Thursday, April 10, 2014 11:47:54 PM
http://finance.yahoo.com/news/one-tiny-chip-changed-world-222100079.html
When Robert Noyce and Gordon Moore founded Intel in 1968, they came up with what they called the "Goldilocks strategy.
They wanted to make memory chips, and started with three very different technologies. One was too easy for rivals to copy. Another added too much complexity.
"And the third one, using a different kind of transistor, called a MOS transistor, turned out to be just right," Moore said in an interview years later.
Intel (INTC) would apply the Goldilocks strategy again years later when it made the leap to microprocessors, launching it to global titan status.
Its chips powered the PC revolution, bringing cheap computing to every desk. Its relentless innovation and clever "Intel Inside" branding helped the company reach new heights in the 1990s as the Web made the Internet a global obsession.
Intel shares rose 22,132% from its August 1986 low to its peak in August 2000.
"The company has really pushed leading-edge technology as a corporate philosophy and strategy," ex-CEO Craig Barrett told IBD. "Look at the stuff it's brought the world. Intel has been there every time the rest of the industry says it's time to slow down.
Out Of Memory
But in the 1970s, Intel was making a good living selling memory chips when Japanese companies teamed up to attack and take over the market, according to Barrett, who joined the company as a manager in 1974.
"We were getting our butts kicked in the memory market," in the 1970s and early '80s, Barrett said. "The Japanese were taking over and we were looking for some place to go to excel.
That's when Intel struck gold.
Intel's big break came in 1981 when IBM chose an Intel microprocessor to power the first commercially successful personal computer, the IBM PC.
Intel engineer Ted Hoff had invented the microprocessor in 1971. A microprocessor is a programmable device that fits on a sliver of silicon. Essentially, it's a tiny computer. It stores software and also runs software stored elsewhere on the computer.
By the early 1980s Intel was a leading microprocessor maker, and its chips ran more software than many of its competitors.
High Tech, Low Price
An Intel spokesman recently told IBD that it was a competitive process but for IBM (IBM) "it had a lot to do with ease with which they could deploy their systems.
IBM decided to buy parts on the open market to keep the price down and boost sales. Intel could supply large quantities of fast, cheap chips that could run the software IBM wanted on its PC.
IBM picked Microsoft (MSFT) operating software. The software maker's future co-founders Bill Gates and Paul Allen had built their own personal computer as teenagers using an Intel chip.
IBM gave its new chip partner, wobbly from the Japanese memory market attack, a large capital infusion. Big Blue in December 1982 said it would buy $250 million of Intel stock, giving Intel the resources to fend off Japanese companies that were eyeing the microprocessor and do R&D on its next-generation chip.
Dan Hutcheson, CEO of chip industry market tracking firm VLSI Research, says Intel proved by the early 1980s that it was the undisputed industry leader — partly just by staying alive.
"It's an amazing company, not just for being innovative but in not dying like most companies do. Instead, Intel reinvents itself," on a regular basis, he said.
The IBM PC came to dominate the personal computer market, opening the floodgates for PCs to show up on more than 1 billion home desks and countertops.
IBM decided not to hold Intel to an exclusive contract, so other PC makers such as Dell and Hewlett-Packard (HPQ) began to buy its processors.
Intel quickly became the industry standard, with the exception of Apple (AAPL), which at that time used a Motorola chip. Today, Apple also uses Intel processors.
"Intel basically — I guess you could call it foresight — could see microprocessors would be great and would bring a big computer revolution," Barrett said, adding, "In the early '80s when the PC market took off, it was the same excitement about that market as when the company started.
Barrett credited Noyce, Moore and Andy Grove. Grove was Intel's fourth employee and CEO from 1987 to 1998, during the bulk of the stock's long run.
"It was their vision and foresight that made the company happen," he said.
'Copy Exactly'
Barrett, who succeeded Grove as CEO and ran Intel from 1998 to 2005, in the 1980s developed its vaunted manufacturing network, using what he called the "copy exactly" method. Every Intel factory is, as much as possible, an exact copy of all others. This ensures high, consistent quality no matter where on the globe Intel makes its chips.
Barrett says Intel bet its future on a presentation Moore gave when he was at Fairchild. Moore said that by shrinking the size of chip features, their power could roughly double every two years. That principle came to be known as "Moore's Law.
Moore's Law To Improve
Although it's not a law of physics, the industry has followed it for nearly 50 years.
"Moore had made computing power affordable" for consumers to put on every home desktop, Hutcheson said, adding, "Intel has used Moore's Law as a guide better than any other company in history.
The IBM PC debuted in August 1981, powered by an Intel 8088 chip that ran at 4.77 megahertz. Intel has rolled out ever more powerful chips. Its current flagship Core i7 processor runs at 3.5 gigahertz, about 734 times faster than the 8088.
Intel chips expanded into servers as the Internet boomed, vastly increasing the need for high-powered computing.
Intel remains the PC chip leader, but it's had a tougher time since the dot-com bubble burst in 2000. PC sales are falling fast as consumers shift to mobile devices.
Smartphone Static
Its chips are in HP, Dell, Samsung and Lenovo tablets. But Intel has struggled to crack the smartphone chip market, which is dominated by Qualcomm (QCOM), U.K.-based ARM Holdings (ARMH) and Korea's Samsung, which makes many chips that go into its own smartphones.
