Intel 80386 - Business Importance

Business Importance

The first company to design and manufacture a PC based on the Intel 80386 was Compaq. By extending the 16/24-bit IBM PC/AT standard into a natively 32-bit computing environment, Compaq became the first third party to implement a major technical hardware advance on the PC platform. IBM was offered use of the 80386, but had manufacturing rights for the earlier 80286. IBM therefore chose to rely on that processor for a couple of more years. The early success of the Compaq 386 PC played an important role in legitimizing the PC "clone" industry, and in de-emphasizing IBM's role within it.

Prior to the 386, the difficulty of manufacturing microchips and the uncertainty of reliable supply made it desirable that any mass-market semiconductor be multi-sourced, that is, made by two or more manufacturers, the second and subsequent companies manufacturing under license from the originating company. The 386 was for a time only available from Intel, since Andy Grove, Intel's CEO at the time, made the decision not to encourage other manufacturers to produce the processor as second sources. This decision was ultimately crucial to Intel's success in the market. The 386 was the first significant microprocessor to be single-sourced. Single-sourcing the 386 allowed Intel greater control over its development and substantially greater profits in later years.

AMD introduced its compatible Am386 processor in March 1991 after overcoming legal obstacles, thus ending Intel's monopoly on 386-compatible processors. IBM also later manufactured 386 chips under license.