Wintel Case Study Term Paper Example | Topics and Well Written Essays - 1500 words

Wintel Case Study - Term Paper Example Secondly, the market segment for Intel is Original Equipment Manufacturers (OEMs). We are informed that the microprocessor accounts for 20 – 40% of the total manufacturing costs of a PC(Yoffie, Casadesus-Masanell & Mattu, 2004). This should ordinarily make the manufacturers price sensitive, however Intel’s threat to integrate forwards prevents them from adopting that practice. In fact the converse happens because Intel is the market leader in chips production. Intel has strong relationships with a few OEMs whom it can selectively give its new microprocessors at a premium price. The premium price ensures that Intel sustains its profitability. On the value-chain structure we see Intel to be at the base. Here the business realized that improving the performance of sophistication of its microprocessors was not enough to grow its business. Intel therefore established Intel Architecture Lab (IAL) to tackle PC platform problems so as to increase the demand for its chips (Yoffie, Casadesus-Masanell & Mattu, 2004). This assures Intel of a growing market and more profits. The organization has also partnered with Independent Hardware Vendors (IHVs) and Independent Software Vendors (ISVs) where it outsources pieces of technology to ensure that its products are delivered timely and in adequate supply. The guarantee on timely delivery and adequate supply sustains the Intel brand image, which consequently gives the company a basis for pricing its products at a premium. With regards to revenue generation and margins, Intel obtains a majority of its profits from the sale of microprocessors. The firm’s ability to control demand through selective selling, investments in software development and complementary relationship with Microsoft are all geared towards increasing the market and profits from Intel’s powerful microprocessors. As a sole-source manufacturer, Intel has asserted its position within the PC value network as a powerful supplier. The market had few,