Intel 2014 Annual Report Download - page 14

Competitors
We compete against other companies that make and sell platforms, other silicon components, and software to businesses that
build and sell computing and communications devices to end users. Our competitors also include companies that sell goods and
services to businesses that utilize them for their internal and/or customer-facing processes (e.g., businesses running large data
centers). In addition, we face competition from OEMs, ODMs, and other industrial and communications equipment manufacturers
that, to some degree, choose to vertically integrate their own proprietary semiconductor and software assets. By doing so, these
competitors may be attempting to offer greater differentiation in their products and to increase their share of the profits for each
finished product they sell. Continuing changes in industry participants through, for example, acquisitions or business
collaborations could also have a significant impact on our competitive position.
We are a leading provider in the PC and data center segments, where we face existing and emerging competition. In the PC market
segment, ultra-mobile devices—such as tablets and smartphones offered by numerous vendors—have become significant competitors
to PCs for many usages. Most of these small devices currently use applications processors based on the ARM* architecture; feature
low-power, long battery-life operation; and are built in SoC formats that integrate numerous functions on one chip.
In the data center segment, our data center platforms face emerging competition from companies using ARM architecture or other
technologies. Internet cloud computing and high-performance computing are areas of significant targeted growth for us in the data
center segment, and we face strong competition in these market segments.
We are a relatively new entrant to the segments for tablets, smartphones, and similar ultra-mobile devices. We have adjusted our
product roadmaps to emphasize the development of low-power SoC chips for such devices, as well the Internet of Things.
In the Internet of Things market segment, we have a long-standing position as a supplier of components and software for
embedded products, and this marketplace is significantly expanding with increasing types and numbers of smart and connected
devices for industrial, commercial, and consumer uses. In this growing market segment, we face numerous large and small
incumbent competitors as well as new entrants that use ARM architecture and other operating systems and software.
McAfee is a major provider of digital security products and services to businesses and consumers. Numerous competitors offer
security products and services, and we seek to offer competitive differentiation by integrating hardware and software security
features in many of our offerings and to have security offerings in numerous market segments, including mobile and embedded
devices and for data centers.
Our products primarily compete based on performance, energy efficiency, integration, innovative design, features, price, quality,
reliability, brand recognition, and availability. The importance of these factors will vary by the type of end system for the products.
For example, performance might be among the most important factors for our products for data center servers, while price and
integration might be among the most important factors for our products for tablets, smartphones, and other mobile devices.
Competitive Advantages
Our products’ ability to operate on multiple operating systems in end-user products and platforms operated or sold by third
parties, including OEMs, is a key competitive advantage. We seek to optimize our products for multiple operating systems and
invest substantial resources working with third parties to do so, but such investments are risky given that it is not clear which
products will succeed in the market.
Another key competitive advantage is our market lead in transitioning to the next-generation process technology and bringing
products to market using such technology. We have products in the market manufactured using our 14nm process technology
and are currently working on the development of our next-generation 10nm process technology. We believe that these transitions
will offer significant improvements in one or more of the following areas: performance, new features, energy efficiency, and cost.
Moreover, the combination of our network of manufacturing and assembly and test facilities with our global architecture design
teams is another important competitive advantage. We have made significant capital and R&D investments into this integrated
manufacturing network, which enables us to have more direct control over our processes, quality control, product cost, production
timing, performance, power consumption, and manufacturing yield. The increased cost of constructing new fabrication facilities
supporting smaller transistor geometries and larger wafers has led to a smaller pool of companies that can afford to build and
equip leading-edge manufacturing facilities. Most of our competitors rely on third-party foundries and subcontractors such as
Taiwan Semiconductor Manufacturing Company, Ltd. and GlobalFoundries Inc. for manufacturing and assembly and test
needs. We provide foundry services as an alternative to such foundries.
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