Upgrade Culture and Technological Change

The Business of the Future

Adam Richard Rottinghaus

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000513790
• Edition: 1
• Topic: Business
• Subtopic: Media & Communications Industry
• Index: Business

This book explores the origin and future of "upgrade culture, " a collection of cultural habits and orientations based on the assumption that new technologies will rapidly, perpetually, and inevitably emerge.

By analyzing discourses of technological change and the practices of marketing workers inside the consumer technology industry between the early 1980s and the late 2010s, the book describes the genesis, maintenance, and future of upgrade culture. Based on archival and popular sources, first-hand interviews with a range of industry professionals, and participant observations at industry-only events, the book attends to issues both intimate to the culture of marketing work and structural to the organization of the consumer technology industry.

This book will have a broad appeal to social/cultural theorists of technology, marketing, and consumerism, as well as to scholars in business history, communication, cultural studies, media studies, sociology, and anthropology.

The Introduction of this book is freely available as a downloadable Open Access PDF under a Creative Commons Attribution-Non Commercial-No Derivatives 4.0 license.
https://www.taylorfrancis.com/chapters/oa-mono/10.4324/9781003193869-1/introduction-adam-richard-rottinghaus?context=ubx&refId=1bb75408-b5c2-4a69-bd20-082a73a77920

1 Creating assumptions about technological change

DOI: 10.4324/9781003193869-2

In 2016, Brian Krzanich, then CEO of Intel, said to the Bernstein Strategic Decisions Conference in New York that

[the] replacement cycle for the PC has extended. Four years was the average, now it has moved to about five to six years. Intel needs to ramp up its efforts and release the right innovations so people are motivated to upgrade PCs quickly and easily.

Shah (2016)

He went on to note that “Right now, it’s easier to move your phone to a new phone than your PC to a new PC. We’ve got to go fix some of those things” (Shah 2016). Intel has been at the forefront of establishing the pace of upgrading in the consumer technology industry for nearly thirty years. However in the 1970s, Intel was just a component supplier for computer manufacturers. Between the 1980s and mid-2000s, Intel became one of the most powerful companies in the world by transforming their business model—based on Moore’s Law—into an organizing principle for the entire consumer technology industry. As an organizing principle, Moore’s Law creates a material pace of product emergence and obsolescence, sets consumer expectations for new digital devices, coordinates anticipated gains in processing power for component and software development, orients organizational research and development resources toward a common goal, inspires individuals to challenge their perception of obstacles, and even takes on evolutionary and cosmic significance by industry leaders.

Moore’s Law began as an observation in 1965 by Intel cofounder Gordon Moore that, based on current trends, engineers could reasonably expect to double the number of transistors on a microchip every eighteen to twenty-four months for the foreseeable future (Jackson 1998, Yu 1998, Malone 2014). When Moore and colleague Robert Noyce left Fairchild Semiconductor to found Intel in 1968, they began to transform Moore’s Law from an engineering observation into a business model. With the hiring of fellow Fairchild defector, Andy Grove, on Intel’s first official day, the “Intel Trinity” was complete (Malone 2014). Some combination of Moore, Noyce, and Grove comprised the core leadership of Intel that oversaw its expansion of scope and influence into the mid-2000s. A crucial decision by Grove and Moore in 1985 codified Moore’s Law in the financial strategies and corporate practices when they decided to switch the company’s focus from memory to microprocessor chips (Malone 2014). Nearly every popular business account of Intel’s success places Moore’s Law and their microprocessor chips at the center of the Intel story (Yu 1998, Byman 2000, Berlin 2005, Colwell 2006, Tedlow 2006, Reid 2007, Ruiz 2013, Malone 2014). The authors claim that, whether from competitive pressure or brilliant leadership, Intel has maintained the exponential growth in processing power through a rigid corporate culture that they would eventually promote as their “tick-tock” production model.¹

As a business model, Moore’s Law was the central planning tool for product development that locked Intel into a rapid cycle of microprocessor design and manufacturing. They poured the majority of their resources into research, design, and upgrading the microchip fabrication facilities. Virtually every new microchip architecture design required new manufacturing technologies to fabricate semiconductor materials into microprocessor chips at smaller and smaller scales. As a result, Intel’s revenue stream was dependent on recouping their investments in the next generation of microchips by getting their customers—the computer manufacturers, also known as original equipment manufacturers (OEMs)—to purchase the latest generation of microchips as fast as Intel would design and manufacture them (Yu 1998).

As an organizing principle, Moore’s Law entrenched the assumptions of rapid, perpetual, and inevitable change into the technological imagination. In order for Moore’s Law to become an organizing principle for the consumer technology industry, Intel had to first convince OEMs to design their computers based on Intel’s microchip architecture. With rare exception, OEMs exert much of the power over the supply chain because their direct relationship to retail consumers allows them to diffuse the consumer demand for PCs through the industry by choosing which companies will supply materials and components. Timothy J. Sturgeon notes that “Capital- and technology-intensive industries such as consumer electronics and autos tend to be governed by producers” (2009, 115). This means that when supply chains are complex and expensive, the company that sells products to retail consumers determines the character of the supply chain. In the early days of the PC industry, OEMs like IBM and Compaq were in the most powerful positions to choose which companies would create components, like microprocessor chips or operating systems for them, and could dictate the terms as to what kinds and how many products their suppliers would make for them. As such, it is rare for a component supplier—such as Intel with microprocessor chips—to dominate in capital and technology intensive industries. However, Intel would eventually invert the power relationship between themselves and the OEMs so that they controlled the terms on which OEMs bought their microchips. Doing so made Moore’s Law the foundation for the digital era, which is built on semiconductor microprocessor chips.

