Intel SWOT Analysis 2018

INTEL SWOT ANALYSIS 2018

#INTRODUCTION

Intel is a global technology brand that designs and manufactures essential technologies which power the cloud and computing industry. It caters to multiple industries and offers a large range of solutions including computing, networking, data storage, and communications solutions. The brand was incorporated in California in 1968 and reincorporated in 1989 in Delaware. It’s an easily recognisable brand worldwide.  A very large number of computers and laptops around the world carry the ‘Intel Inside’ logo. Its technology has been at the core of several computing breakthroughs ever since the brand was incorporated. The computing market is undergoing fast and major changes which have forced the brand to make changes to its business model. 2017 was a successful year for the company which showed the brand had been successful at shifting its course from being a PC centric company to data centric company. Apart from record revenue, the brand also achieved strong operating income growth and better bottom line results. This is a SWOT analysis of the brand discussing its strengths, weaknesses, opportunities and threats.

#Strengths: –

– Brand image and equity :-

Intel’s brand image is a key strength. It is globally popular brand whose logo is found on almost every laptop and desktop. Intel is considered a reliable technology brand around  the globe and its logo ‘Intel Inside’ a mark of reliability. Since its foundation, Intel has continued to power several industries. Its technology forms the core of several computing breakthroughs. This has also led to high level popularity and customer loyalty.

– Strong revenue growth :-

The brand has experienced strong revenue growth during the recent years. This shows the company has performed well amid fast changing environment. The technology industry has advanced fast and keeping up with the changes has been a tough task for most brands.  The business has taken a turn from being PC centric to being more data centric. Over the last three years, its revenue has grown more consistently. From 55.4 Billion dollars in 2015, it grew to 59.4 Billion dollars in 2016 to 62.8 Billions in 2017. Operating income also grew from 12.9 Billion dollar (GAAP) to 17.9 Billion Dollars.

– Large product portfolio: –

The brand’s product portfolio has grown wider. Now its business is divided into five divisions that  include Client Computing Group (CCG),  Data Centre Group (DCG), Internet of things group (IoTG), Non Volatile memory solutions group  (NSG) and memory solutions group (MSG). CCG or Client Computing Group includes platforms made for notebooks and desktops (including 2-in-1, thin-and-light, high-end desktop, and all-in-one PCs) and wireless and wired connectivity products. Data Centre Group or DCG includes workload-optimized platforms and related products made for enterprise, cloud, and communication infrastructure market segments. IoTG or Internet of Things Group includes high-performance Internet of Things platforms for retail, automotive, industrial, and a broad range of other embedded applications. Non Volatile Memory Solutions Group or NSG Includes Intel® Optane™ technology and 3D NAND flash memory, primarily used in solid-state drives (SSDs). The Programmable Solutions Groups or PSG includes programmable semiconductors, primarily FPGAs, and related products for a broad range of markets, such as communications, data center, industrial, military, and automotive. CCG and DCG are the top two revenue earners for Intel with the first accounting for 54% and the second for 30% of its entire revenue.

– Focus on innovation :-

For a technology brand like Intel growth in the 21st century is not possible without retaining heavy focus on innovation. Intel excels in this areas. It makes major investments in research and development every year. It increased its research and development expenditure from 12.7 Billion dollars in 2016 to 13.1 Billion dollars in 2017. Its continued focus in client computing is driving growth in its cloud and data centre business. Apart from that, the brand is also investing in innovation in areas like artificial intelligence, autonomous driving and IoT.  In 2017 it introduced the 8th generation Intel® Core™ processor family (formerly code-named Coffee Lake), maintaining its rate of innovation.

– Strong manufacturing capabilities: –

Intel has managed strong manufacturing capabilities which is a great strength for any brand. Unlike many other semi conductor companies, the brand manufactures its products in its own manufacturing facilities. Its in-house manufacturing assets are its most critical assets and advantages. This competitive advantage enables the brand to optimize performance as well as shorten time-to-market for new product introduction, and more quickly scale products in high volume. Intel uses its manufacturing facilities primarily to manufacture silicon wafers and memory products. The company has a central development fab from where it transfers each new process technology identically to the manufacturing facilities.

