With driverless car bet, Intel shows a willingness to turn
Business Management

With driverless car bet, Intel shows a willingness to turn

Clayton Christensen’s book The Innovator’s Dilemma is a sacred text in Silicon Valley even if, as with so many such works, it is probably more cited than read. Its argument boils down to this: Christensen’s innovator has a choice of whether to stick with the formula of what has made his/her company successful or take another tack because the market has been changed by “disruptive innovation” - the advent of new technologies developed by scrappy startups with nothing to lose. It’s all about standing at the crossroads and deciding to go straight on and enjoy the (possibly diminishing) returns of an incumbent serving a known customer base, or take a sharp turn and embrace the unknowable future.

If any company today is facing that choice it is surely Intel. The company has enjoyed decades of cash gushers that have sprung from its core microprocessor business as its chips have dominated laptop, desktop and server computers. But the next wave of demand for silicon - smart mobile devices and the Internet of Things - appears ripe for small disruptors. Making matters worse is what’s happening in Intel’s traditional market: declining PC demand, blood bath pricing and a cloud computing market that prefers no-name, cheap servers to the decent margins that the Dells and HPs have traditionally enjoyed.

To be fair to Intel, it has not stood still or merely doubled down on its core business. Instead it is scrambling in all directions for a different future where it plays in all manner of new data-centric systems, software and devices. The just-announced deal to acquire driverless car firm Mobileye for $15.3bn is the most compelling evidence yet that Intel sees the risks in stasis and the opportunities in striking out boldly.

Mobileye is an Israeli firm that makes the sensors and cameras that enable autonomous vehicles to operate. And while this might seem a huge leap away from Intel’s heritage, in some ways it is not: just as Intel provided the brains for generations of computers, Mobileye provides an equivalent for the future of the car. (It also helps that the pair are already working together and it doesn’t hurt that a lot of the best Intel R&D work has come from Israeli engineers.)

The cost of acquiring Mobileye is high but then so are the stakes: Intel has a market value of over $163bn but it knows that, in tech, markets can change quickly. Intel is an innovator with a dilemma and CEO Brian Krzanich recognises the value in the famous dictum of one of his illustrious predecessors, Andy Grove, who knew that “only the paranoid survive”.

 

Also read:
Does Intel regret its co-location U-turn?
Andy Grove obituary

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Martin Veitch

Martin Veitch is Editorial Director at IDG Connect

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