Gap Analysis
Gap 1 - Mobile Devices
One of the gaps between Intel and the consumer electronics market right now is the mobile devices market – which has been dominated by Qualcomm and Samsung. While Intel has about 90% of the servers market and 60% of the consumer PC sector, the tech company has close to 0% of the smart phone market right now and is struggling with its Atom processors which were designed for handheld electronic devices. But even though Intel’s mobile device processor division is earning negative operating profits, it is still important for the company to retain its efforts in this sector because of the sheer volume of mobile devices that are being shipped each year – 1 billion mobile devices have been shipped globally in 2013. The big question is how much of Intel’s resources should it commit to this seemingly lost cause?
However, we believe that not all of the entire mobile market is lost to Intel – they still have 4-5% of the tablet market even despite their near 0% share of smart phones. By building on this, they should be able to get a better footing in this market. One of the things they can do would be to step up the strategy that has always worked for them so far – subsidizing manufacturers who put in Intel chips instead of ARM-based processors. By using subsidies and extensive Intel engineering support for tablet manufacturers, Intel will be leveraging on one of its greatest strengths, financial muscle. Additionally, Intel is targeting the low-end tablet manufacturers using this strategy because low-to-middle range tablets are what is driving the tablet market right now. In fact, by using this strategy, Intel are already on track to deliver 40 million tablets by the end of 2014 – this volume will bring Intel’s tablet market share up to 15%.
Gap 2 - Android in PC
It is no secret that the PC market in whole is declining with the emergence of alternative electronics like tablets and smart phones in recent years. In fact, the percentage share that PC’s take in Intel’s global revenue has been declining steadily over the last 5 years – 73% in 2009 to 65% in 2013. However the PC clientele remains as Intel’s most lucrative business by far. We believe this represents a problem that Intel may want to address over the next few years.Whether we like it or not, the mobile revolution is here to stay and we expect the cannibalization of PC sales by mobile technology to continue.
However, we also believe that PC’s and laptops will never be fully replaced by tablets and smart phones, especially in some applications like an office setting or general computing. While there is nothing Intel can do about the global mobile device “adoption drive”, slowing this process down would definitely be in their interest. One of the ways they can do this would be to temporarily blur the lines between mobile devices and PC’s with their product offerings. Take the recent Dual OS initiative that Intel unveiled in CES 2014. PC’s or laptops equipped with this new technology will be able to switch instantly between Windows OS and Android OS. In fact, the new series of Transformer Notebooks from Asus will be featuring exactly this function. This will allow Intel to capture a whole new segment of customers, some of which will be from the mobile segment that Intel is barely penetrating. At the same time, Intel’s existing PC or laptop customers now have an additional option in this PC/Android option.Of course all of this is assuming Android makes sense in a PC, but at the very least it will be a very good effort on Intel’s part to stem the bleeding.
Gap 3 - Customer Resonance
One of the largest gaps between Intel and its consumers would be the knowledge gap. Sure, almost everyone we surveyed responded that they know what Intel is, but do they really know about Intel’s products and what these products can do for them? We believe at the B2B level, knowledge of Intel’s brand, products and its advantages are quite widespread; thanks to Intel’s training programs and superb engineering support with its partners and consumer electronics manufacturers.
However, at the consumer level – based on our survey and brand valuation exercise – the knowledge of Intel, its products or even its brand salience is pretty skin-deep. This may result in low resonance and less emotional attachment to its products in the long run. In fact, during our survey most of our respondents viewed Intel as only a “colleague” which means that for most people, their relationship with Intel would be that of “marriage of convenience”. We believe that this could be a result of the lack of understanding of how important Intel is to their lives. We also believe that this is a consequence of Intel’s own success – e.g. consumers do not actively choose to go with an Intel laptop because almost all the laptops on the market are already Intel.
Therefore, appreciating the points of parity and differences and ‘understanding’ becomes irrelevant (because there is only one choice). And if there is no appreciation and knowledge of the brand, consumers normally do not form a strong emotional bond with it. This is made worse by the incredible amount of technical jargon that Intel uses to explain to consumers how their products work or how they are better than the competitors. We believe this aspect can be improved by Intel using simpler and layman language to educate the end consumers on the key benefits of having an Intel eco-system and also to invoke consumers’ emotions with their marketing campaigns. This will help normal, non-technical consumers relate to Intel in a different and more emotional way, possibly increasing brand loyalty.