#Weaknesses: –

– Slower innovation and lack of diversification : –

While Intel is an innovative brand, its pace of innovation has been relatively slower compared to its closest competitors like Samsung. Samsung is also a major chip maker and has surpassed Intel a few years ago in this area. Apart from that Intel is not as diversified as Samsung either. While apart from chips Samsung makes smartphones and has acquired a leadership status in the area, Intel is just trying to shift its focus from its PC centered business model. Intel can use its technological capabilities for superior growth given it can invest in the right areas and be more willing to take risks.

– Depends on Computer brands :-

Another big weakness of Intel is its dependence on the computer brands. Its technology is used by computing brands but that also signifies that the brand is highly susceptible to competitive pressure in its chip and memory solutions business. Intel would need to grow its own computing brand to reduce its dependence on the other PC brands.

– High dependence on key markets : –

Intel’s sales are mainly concentrated in a few key markets. China and Taiwan are its biggest markets followed by Singapore and US. Its earnings from the other countries is only around 20% of its entire revenue. So, this could lead to growth in impact of currency fluctuations or changing market conditions. If sales are distributed more evenly it would be better for the financial health of Intel.

#Opportunities: –

– Marketing opportunities :-

Marketing opportunities before brands have grown in the 21st centuries. Apart from digital and video marketing opportunities here has been a rapid growth in options for consumer engagement. Focusing on exploiting test marketing opportunities will help Intel grow its brand faster. Even if its business model depends on other brands, creating brand recognition and higher aeareness can help it create new channels of revenue and growth. social media, other digital channels and AI present several major opportunities of customer relationship management and better engagement. Intel must exploit these opportunities to grow its popularity in less penetrated markets too.

– Supply chain digitisation :-

Digital technology has created several major opportunities for rands apart from those in the area of marketing. It can also help maintain better relationships with the supply chain partners and the company’s staff. Digitising the supply chain reduces wastage and ensures smoother production and delivery. This will also help Intel engage its suppliers better. The brand uses a multi source strategy for its memory business to enable a robust and flexible supply chain. engaging he suppliers can help strengthen it supply chain management. Intel can also use digital technology and Ai to drive the engagement level of its staff higher.

– Related diversification :-

Diversification can generate new opportunities and new channels of revenue and growth for Intel. The brand has missed a  major opportunity which Samsung exploited very well. It could have crete higher revenue and generated after growth through smartphones. Apart from that, there are other related areas for diversification too which the brand can exploit for growth.

– Acquisitions :-

In 2017, Intel acquired Mobileye, an industry leader in computer vision and machine learning. Such more acquisitions will help the brand grow faster and create new channels of revenue and growth faster.

#Threats: –

– Fast advancing technology industry :-

The technology industry has advanced fast and new technologies keep coming. This makes it an industry full of risks. Brand have to invest a lot on innovation. The pressure related to innovation is a lot higher now. Intel has been the shift from PC centered model to data centered model of business. However, its PC centered business is still its largest source of revenue. Given the changing form of technology industry, Intel might have to be more flexible and agile to stay ahead of others.

– Regulatory and legal pressures :-

Regulatory and legal pressures in the technology industry have grown. Worldwide governments are now stricter in terms of sines regulation. the technology firms are being monitored the most. Several of them have also injured heavy fines and are going through legal battles. This does not just create pressures or grow compliance and operational costs but also reduces he chances and channels of growth.

– Competitive pressure :-

Competitive pressure in the technology industry has grown fast. Samsung has outpaced Intel in the chip industry. Competition is also growing from oath brands leading to higher cost pressures and other concerns.

Conclusion: –

Intel is the world’s leading brand of technologies that power the cloud and computing industry. The ‘Intel Inside’ logo can be easily recognised setting the brand apart from its competition. Intel is currently undergoing a shift from being a PC centred brand to a data centred brand. It is also investing aggressively in new technologies including AI and autonomous driving. However, its business is still dependent on PC brands and key markets. It must focus aggressively on innovation as well as try diversification and acquisitions to generate new channels of revenue and growth. remaining stuck in some key areas and markets can lead to higher competitive pressure. Otherwise, its performance overall has been good during the recent years and it has string technological and manufacturing capabilities that can enable it to achieve better performance and faster growth.

Sources:

Intel Annual Report 2017