On January 3, 2006 Intel Corporation formally unveiled a new brand identity that it said "represents a significant milestone in the company's history and further signifies the company's evolution to a market-driving platform solutions company." The company has made a fundamental shift in its approach to the market that began with the development of the Intel Centrino mobile technology platform. The company reorganized itself around the platform model last year, and is now focused on four key market segment opportunities: mobile, digital home, enterprise and health. The company has also announced that it will deliver a new platform for the digital home - Intel Viiv technology - in early 2006. The announcement was made at the same time as the Consumer Electronics Show in Las Vegas. Paul Otellini was one of the keynote speakers at the show.
On rare occasions companies change their names. A name change might occur as a result of a merger or major acquisition such as Exxon Mobil. Synopsys began in 1986 as Optimal Solutions. Cadence Design Systems, Inc was formed in May 1988 as the result of a merger between SDA Systems Inc. and ECAD, Inc. The name change might occur in an attempt to overcome negative publicity such as WorldCom becoming MCI. This might occur when a firm changes its basic business strategy. It might occur when a firm wants to replace a name associated with outmoded technology. IBM was Computing-Tabulation Company until 1924. It may simply occur as a marketing effort to revitalize a struggling company.
When a company changes its name, it generally changes its logo. A company may obviously change its logo without changing its name. The IBM logo was originally based on a globe. The familiar three letter logo was originally an outline of the letter, it then became a solid version and is now a stripped version. In the case of a name and/or logo change a firm will spend a substantial amount of money developing new and replacing old versions of everything with the company name or logo.
A good example of a company name change is Exxon. In the early seventies Jersey Standard changed its corporate name to Exxon enabling it to replace three regional brands (Esso, Enco and Humble) of gasoline with a single national brand. After the merger with mobile the firm became Exxon Mobile. A more recent example of a company name change is SBC Communications Inc. who changed its name to AT&T Inc. after it acquired AT&T Corporation.
An example of a logo change would be the NBC (National Broadcast Company) who in 1976 introduced with considerable fan fare a new logo, a stylized "N" built from two trapezoids. They were embarrassed when it was found that tiny Nebraska ETV Network that had a nearly identical logo. NBC paid the Nebraska company to obtain the rights to the logo.
Companies frequently change product names, advertising themes and taglines. Taglines are an important component of marketing campaigns. General Electric taglines have included "We Bring Good Things to Life", "Progress is Our Most Important Product", "Live Better Electrically," and now "imagination at work". Nike uses "Just Do It", BMW "The Ultimate Driving Machine" and IBM "On Demand"
Sometimes a company changes its name or a product name for political correctness. There once was a dietetic candy called AIDS. In 1957 Sam and Bo started a restaurant called Sambo's. The restaurant chain once had over 1,200 units. The firm used a logo based on a children's story called "Little Black Sambo". Although the story takes place in India and Sambo is Indian, many thought the boy was African. The negative public relations caused the firm to close all but the original store in Santa Barbara. AIDS dietary candy
A brand is a product, service or concept that can be distinguished from similar products, services and concepts the way cattle ownership can be determined by a symbol burnt into the skin of the animal. The visual elements of a brand included shape, font, color and text. But a brand is more than this. According to Building Brands Limited a brand is "a collection of perceptions in the mind of the consumer." In the heyday of IBM hardware is was said that "no one ever got fired for buying IBM"
Intel is not merging with anyone, they dominate the semiconductor manufacturing industry, and their "Intel Inside" marketing campaign has been an enormous success. How many consumers know the vendor of the memory or disk drive of the computer they own? Most know not only the name of the vendor of the processor chip but the version of the Pentium or Centrino chip they have. In fact in July 2005 Interbrand Corporation, a leading brand consultancy firm, ranked the top 100 brands on net present value based upon their five year projection of intangible earnings discounted by certain risk factors. The results were published in Business Week. In this report Intel ranked number 5 behind Coca-Cola, Microsoft, IBM and GE. The value of the Intel brand was calculated to be nearly $36 billion.
The original Intel logo developed 37 years ago (1968) by company founders Robert Noyce and Gordon Moore was described variously as dropped-e, lowered-e or decended-e Intel logo. In 1991 Intel began using Intel Inside advertising logo. The Intel Inside® Program is one of the world's largest co-operative marketing programs, supported by thousands of PC makers who are licensed to use the Intel Inside® logos. The new logo will feature an oval swirl souring the company name.