Hutcheson says Intel is making headway. "The company has doubled down on mobile phones and accelerated the rate its mobile silicon is coming out," he said.
Barrett said he would like to see Intel stay on the road it's paved for itself.
"I'd like them to do pretty much what the company has done in its history, continue to invest heavily in R&D and move the market forward to bring out new products and not be afraid of competition.
Asked what challenges entrepreneurs wanting to start the next Intel need to be aware of, Barrett said stay focused and ignore negative buzz. "If you've got a great new technology, focus focus focus onto it," he said.
Recent INTC News
- U.S. Stocks May See Further Upside In Early Trading • IH Market News • 04/29/2024 01:05:53 PM
- U.S. Futures Rise in Pre-Market Trading Amid Key Federal Reserve Meeting and Earnings Week Ahead • IH Market News • 04/29/2024 11:12:54 AM
- U.S. Stocks Rally On Upbeat Tech Earnings • IH Market News • 04/26/2024 08:30:27 PM
- Exxon Mobil Net Profit Drops 28% to $8.22 Billion, Atlassian Surprises with Revenue Boost and Co-CEO Exit, and More in Earnings • IH Market News • 04/26/2024 11:47:51 AM
- U.S. Stocks Climb Well Off Worst Levels But Close Mostly Lower • IH Market News • 04/25/2024 08:40:00 PM
- Intel Reports First-Quarter 2024 Financial Results • Business Wire • 04/25/2024 08:01:00 PM
- U.S. Futures Drop in Pre-Market Trading as Tech Stocks Plunge After Meta Issues Gloomy Forecast • IH Market News • 04/25/2024 11:53:54 AM
- BHP Bids $38.8 Billion for Anglo American; Biden Unveils Historic Micron Technology Deal, and More News • IH Market News • 04/25/2024 11:48:40 AM
- Futures Pointing To Extended Rebound On Wall Street • IH Market News • 04/23/2024 01:11:27 PM
- U.S. Stocks Close On Bright Note Despite Coming Off Day’s Highs • IH Market News • 04/22/2024 08:38:04 PM
- Nasdaq, S&P 500 Extend Losing Streaks On Tech Weakness But Dow Advances • IH Market News • 04/19/2024 08:32:14 PM
- Paramount’s Shares Surge Following Sony and Apollo’s Joint Bid; ISS Backs Berkshire Hathaway Director Re-election, and More • IH Market News • 04/19/2024 11:31:22 AM
- Intel Builds World’s Largest Neuromorphic System to Enable More Sustainable AI • Business Wire • 04/17/2024 04:22:00 PM
- United Shares Surge 5.3% in Q1 2024 Earnings Beat; Take-Two Cuts 5% of Workforce, and More News • IH Market News • 04/17/2024 10:57:39 AM
- Intel Brings AI-Platform Innovation to Life at the Olympic Games • Business Wire • 04/17/2024 08:00:00 AM
- Samsung Surpasses Apple in Q1 Smartphone Market; Salesforce in Talks to Acquire Informatica, and More News • IH Market News • 04/15/2024 11:06:48 AM
- Paramount Global Board Shrinks, Morgan Stanley Faces Regulatory Probe, and More News • IH Market News • 04/12/2024 11:05:29 AM
- Delta Generates US$37 Million Profit in Q1, Google and Intel Unveil Cutting-Edge AI Chips, and More News • IH Market News • 04/10/2024 11:13:48 AM
- Intel Unleashes Enterprise AI with Gaudi 3, AI Open Systems Strategy and New Customer Wins • Business Wire • 04/09/2024 03:35:00 PM
- Bigger Than Expected Increase In Jobless Claims May Generate Buying Interest • IH Market News • 04/04/2024 01:05:37 PM
- US Index Futures Rise, Oil Dips Slightly • IH Market News • 04/04/2024 11:31:45 AM
- Intel to Report First-Quarter 2024 Financial Results • Business Wire • 04/03/2024 08:30:00 PM
- Major Averages Fluctuate Before Closing Narrowly Mixed • IH Market News • 04/03/2024 08:26:25 PM
- Futures Pointing To Continued Weakness On Wall Street • IH Market News • 04/03/2024 01:06:44 PM
- Cal-Maine Surges on Strong Quarterly Performance, Taiwan Earthquake Disrupts Tech Supply Chain, and More • IH Market News • 04/03/2024 11:12:20 AM
Cannabix Technologies to Deliver Breath Logix Alcohol Screening Device to Australia • BLO • Apr 30, 2024 8:53 AM
Hydromer, Inc. Reports Preliminary Unaudited Financial Results for First Quarter 2024 • HYDI • Apr 29, 2024 9:10 AM
Avant Technologies to Implement AI-Empowered, Zero Trust Architecture in Its Data Centers • AVAI • Apr 29, 2024 8:00 AM
Bantec Reports an Over 50 Percent Increase in Sales and Profits in Q1 2024 from Q1 2023 • BANT • Apr 25, 2024 10:00 AM
Cannabix's Breath Logix Alcohol Device Delivers Positive Impact to Private Monitoring Agency in Montana, USA • BLO • Apr 25, 2024 8:52 AM
Kona Gold Beverages, Inc. Announces Name Change to NuVibe, Inc. and Initiation of Ticker Symbol Application Process • KGKG • Apr 25, 2024 8:30 AM