A strategic inflection point is a time in the life of business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.
—Andrew S. Grove, Only the Paranoid Survive (1988)
In the late 1960s Intel sniffed the winds of change and made a dramatic decision to build microprocessors instead of random access memory, RAM. Former Intel CEO Andy Grove describes this abrupt change in Intel’s strategy as an inflection point. As we know from mathematics, the coordinates of an inflection point are where a curve changes direction—typically from up to down or the reverse. In the case of young Intel, the RAM business was no longer profitable, and yet, the profitability of microprocessor chips was totally unknown. It was a choice between dying along with the RAM market or possibly dying with an unproven product in a non-existent market. We now know Grove was right, but he could have been wrong. Such is the life of an entrepreneur.
It has been 50 years since Intel’s inflection point was recognized and then mostly forgotten. But the company and the industry it grew up with is facing another inflection point—the demise of Dennard scaling—the 1974 rule that the power consumption of CMOS chips remains constant as transistors are scaled down in size. Continue reading