intel
Tablet Share Small for near Future.
Web. 13 Apr. 2012. <http://www.itnewspost.com/microsoft/windows-on-intel-tablet-share-small-for-near- future/>.
Images:
It looks to me as if AMD only wins a trick if there is some reason for Intel to allow it - the sort of thing that George Galloway or David Ike would call ' two cheeks on the same bottom ' But it doesn't explain why Russia, China or Iran shouldn't buy a lot of R&D and if necessary a lot of lawyers and save us from all this freedom. After all, freedom isn't supposed to have this kind of result and it doesn't have it in any other gutter of the market.
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