Silicon Insider: Intel Inside Is Out

Then along came Intel Inside. It was the equivalent of a company that made piston rings trying to convince you to buy a Corvette because Chevrolet put those rings in its engines. Intel, sitting at nearly the top of the food chain, was trying to reach down, past two or three better-known intermediaries, and wave at the consumer. It was crazy -- especially when driven home by TV commercials featuring dancers in gold lamé clean-room suits -- and it was breathtakingly expensive for an industry that until then had settled for dreary B&W ads in Circuit News and Datamation. But it worked.

An Innovative Marketing Movement

Like most revolutionary ideas, the success of Intel Inside looks inevitable in retrospect: PCs, after all, are little more than containers for microprocessors -- a fact that an increasingly sophisticated audience had begun to understand. Thousands of consumers were already looking to see which Intel 80x86 processor (286, 386, 486 … ) was in the computer they planned to buy. So putting an "Intel Inside" sticker on the box was, looking back, really only meeting most consumers halfway.

Moreover, Intel was hardly new to innovative marketing. Intel Inside, in fact, had an antecedent a decade before in an equally landmark campaign called Operation Crush. Crush, led by Grove and two of my favorite people, PR legend Regis McKenna and Bill Davidow (now a famous venture capitalist), was Intel's desperate Hail Mary after Motorola caught it napping.

This was December 1979, in the early days of the microprocessor, and Intel, having run most of its competitors out of business, made the mistake of sitting on its laurels ... and looked up to find that Motorola had beaten it to the next generation of chips. Stunned, Andy Grove gathered a task force and gave it the job of saving Intel -- fast.

The Crush team had little to work with, as Intel's next generation of products was months away. The only competitive edge, it seemed, that Intel still had was the wealth of design support it offered with its chips. So the team went with that and in the process changed the very definition of a computer chip from being a mere sliver of silicon to a complete customer solution -- an utterly radical idea in those days but commonplace today.

Crush not only saved Intel; it restructured the entire semiconductor industry, putting Intel on top for a generation -- especially after an Intel salesman walked into IBM's PC division in Boca Raton, Fla., with this "solution" … and walked away with the IBM PC contract. Within five years Intel was called the most important company on earth.

Facing Increased Competition

Roll forward a dozen years, and Intel is in a different kind of trouble. It had always been a painful law of the semiconductor industry that innovative and highly profitable new chips quickly became less profitable commodities as soon as competitive parts came on the scene -- largely because there was no brand identification between one semiconductor company's products and another's. Now this cycle was getting shrunk even shorter as Intel chips, by far the dominant processors on the market, were getting attacked on all sides by "clone" chipmakers such as Advanced Micro Devices, which built chips that were as identical to Intel x86s as the law would allow.

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