Sample Presentation. Who is Intel? World’s largest producer of semiconductor microprocessors Tremendous growth under Andy Grove as CEO Craig Barrett became.

Sample

Presentation

Who is Intel?

• World’s largest producer of semiconductor microprocessors

• Tremendous growth under Andy Grove as CEO

• Craig Barrett became CEO in 1997

Latest Annual Revenue

1, 3, 5, 10 yr. Growth in Revenues

84% market in PC processors

100% of profits

90% of revenues

Growth in Processor market slowing Down

PC Components

Intel & the Changing LandscapePC at the center of computing universe in

the 90’s

Next decade INTERNET IS IT!Implications: Old rules of Computerdom no longer hold

8% compound growth rate over the past two years

Revenue growth slowed to 5% from

30% Blunders in 1999: chipsets delivered months late

embarrassing design bugs

supply shortages

Transition-Related Bumps

PC Pothole

•Earnings declined for the 1st time in a decade

•Low Cost PCs

•Stock down 30% and off its peak for most of 1998

•Industry Consolidation

Changing PC Dynamics & IntelIntel Assumption: Customers would clamor for more power to run fatter software programs

Reality: Customers wanted cheap PCsto go online. Competitors grabbed 20% of the market share in 1997 (highest in half a decade)

Previous Corporate Mission: Leading Purveyor of PC technology

Existing Corporate Mission:Provide Building Blocks for the Entire Net Economy

The Creosote Bush

• Drips poisonous oil, kills everything around it

• Dominant microprocessor strategy was Intel’s creosote bush

• No other businesses could sprout around it

Intel at Crossroads, Again??Business Goes To New Heights

Business Declines

Inflection Point

Memory Chip Business

Microprocessors

1985

Valley of Death

Intel at Crossroads, Again??Business Goes To New Heights

Business Declines

Inflection Point

Microprocessors

Internet appliances

1999

Valley of Death

Responses to Crisis

Copy Exactly

segment the microprocessor market

reorganize

Think big, broaden the pond,

10X Rule

ObjectivesGrowth Rate 15-20% a year

New businesses to be No.1 or No. 2

Grow faster than the industry

Technology leader

Profitable

Every plant is identical –Down

to the colors of paint

easy to roll-out new

production Techniques

dramatic Boost in

productivity & Quality

Copy Exactly

Segment the Microprocessor MarketCeleron: Inexpensive PCs

Pentium III: Middle Tier of Market

Xeon: High-Powered Servers and Workstations

Results:Celeron market shareUp from 30% to 62%

60% gross margins

Revenues from Xeon chips to double

ReorganizeDismantled previous centralized management structure

Break Intel into five groups and themanagers of these groups report directly to himNetworking Chips

Communication Products

Computer Processors

Information Appliances

New Business

Think Big, Broaden the Pond, 10X Rule

Seminars for top 400 Managers

Day 1: Develop and nurture an entrepreneurial spirit

Day 2: Disruptive Technologies

Day 3: Business Ecosystems

Develop and Nurture an Entrepreneurial SpiritThinking Green: figure out how to grow

new businesses in the shadow of the “creosote bush”

OLD NEW

Disruptive Technologies

Cheap steel reinforcing bars (rebars)

Dismissed as insignificant by industry giants

Rebar companies nibbled their way into the market for higher value steel

PCs and mainframes

Japanese automakers and small cars

Digital Rebar

• Cheap PCs could nibble up the high end computers

• Aggressive Celeron marketing even at

the risk of cannibalizing sales of pricier chips

• Intel Capital

• Opening of the minds

Business EcosystemsConstruct new webs of relationships

Help seed emerging business ecologies

Invested $6 billion to acquire companies

Providing seed money of more than $1.2 billion

Launched in 1991

To invest in companies that created “waves of excitement”

To expose the company to every facet of the Internet economy

1. Intel Capital

Think Big, Broaden the Pond, 10X Rule

Think Big, Broaden the Pond, 10X Rule

1a. Intel Capital

Fund has increased from $300 million

in 1997 to $1.2 billion in 1999

Has stakes in more than 350 software

and internet companies

Notable hits: Red Hat, Inktomi, eToys

Holdings valued at more than $8.2 billion

$327 million in pretax income

Think Big, Broaden the Pond, 10X Rule

2. New Business Group

New rules for funding new projects

No more tight budgets

No more rigorous reviews of internal startups

Similar to venture-capital financing

Launched about 25 seed projects

Spent more than $50 million on these projects

Web-hosting for clients (Citigroup)

Vivonic: digital handheld health planner

PassEdge: technology for protecting digital content

Installing 3,000 information terminals on the back of seats of Madison Square Garden

Equip doctors with secure Ids to encourage online medicine

2a. New Business Group

Web War

Unfamiliar Territory

VS.

New Competitors

Think Big, Broaden the Pond, 10X Rule

3. Information Appliances“Move Intel into the home, somehow”

Screen phonesE-mail terminalsTV set-top boxes

Think Big, Broaden the Pond, 10X Rule

4. Communication Products

Home NetworkingBroadband ModemsPC-based TelephonyServer AppliancesEthernet HubsSmall Networking SwitchesSpecialized Servers for Web Trafficand speeding up e-commerce

Think Big, Broaden the Pond, 10X Rule

5.Networking ChipsFastest growing category among chips

Used in modems, network interface cards, switches, and routers

Acquired a lot of companiesLevel One Communications($2.2 billion)NetBoost ($215 million)Softcom Microsystems ($149 million)

The Future of Intel

• Many skeptics

• The creosote bush is no longer thriving at Intel

• Enormous potential for growth

• Moving in the Right Direction??