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The 386 and 486 (known officially as the 80386 and 80346) were standard in IBM-compatible personal computers. It was estimated that in 1990 about 14 million of the 22 million PCs made worldwide included an Intel microprocessor. With each chip costing an estimated $50 to produce, and carrying a $200 retail price, Intel was raking in money. "As the sole supplier of the computer industry's most important single part, the 80386 microprocessor, Intel enjoys profit margins far greater than those of its competitors," wrote Richard Shaffer in Forbes.
Under Grove, Intel found it necessary to introduce a substantially
improved microprocessor as often as every year or so, in order to insure its place in the market. Every time a rival like Advanced Micro Devices began shipping a chip that approached Intel's standard, the pioneering company's profit margins began to fall. "It cannot achieve supremacy in a product and sit back and count the money rolling in forever," Forbes wrote of Intel in 1990. "It must keep pushing back the frontiers of innovation and technology."
And that is precisely what Intel continued to do, in production as
well as in design. No sooner did a new plant open than Intel's design and engineering staff began to plot the construction ora larger, cleaner, more efficient plant. "In this business you have to build your own capacity," Grove remarked.
In 1992, when Intel's IBM~PCmarket share remained at a solid 75
percent, Motorola, its biggest competitor, was a distant second, with 14 percent of the market. Yet that year Intel spent $1.2 billion of its $5 billion in sales on plants and equipment and another $800 million on research and development.
In June 1989, Intel began to develop the Pentium Processor.
With 3.1 million transistors operating in a single chip, it was faster, smaller, and more powerful than any previous Intel processor or any other on the market. The company faced a debacle when, after a well-orchestrated launch, the new microprocessor was found to have.
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