When Your Company Moves From Innovation To Profit …

When Your Company Moves From Innovation To Profit …

And, so, Steve Jobs approached Intel to make chips for the first version of the iPhone. After carefully considering the deal, Intel turned it down because they just couldn’t see the demand for these low-powered devices and went back to pushing x86 processors that were faster and guzzled even more power. And, so, Steve turned to ARM, and the rest is history. While Intel needed fabrication facilities, ARM decided to licence their designs to whoever wanted to use them.

How could this happen? Well, Intel were a company built on amazing engineering. They were lucky to be selected for the IBM PC, but it was Andy Grove who took Intel out of the DRAM business and got them focused on microprocessors. But, after Andy Grove left the company, Intel increasingly focused on the profits from their x86 architecture cash cow. They did eventually realise their mistake and made some extremely poor processors for mobile devices. And, so, within a few years of iPhone sales, Apple was making more money than Intel. The company’s focus on profit over innovation meant that they missed a new market.

Now, after years of growth, the focus on making a profit is now catching up with Intel, and where the last few years have shown a decline in their business:

The world just needs less high-end processors any more. So, what does this tale show us? Well, if your company is based on a strong engineering approach, watch out for a creep towards making profit, and with a lack of focus on innovation and in building product ranges for the future. You should always invest profits back into R&D, and not just in your core product offering. Don’t let spreadsheets overrule innovation.