New and Old Logo
New and Old Ad Logo
The re-branding includes
Branded platforms: Viiv, Centrino, Centrino Duo
Core: Solo, Duo
Pentium: D, M, 4HT, Extreme, 4, 4 Extreme
Celeron: M, D
These changes comes less than a year after Paul Otellini succeeded Craig Barrett as Intel CEO and only a few weeks after Eric Kim was promoted to the role of Chief Marketing Officer. Kim been hired away from Samsung last fall. He was credited with making significant inroads against Sony. Over the last five years Samsung has had the largest increase in brand value at 186%. In a statement Eric Kim said that "'Intel® Leap ahead' is a simple expression that declares who we are and what we do. This is part of our heritage. Our mission at Intel has always been to find and drive the next leap ahead - in technology, in education, social responsibility, manufacturing and more - to continuously challenge the status quo. It's about using Intel technology to make life better, richer and more convenient for everyone."
Otellini, Intel's first chief executive without an engineering degree, has strong opinions about being more market than technology driven. He sees the days when Intel could thrive by being focused on individual microprocessors as past and he believes the firm needs to be bringing together chips and software into so-called platforms.
The company staretgy had been to develop new and improved microprocessors by ramping up their clock speeds, by developing chips based on multicore processing, or by having two or more cores in one processor.
In 2003 with the introduction of Intel Centrino mobile technology Intel first provided customers with full sets of technology ingredients - such as microprocessors, chipsets, communications chips, base software capabilities, and other enabling tools that work together as a platform to improve the way technology is used.
During the first quarter of 2005, the company reorganized its business groups to bring all major product groups in line with the company's strategy to design and deliver technology platforms. These new business units include the Digital Enterprise Group, the Mobility Group, the Digital Home Group, the Digital Health Group and the Channel Platforms Group. The platform-based organizations also reflect the ongoing convergence of computing and communications by incorporating both capabilities across the new groups. The Mobility Group will develop platforms for notebook PCs and handheld computing and communications devices. The Digital Enterprise Group will develop computing and communications infrastructure platforms for end-to-end solutions in businesses. The Digital Home Group will develop computing and communications platforms for use by consumers in the emerging digital home, with emphasis on living room entertainment applications and consumer electronics devices. The Digital Health Group will develop products and explore business opportunities for Intel architecture products in healthcare research, diagnostics and productivity, as well as personal healthcare. At the time Otellini said "Each operating unit has the autonomy to allocate computing and communications resources to be successful, making Intel's entire structure consistent with our platform products strategy." For the first three quarters of 2005 the Digital Enterprise Group had $18.8 billion in revenue, the Mobility Group $9.7 billion and the others combined for $189 million.
Intel's most recent 10Q filing states "We believe that the end-users of computing and communications systems and devices want products based on platform solutions. We define a platform as a collection of technologies that better meet the requirements of end users. By combining technology ingredients to work together in a platform, we believe we provide a better end-user solution than if the ingredients were used separately."
At the CES show Intel introduced Viiv (rhymes with "five") technology includes a suite of Intel-based hardware and software that, along with Microsoft Windows XP Media Center Edition 2005, offers new entertainment experiences. Viiv offers the ability to download, watch, record, control, store, and organize music, movies, TV, games, photos, and entertainment services. PCs based on the platform will have a variety of entertainment options including support for both a minimum of 5.1 or higher surround sound and high-definition video. Systems may also instantly turn on and off with the touch of a button and could be used with TV-like remote controls. Later this year, the platform will add features that will simplify the set-up of a home network and the ability to transfer digital content from the PC to other devices.
Intel announced several content alliances with commitments from top U.S. and international entertainment companies including AOL, DIRECTV, NBC Universal, Turner Broadcasting's GameTap, ESPN, Televisa, Eros and ClickStar.
