Wintel (A): Cooperation or Conflict? Essay Example

What are the key drivers of profitability in the business models of Intel and Microsoft?

The key drivers of profitability in the business models of Intel and Microsoft are investment to develop new and better products, an ability to say ahead of competitors, and the partnership between these two companies that lead to the manufacturing of products that are high in demand. One of the major reasons that Microsoft and Intel are so successful is that when they first entered the computing industry, they were both innovative and created products that were ahead of their time. As a consequence, competition was scarce.  The success of Intel and Microsoft become even more significant after the two partnered together.

Both Microsoft and Intel are profitable companies because they are not afraid to try out new products and they are creative enough to develop products that are released long ahead of their competitor’s products. For example, in 1995, Intel was considered to be the world’s leader in microprocessor manufacturing. As the years continued, they further built upon this technology by generating hard drives that would process information more quickly. This was a constant project for Intel, who desired to make their product better as frequently as innovation would allow. In this manner, they were able to stay ahead of the competitors. In addition, Microsoft was so innovative because this company was the first to implement a high-level programming language on a microcomputer. The company continued to develop this language over several years in addition to developing more advanced languages as well. When Microsoft and Intel began working together, they were able to produce computers with the best programming and microprocessors. Therefore, they were ensured a continued success.

Given the drivers of profitability, in what areas should you expect conflict? Cooperation?

Given the drivers of profitability, it would expect cooperation mainly in the belief that both companies should invest money in the development of faster processors and programming language that has a greater amount of function and is easy to use. Since both Intel and Microsoft became successful based on this principle, it could be considered a core value that both of these companies share.

A major area where conflict is expected in this relationship is which company should get the intellectual property rights for a product that was manufactured cooperatively. Furthermore, ethics should be considered in this area. When Microsoft decided to withdraw their intellectual property rights for the optimization of Xenix, a Unix-based operating system, Intel became angered. In business partnerships, it’s important to define how information will be shared and which company owns what. After making a formal plan with Microsoft, Intel was bothered by the fact that Microsoft had demanded their portion of the intellectual property be returned. Since development of products that are in high-demand is a key driver of profit, Microsoft wanted to ensure that it benefitted from its own technological developments.

Therefore, conflict is expected between Microsoft and Intel when key drivers of profitability directly tie into the profit that will be received. There are many drivers of profitability, such as marketing and development of a business plan, but these will not stir conflict because they only indirectly influence an increase in profit. Thus, Microsoft and Intel will be able to work well together provided that one partner does not believe it would be more profitable to act on their own.