Andy Grove about the computer market and its players

The value of Andy Grove for the computer industry is difficult to overestimate. Almost from the very beginning of its rapid development, and further for more than 30 years, he was among those who made the most important decisions about where and how to move. That is, in short, modern computers - they are because Grove decided so (including). Therefore, it is not surprising that in 1997 Time magazine called Grove the man of the year, accompanying his choice with the words: “his microchips changed the world and the world economy”.

In the second post of the memory of the great Executive (you did not read the first ? Take some time, there are really curious things told), we will cite a few more quotes from the book “Only paranoid people survive”, where the author shares his opinion about the computer market, Intel and other major companies represented on it. We will also show some more photos from the Intel archive, where Grove was shot with Bill Gates, Steve Jobs and other well-known people.

Recall that the book Grove came out in the late nineties, which makes his memories even more interesting for those who began their careers in these years. Let's pause together.

Andy Grove about Intel Inside project
[In 1991] we launched a major marketing campaign - the Intel Inside project. It was the largest campaign in the entire history of the industry; in fact, it can only be compared with outstanding advertising campaigns of consumer goods. Its purpose was to make it clear to the user that the microprocessor inside his computer is a computer.
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As in many other advertising campaigns, we used the “repetition of truth” technique. Even before the campaign, we noticed that if you ask any user what computer he has, he will answer: “I have 386 minutes”, i.e. first, it will say what kind of microprocessor is inside the computer, and only then call the manufacturer, list the installed programs, etc. Users instinctively felt that the distinctive features and class of the computer more than anything else defined the microprocessor inside it. Of course, for us it was very good. This set off our company, made it recognizable, consumers received more information about us and our products.

The goal of our campaign was to convey this point of view to the maximum range of users and potential computer buyers. We developed a special logo and agreed with the manufacturers who bought our microprocessors to use this logo in advertising their products - often in the form of a sticker on a ready-made computer. Hundreds of manufacturers in the United States and abroad participated in this campaign.
We spent a lot of money on the promotion of this brand. We installed billboards with the “Intel Inside” logo all over the world, TV commercials were broadcast in many languages. We even released reflectors for bikes with the “Intel Inside” badge in China. By 1994, research has shown that our logo has become the most recognizable among consumer product logos, on par with Coca-Cola or Nike.


Despite the 19-year difference in age, Andy and Bill Gates were on friendly terms

About Steve Jobs and Project Next
When Jobs left Apple in 1985, he decided to repeat [his] success story. He wanted everything to work even better. The very name of his [Next] company indicated that he intended to create a “next” generation of great computers, a graphical interface that would even be better than Apple’s Macintosh interface, and an operating system capable of solving more complex tasks than a Mac. Programs had to be created in such a way that users could customize applications to fit their own needs, changing parts of an existing program, rather than writing everything anew.

It took several years to complete the task, but in the end he almost succeeded. The computer and the operating system of Next had almost all the required characteristics. However, focusing on such an ambitious and complex business, Jobs ignored the key developments, and this negated almost all of his efforts. While he and his staff were working day and night to create a supercompatible computer, a widely available Microsoft graphical user interface, Windows, appeared on the market. It was no better than the Mac interface, let alone Next, and is not always compatible with computers or applications. But it was cheap and, most importantly, it worked on inexpensive and at the same time powerful personal computers that have been supplied by hundreds of manufacturers since the late 80s.

The new computer never saw the light. Despite the constant infusions of investor funds, money flowed from Next. By 1991, six years after its foundation, Next began to have financial difficulties. Some company managers offered to focus on the mass production of personal computers. Jobs long resisted this. He did not like personal computers. He believed that they are not elegant and poorly designed. Steve Jobs, a man almost brilliant, was one of the founders of the personal computer industry. At twenty, he realized that in several years this industry would become a global industry with a turnover of one hundred billion dollars. However, ten years later, when he was thirty, Jobs was still living his past. There, in his past, "insanely great computers" (his favorite phrase) won the market. Graphical user interfaces were very important because personal computers were still flawed. The situation has changed, and his managers knew about it, but Jobs was not easy to give up his convictions, thanks to which he became an ardent and successful industry pioneer. It took a real threat to the survival of the company to overcome the usual dogmas.