Intel itself does not manufacture Viiv PCs. It developed the platform and specifications. OEMs such as Acer, Fujitsu, D-Link, LG, Linksys, Lenovo, Huawei, Onkyo, Sony and HP are manufacturing ViiV appliances. Intel will require PC manufacturers to use several different Intel-produced components in Viiv-branded PCs in order to receive marketing assistance from the chip maker
Intel's strategy is a response to the convergence trend toward a single device performing multiple functions like an MFC combines the functions of printer, scanner and fax machine. Today consumers are seeking a single device to perform multiple functions including browsing the Internet, sending and receiving emails, making and receiving phone calls, viewing both live and recorded entertainment (music, videos, movies, and TV shows), taking pictures and recording videos, playing interactive games and so forth. Of course many customers will continue to purchase specific devices like high end digital cameras that offer superior functionality, quality and so on, a sort of best of breed approach. Today a cell phone camera does not offer the same quality and functionality as a high end digital camera.
There are several contenders for the base platform. These platforms include the cell phone, the automobile, home entertainment centers, video game consoles and personal computers. Each is rapidly evolving.
Cell phones which are now in the hands of 80% of American between the ages of 16 and 65 perform most of the desired functions. Mobility is the strength of this handheld device. The obvious limitations of a cell phone include short battery life (3 hour talk time and ~ 1 week standby time), small screen size, storage capacity, and user interface for text entry with only 12 keys. Dead zones and dropped calls are still a problem for carriers in some areas. Connect time charges can make this an expensive solution for some features. New cell phones are addressing some of these issues. For example the Sony Ericcson Walkman mobile phone includes a 2 megapixel camera and can hold 30 hours of music. The Palm Treo combines PDA and cell phone capabilities in particular a QWERTY keyboard for text entry and MS Windows Mobile software. MobilTV from Idetic offers live TV channels covering news, sports and weather through several major carriers.
The automobile has long had AM/FM radio, satellite radio, CD and cassette players, car phones and communication capabilities such as OnStar. With a DC power adapter one can run most mobile products such as a DVD players or video game. MP3 players like iPods can use FM transmitter to play through the car FM radio. Auto companies are now offering factory installed support for iPods as they have with satellite radio and DVD players. GPS navigation is another popular application. KVH TracVision A5 provides full in-motion reception of satellite TV signals through DirectTV's Mobile Choice program. The service supports 135 channels but not the major networks or premium channels like HBO and Showcase. While the car, SUV, van or truck makes sense during commuting and long family trips, the major limitation is obvious. Driver distraction is also a safety issue.
The strength of home entertainment center is the theater like experience they can offer with large screens, surround sound and HDTV. Also a home entertainment center can easily accommodate multiple units for different family members. Internet browsing is provided via the cable modem.
The big three of video games consoles are Sony with its PlayStation line, Nintendo with its DS line and Microsoft with its Xbox line. In 2004 market analyst firm, the NPD Group, reported Sony Playstation leading the pack in North America with 56% market share, Microsoft with 25% and Nintendo Game Cube with 19%. For 2005 NPD reports that retail sales of video game hardware, software and accessories hit a record $10.5 billion up 6% from 2004. Bill Gates made the cover of Time twice last year, once for the Xbox (May 23 issue). By that time 20 million units of Xbox had been sold since its introduction in November 2001.
Bill Gates and MS Xbox VP Peter Moore were at CES with the new Xbox 360. They have already sold 600,000 units and have a target of selling between 4.5 million and 5.5 million Xbox 360 consoles during the current business year, which ends June 30, 2006.
At the show Moore said "Five years ago, we envisioned the future would include the convergence of high definition movies, things like games and photos, movies and, of course, television. Today, Xbox 360 is delivering on that vision."
Microsoft also offers Xbox Live as a one-stop digital download center where you can access high definition games, music, movie content from our leading industry partners. Xbox Live already has 2 million members. Microsoft also is attempting to more closely tie Xbox 360 to the rest of its universe by trying to make it a conduit for other entertainment activities such as watching high-definition TV, looking at family photos and listening to music. Xbox 360 can do some of those tasks itself, and it also can function as an "extender" that links to a PC running Microsoft's entertainment-centric Windows XP Media Center Edition. According to Bill Gates "In the living room itself, Xbox 360 is our centerpiece and a product that redefines what goes on there."
Peter Moore also announced plans to deliver a new Xbox 360 external HD DVD drive peripheral in 2006. According to the company: "The new drive will offer millions of Xbox 360 owners the ability to easily enjoy HD DVD movies and will provide consumers with even more choices for experiencing high-definition content, in either physical or digital form."
