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The 1970s turned Intel into a giant. Revenues rose from $4.2 million in 1970 to $661 million in 1979, a year in which it held 40 percent of the $820-million microprocessor market. By 1980 its stock had appreciated 10,000 percent from the original offering price of $23.50 per share. With no long-term debt and a dominant position in the market it had helped create, Intel felt its place in the industry was secure. Yet the company's leaders felt that they had just begun to understand the possibilities of the technology. By packing increasingly greater computing capability into silicon wafers, they believed that a single chip could hold
the power of mainframes, those large workhorse computers, produced
mainly by IBM, that drove most large-scale business enterprises.
Yet Intel's bold pioneers would face unexpected challenges. Neither
size nor tradition guaranteed a company a future in the rapidly shifting computer market. As Howard Rudnitsky wrote in Forbesof the semiconductor industry in 19S0: "Still ruthlessly competitive but increasingly capital-intensive and complex, it is no longer a business where you can start in a garage with $100,000 or play everywhere in the big timeeven if you are an Intel, with $66 million a year in R & D and $150 million in capital expenditures."
By 1980, Intel no longer had the field to itself. Companies like
Zilog and Motorola had invested substantial sums to improve their capabilities. And with these worthy competitors seeking to gain market share, Intel could never be sure that its chips would be chosen as standard components when computer manufacturers designed their products. If Intel didn't gain a sufficient number of these so-called "design wins," the groundbreaking work of the prior decade would have been for naught. "In the semiconductor business, the only market share you really care about is the one you maintain when the market is mature," Intel executive William Davidow wrote in his book, Marketing High Technology.
The newly minted 8086/8088 chips, introduced in 1978, were fast
approaching maturity when Intel embarked upon a campaign to make
its microprocessor chip the industry standard. In December 1979 a group of Intel executives convened to discuss strategy. Silicon chips were becoming a commodity, with many different companies producing them. The Intel executives recognized that their company had strengths, especially in the development of microprocessors. Intel had the reputation of being ahead of its time, and its chips were viewed as high-performance products. To exploit these advantages, the company embarked upon Operation Crush, a campaign of public relations and trade advertising that stressed Intel's role in creating the microprocessor. The objective was to achieve 2,000 "design wins" over competition from other technology firms. They ended up with 2,500. "By the time Crush was over [at the end of 1980], our victory was almost complete. Intel all but owned the
business application segment of the 16-bit microprocessor market," wrote Davidow. Among, all the design wins, one, in particular, was crucial. "The one large client we had to win over was IBM," he said. In 1980, IBM chose the Intel 8088 microprocessor as the power plant for its upcoming personal computer, which also used Microsoft's MS-DOS operating system.
The introduction of the IBM-PC changed the computing world.
With the backing of a powerhouse like "Big Blue," personal computers - machines with both a "brain" and a memory-quickly became hot products for individuals and businesses alike. The IBM PCs immediately established Intel's 8086 as the industry standard. Since IBM didn't develop much proprietary technology relating to the PC, companies could replicate the PC without too much difficulty. So when makers of clones, like Compaq Computers Corporation, sought to copy IBM's architecture, they naturally turned to Intel, which was one of the main beneficiaries of the IBM-PC and the clone boom of the early 1980s. The company's
sales rose rapidly from $789 million in 1981 to $1.6 billion in 1984. One segment of its business was under tremendous pressure, however, as competition from Japanese manufacturers brought the price of DRAM down below the cost of production for a company like Inte1. The company abruptly withdrew from the market and concentrated on areas in which it could control prices with advancements in technology.
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