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Problem

Rather than time to market, Intel refers to the product development cycle for a new chip as “time to money.” Andrew Grove, Intel’s legendary leader, said, “Speed is the only weapon we have.” What pricing advantages issue from a rapid product development process?

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Step 1/3

INTC is a USA based chip manufacturing company. INTC generally refers product development cycle for new chip as “time to money”.

One of the leaders of the company has stated that speed in developing new product is the most important weapon of the company. Due to its speed in developing new products the company has been able to capture large market share.

Step 2/3

The company is able to develop the products at faster rate; this allows the company to introduce the product earlier as compared to its competitors and hence the company charges a higher price for introducing the latest technology in the market.

The company skims the market by charging higher price for the product and as the company starts acquiring efficiency in the production system, gradually the prices of the products starts declining.

Step 3/3

Thus product development cycle is considered as “time to money”, as soon as the product is introduced in the market, the company starts making money from the customers for introducing the latest technology in the market.