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Geoffrey Moore

Managing Director, TCG Advisors Venture Partner, Mohr Davidow Ventures

Geoffrey Moore is a best-selling author, a Managing Director at TCG Advisors and a venture partner at MDV.  More...

November 2008

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Intel: From Product to Platform Innovation

Intel’s shift from product focus to platform focus has been well chronicled, both in the cover article of the January 9 BusinessWeek and elsewhere.  As described, it is completely consistent with the innovation models set forth in Dealing with Darwin and in our view is absolutely the correct strategy to pursue.  That said, executing it will be no picnic.

First of all, most of Intel’s revenues for the foreseeable future will come from PC microprocessors.  By any lights this makes the category mission-critical.  But in a platform-oriented strategy targeting the hyper-growth markets enabled by mobile devices, game machines, set-top boxes, and the like, the PC market is no longer, in our parlance, core.  That is, it is no longer the source of future gains in competitive advantage.  Screw it up, and Intel is in deep trouble.  Perform brilliantly, however, and there is no net gain in advantage.  No upside, only downside--that's what defines mission-critical context--and it makes for challenging dynamics indeed.

What classically happens in such cases is that revenue commitments are able to extract resource commitments to support them, even when those resources come at the expense of core.  That is, mission-critical trumps core in the battle over resource allocation.  It shouldn’t.  It’s bad when it does.  But it is the normal way of things.  Why?

Well, for starters, mission-critical is what makes the quarter.  Core, by contrast, is mostly about making future quarters.  At the margin, most executive teams shy away from making and keeping the full commitment needed, choosing instead to compromise on critical resources, and ending up jerking around the core project just enough to throw it off its tracks.  And why is this?  Because the executives in charge of the mission-critical outcomes are the most execution-oriented people in the company, and such people excel in securing the resources they need (and then some).  When inspired core executives meet hard-boiled mission-critical counterparts, trench warfare ensues, and it is the latter who control the trenches.

By the way, it doesn't help that what has now become Intel's context is still AMD's core.  They aren't trying to convert to a platform strategy.  They are going to go full bore continuing to attack the PC.  And this will hurt Intel to some degree.  How much pain Intel is willing to take remains to be seen.  But if they redirect too many guns back on AMD, they defeat their own plans.

But let us supposes that Otellini and team solve this conundrum.  It is solvable, by the way, it just takes alignment, courage, and commitment to actually execute the solution.  Well, Intel has done that sort of thing in the past, so I wouldn’t put it past them to do it again.  We’re still not out of the woods.

The key to the platform play is to leverage a ubiquitous product into a market-making platform.  Intel has ubiquity in PCs, but not elsewhere.  It needs to invade new spaces where it is not ubiquitous.  It needs to recruit new partners who have not been part of the PC whole product team.  It needs to develop relationships of trust with service providers who have been loath to allow the PC pair of Wintel near their franchises (although, to be fair, this has probably been more due to fear of Microsoft than Intel). 

Finally, Intel needs to convert from a competition culture where only the paranoid survive to a collaboration culture which trusts first and plays tit-for-tat later.  That's the only way to engender partnership dynamics.  This is a tough transition for any gorilla company who rose to power as a fierce competitor, as the folks at Cisco, Microsoft, and SAP are all willing to testify.  It is even harder when a traditional competitor like AMD is nipping at your heels.  But transition it must if it is to make the platform strategy a success.


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