Steve Jobs called the Grove his mentor. When Steve found out about his diagnosis, the first thing he did was call Grove, who immediately came to him

About reasons for IBM PS / 2 failure
The company [IBM] consisted of people who over and over again, decade after decade, won in a fight with other players in the vertical computer industry. The managers who managed the company made a career in these conditions. They were chosen for their excellent ability to develop products and compete in this market segment. They were accustomed to success, and this influenced their mentality, which, in turn, led to further victories. Therefore, after the transformation of the industry, they continued to use the way of thinking that worked in the past.

Even such a simple thing as choosing the name "OS / 2" indicated that IBM did not realize the meaning of horizontal industry. OS / 2, the new PC operating system, was introduced in 1987 at the same time as the launch of a new line of IBM personal computers called PS / 2. OS / 2 was supposed to work only on PS / 2 computers. [13] This alone was enough to limit the success of OS / 2, since most personal computers were produced not by IBM, but by its competitors.
But it was not only that. It took a lot of time before IBM made the necessary changes in OS / 2 so that this operating system worked on computers from other manufacturers, and even more - before the company started selling its operating systems to competitors and those along with DOS and Windows began to install on their OS / 2 computers.

I happened to witness a conversation during which the IBM manager, who worked on the creation of both PS / 2 personal computers and OS / 2 operating systems, tried to convince another large PC manufacturer to use OS / 2 personal computers. These were the strangest talks I've ever attended. These two considered themselves competitors primarily in the personal computer sector. Although the IBM’s first priority was to spread OS / 2, it was emotionally wrong for him to try to trade with his rival. At the same time, a representative of another computer manufacturer did not want to depend on IBM (a competitor in the personal computer market) in such an important technological issue as the operating system. The conversation was strange and intense; the deal was never made. OS / 2 is still not popular with manufacturers.


Intel's two generation manual. From left to right: Paul Otellini, Andy Grove, Gordon Moore

About Netscape and the Internet in general
Netscape released its shares to the stock exchange when I was writing this book. I knew about them and thought that they had a great future. But the way the shares jumped in price and continued to grow on the very first day of public auction struck me. I could not find a rational explanation for this incredibly fast stock price increase. There was more than just the opening of an ever-increasing number of investors in a promising new company. The basis of Netscape's business was closely connected with the emerging Internet. And since the shares of other Internet companies also grew after Netscape, it became obvious that the enthusiasm of investment circles was connected not only with Netscape, but also with the Internet. The press did not lag behind. There was an avalanche of articles about the dramatic opposition of software companies whose business was based on the Internet (Netscape, Sun), and those that led it to the usual standards (Microsoft).

Pros and cons of the Internet for Intel

pros	Minuses
More applications.	Microprocessors can become consumer goods.
Cheaper connection.	More complex operations are transmitted to central computers.
Cheaper software distribution.	Internet devices can work with cheap microprocessors.
Expansion of media business; increased demand for powerful microprocessors.

Before asking what new this table gives, let's ask ourselves another question. Is the Internet so important? Or is it just a newfangled hobby? I think it is really important. I think everything that can affect industries with a total income of hundreds of billions of dollars is important. Is this a strategic turning point for Intel? Will any of the forces affecting our business, including our subcontractors, increase tenfold?

When I look at this table, I see no reason why our customers or suppliers would have to change a lot. And competitors? Let's use the silver bullet test. Will the Internet bring to the scene players who will become more attractive targets than those that are now? Intuition tells me that no. Of course, new players will appear, but they can play both in the role of subcontractors and competitors. Of course, I will not spend a silver bullet to destroy the subcontractor, which may be useful to us.

Will the composition of my fellow travelers change? Yes, that will change, because companies that used to be allies of our competitors are now releasing software that works with both our competitors' microprocessors and our microprocessors. This makes them and our subcontractors. In addition, every day there are new companies that use the power of the Internet. More and more creative energy and finance is being invested in the industry, which will create new opportunities for our processors. So we will have more fellow travelers, and I do not think that we will lose anyone.

Everything suggests that the Internet is not a strategic turning point for Intel. But, although classical signs do not confirm this, the totality of all changes is so great that in my heart I think that this is still a strategic turning point.

Andy Grove was not mistaken here. This is me from myself.