Intel’s Disruption

3 min readNov 12, 2020

“Look, Clayton, I’m a busy man and I don’t have time to read drivel from academics but someone you told me you had this theory… and I’m wondering if you could come out to present what you’re learning to me and my staff and tell us how it applies to Intel.”

So begins the story that Clay Christensen would love to tell about how Andy Grove of Intel famously came to be a convert to the theory of disruption. Christensen shared with Grove his research on how steel minimills, starting at the low end of the market, had gained a foothold and used that to expand the addressable market, continued to move upmarket, and finally disrupted the giant incumbents like US Steel.

Grove immediately grokked it.

Grove and Christensen on the cover of Forbes magazine in 1999

A couple of years later, after Grove had retired as CEO of Intel but remained its Executive Chariman, he stood on stage at Comdex. He told the world that the book he now held in his hands — Christensen’s just-published The Innovator’s Dilemma — was “the most important book he’d read in a decade”.

Grove used the learnings of Christensen’s research to guide Intel over his tenure. One of the most famous examples of this was Grove pushing Intel to do something that companies rarely have the appetite to do: launch a low-margin product that cannibalized its high end products. But Intel did it — they introduced the Celeron processor in 1998. It did cannibalize their Pentium processor to an extent, but it also enabled them to capture 35% of the market they were competing in. Perhaps more importantly still though, it staved off threats from the low end.

Under Grove’s steady hand, Intel built the chips that effectively powered the personal computer that soon sat in in every home and on every desk. Alongside Microsoft, it became synonymous with the desktop computer — and famously valuable.

It was not until 2005 that Grove retired from Intel. That happened to be the same year that Paul Otellini took over as CEO. Things seemed to be off to an auspicious start for Intel and Otellini — Apple, whose Mac business was on a tear at the time — was basically the only desktop computer manufacturer that was a holdout from the x86 world that Intel represented.

And Apple converted. Steve Jobs invited Otellini on stage at Macworld to make the announcement:

Intel’s victory seemed complete.

Indeed, that deal between Apple and Intel was more important for Intel than it could have ever possibly realized. But it wasn’t because Intel had sewn up the last of the desktop computer processor market. Instead, it was because Intel had just developed a relationship with a company that was thinking about what was coming next. And when Apple were figuring out how to power it — and by it, I’m talking about the iPhone — they came to their new partner, Intel, for first right of refusal to design the chips to do.

How did Intel respond?

Intel’s Disruption

Written by Euro