Sony and Nintendo are expected to have major product releases in 2006. In January 2005 Sony launched PSP (PlayStation Portable) equipped with a 4.3-inch-wide screen color LCD and wireless capability. It plays movies and music sold on a proprietary miniature disc, the 1.8-gigabyte Universal Media Disc. In November 2004 Nintendo introduced DS (Dual Screen).
The strengths of the personal computer is breadth of applications, backup capabilities, Internet connectivity and storage capacity. Screen size lies between the cell phone and the plasma TV. The laptop or notebook version provides mobility but again limited battery life is an issue. The increasing availability of WiFi hot spots addresses the issue of the accessibility to the Internet while on the move. One can easily see the growing need for a system to manage the sheer quantity of diverse types of content. This is a strength of the PC.
The Tipping Point for these platforms is availability of content. When Apple introduced its Video iPod in October the technology promise was obvious but the initial content was limited to past episodes of 5 TV shows including popular Lost and Desperate Housewives, some Pixar short films, music videos and home movies. Vendors of the various platforms are rushing to form alliances with content providers.
Both Google and Yahoo are also getting into the content game with online stores. For example Video Google is an open online video marketplace, where you can search for, watch and even buy an ever-growing collection of TV shows, movies, music videos, documentaries, personal productions and more. You can purchase or rent premium content at the Google Video store. Cable companies are beginning to offer VoD, Video on Demand, as a premium service.
Consumer electronics has become the major driver for semiconductor firms. Look at the phenomenal success of the Apple iPod. Demand for consumer electronics is heaviest from young people who have grown up with these various technologies. Product lifetimes are shrinking. Competition across and within these platforms will drive down consumer prices and therefore drive down component costs. For example, cell phones retail for $200 to $ 600 dollars. Carriers offer ~$150 discount to lure new customers and entice existing customers to renew contracts. There are two versions of Xbox, the Xbox 360 Core System lists for $299 while the premium edition lists at $399. The various versions of iPod range from $100 for the low end shuffle to $400 for the high end video version
The consumer electronics business is becoming more like the old safety razor business where you give away or discount the razor and make money on the blades. Over time households will buy more units and look for systems with boarder range of capabilities. They will be very interested in mobile systems with increased battery life to support anywhere and anytime use. They have already evidenced a willingness to pay for content and premium services.
Users of EDA tools are under substantial pressure to develop boarder products with new features, increased speed for downloading and streaming media, and increased storage capacity for both software and content. They must accomplish this within considerable time-to-market and cost constraints. Tools and methodologies that can address these challenges with minimal risk should be in high demand. One hurdle facing EDA vendors, particularly those offering new point tools, is to convince decision makers in prospect accounts that they can deliver on their product promises. In the CE arena missing a target market window by a little is the same as missing it altogether.
If a company like Intel with a long successful business track record is changing direction in response to shifting market requirements, all companies would be well advised to review their own strategies. Of course it is too early to know what impact these changes will have on Intel. On January 17 Intel announced results for the fourth quarter and the year. Revenue for the quarter was $10.2 billion up 6% from the fourth quarter in 2004. Net income was $2.5 billion up 16% from the same period a year ago. Revenue for the year was $38.8 billion, up 13.5% while net income was up $8.7 billion up 15% year-over-year. However, the results were below analysts' expectations and below Intel's own midquarter forecast. As a result the stock price dropped 11%.
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Mentor Graphics Reports Preliminary 2005 Results; Fourth Quarter Revenue and Bookings Hit Records 234 Mentor announced that fourth quarter 2005 bookings and revenues achieved record levels. Revenues are expected to be in excess of $220 million, exceeding the Thomson First Call consensus estimate of $218 million. The company expects to be profitable for the quarter.
Sequence Low-Power Design Tools to Highlight Japan's EDSF At the upcoming Electronic Design and Solution Fair Sequence will exhibit its complete lineup of tools for low-power design, including PowerTheater, a complete toolkit for SoC power analysis and optimization; CoolPower, providing physical power optimization for leakage power, and dynamic power; and CoolTime, for static and dynamic power grid analysis and optimization.
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- Cadence Selected by MIET to Ramp Up Russian Startup Ecosystem; Moscow Institute of Electronic Technology Inaugurates Design Center to Develop and Fuel the Russian Electronics Industry
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-- Jack Horgan, EDACafe.com Contributing Editor.