Intel secured their supplier dominance through a combination of legal marketing strategies augmented by anticompetitive business practices. By the late 1980s, Intel chips were standard hardware for PCs cloned from IBM’s original design, but OEMs were refusing to purchase Intel’s latest chips because they did not think that PC consumers needed the additional processing power. In order to get OEMs to buy their latest microchips, Intel began the “Intel Inside” campaign in 1991. The strategy was to trap OEMs between supplier power and consumer demand through a combination of traditional B2B marketing and sales strategies, cooperative advertisements, and direct-to-consumer retail promotions.

The retail ads that brought Intel’s brand into popular consciousness in the 1990s were only one aspect of their strategy to dictate microchip purchasing terms to OEMs. Conventionally speaking, retail advertisements entice consumers to directly purchase the promoted products. Yet Intel instructed consumers to demand Intel over competing chip companies such as AMD, Texas Instruments, and Cyrix because the microprocessor was “the computer inside the computer.” The Intel Inside campaign successfully “educated” consumers that the brand of microchip was more important than the brand of PC. They also enlisted the OEMs to promote Intel in their own advertisements through a cooperative marketing program that subsidized the OEMs’ own advertisements—provided they bought enough Intel microchips. The co-op program would ultimately create the leverage that Intel used to monopolize the market for decades. Through it, they paid off customers, conditioned contracts, and stipulated exclusive supplier deals, which created a virtual monopoly over the supply of microprocessor chips throughout the 1990s and early 2000s.

A key moment in the development of upgrade culture was when Moore’s Law went from a business model to an organizing principle because Intel’s monopoly over the supply of microprocessors chips inverted power between them and OEMs. Instead of PC manufacturers telling Intel what chips to produce for their computers, Intel dictated which chips OEMs would buy and—more importantly for the emergence of upgrade culture—how quickly PC companies upgraded computers for consumers. Without Intel’s marketing and monopoly, OEMs might still be dictating terms of chip production to their suppliers instead of the other way around. The result was not only a standardization of chip architecture, PC design, and software interoperability but a standardization in the pace of technological change for the entire consumer technology industry.

Beyond the technical dimensions, Moore’s Law today also operates on symbolic and affective registers. It is aspirational for the industry and inspirational for individuals. Industry leaders adopt the language that Moore’s Law is something to believe in. They emphasize that it inspires people to innovate in places they would not otherwise. In both competitive and cooperative ways, it also organizes the complex dynamics of an otherwise disparate set of organizations scattered across the world. Despite that commentators and analysts have been declaring the imminent (and near) death of Moore’s Law since the 1990s, it is now an organizing principle for an industry structured on selling the next big thing in perpetuity.

The story of Intel and upgrade culture is more than mere promotional messages stimulating desire for the next upgrade. Intel’s marketing restructured the organization of corporate power in the consumer technology industry by making themselves a key company determining the pace of change during the industry’s most formative decades. With Moore’s Law as the symbolic, affective, and material core, the consumer technology industry grew from a hobbyist interest into a cultural juggernaut displacing prior understandings of change in the technological imagination. Where technological change was once understood as sporadic and intermittent, Moore’s Law gave it form and cadence as rapid, perpetual, and inevitable on an exponential curve. Today, the consumer technology industry is organized in such a way that technological change is rapid, because the devices all have microchips produced with Moore’s Law’s cadence, perpetual because their business models are built on regular intervals of consumer purchases, and seemingly inevitable because its structure as a resource-intensive industry dictates terms to consumers, rather than respond to their demand. In short, Intel transformed Moore’s Law from an engineering observation to a business model, to an organizing principle for an industry that reshaped understandings and experiences of change in the technological imagination.

Marketing Moore’s Law

Since the mid-1990s, popular business literature has repeatedly described Intel in terms of a “great-men-of-history” narrative that almost entirely attributes Intel’s success to the genius of Gordon Moore, Robert Noyce, and Andy Grove (Jackson 1998, Young 1998, Yu 1998, Byman 2000, Berlin 2005, Colwell 2006, Tedlow 2006, Reid 2007, Malone 2014, Thackray, Brock, and Jones 2015). However, Intel’s rise to dominance was contingent on a myriad of historical, technological, and cultural conditions such as the formation of the consumer technology industry; the emergence of the PC as a “new” consumer product; international antitrust regulation; and the forms of corporate power that structure purchasing decisions between businesses.

One of the most important dimensions of the Intel story lies in the supply chain partnerships that were formed in the nascent years of the PC industry. Gawer and Cusumano (2002) identified that the 1980s PC industry had an oversupply and under demand of microprocessor chips. Referring to Intel, they claim,

we know of no other company that has devoted more thought and resources to platform issues and the broader problem of how to increase ‘the pie’ for (almost) every...