Intel Berkeley Corporate Venturing Q1.Why Did Intel Essay

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Intel Berkeley

Corporate Venturing

Q1.Why did Intel Capital invest in Berkeley Networks? Why did Berkeley Network invite the investment?

Intel instituted a venture capital division in its company as a means to provide support to the industry. Intel is the world's largest manufacture of microprocessors. However, the company is also heavily dependent on other players in the industry who produce some of Intel's supplies or manufacture other components that work alongside Intel's processors. The interconnectedness of this industry has been referred to as a "market eco-system" because the success or failure of another company could have implications for the entire industry.

Although Intel commonly invests in other technology companies, it does not do so randomly. Intel targets their investments in other companies that do or could support Intel strategic interests. For example, if another company was manufacturing a product that was made to work with one of Intel's chips and had potential but was having trouble accessing capital to pursue their project, then Intel could step in and capitalize the company in order to support this company in their development. However, the ultimate goal would be for the investment to help Intel profit from this arrangement at some point in the future. Profitability in this arrangement could be gained both from the investment in the company as well as the benefits that would accrue to the parent company.

Intel invested in Berkley Networks for just this reason. Berkley Networks produced electronic switches that were embedded with Microsoft's Windows NT technology. The technology utilized a horizontal, rather than vertical, open architecture that was designed and intended for use with Intel processors that were powered by Windows NT. Furthermore, this technology also complimented one of Intel's internal projects that were working on a proactive network routing system.

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Berkley Networks originally invited the investment because it allowed them to become closer to Microsoft which added value to them because the company was trying to embed Windows NT architecture into their switches.

Q2.What is learning from investment in Berkley Networks? Vice versa?

There are many opportunities to learn through investments such as the one outlined in the case. Intel persistently invests in new start-ups as a means of gaining access to the latest developments in the industry (Takahashi, 2011). Although Intel does not gain full control of these companies, it does gain access into understanding what projects they are currently working on. These projects could shape the direction of the industry in the future and since Intel is one of the cornerstones in the industry with its microprocessors then it acts to coordinate its development as much as possible.

Berkley Networks can also stand to learn a considerable amount from Intel as well. Although there is reservations that arise in sharing information on a specific level, having communications on a high level can provide many insights into steps that need to be taken to develop their product. Berkley can also be quickly connected to other key players in the industry such as Microsoft as the case mentions. For Berkley Networks, having access to Intel's human resources can be a considerable time saver because Intel representatives can quickly point Berkley in the….....

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