Strategy Simulation: Competitive

Dynamics and Wintel

How to Play FAQs
Play of the Wintel Game follows a sequence of decisions by two complementary companies:
Intel Corporation and Microsoft Corporation. The game concerns only the market for “Wintel” PCs,
which are comprised of one Intel CPU and one Microsoft OS.
In each round of the game, Intel must decide:
(1) Whether to release a new version of its microprocessor, and
(2) Where to price it.
Similarly, Microsoft must decide:
(1) Whether to release a new version of its operating system, and
(2) Where to price it.
At the beginning of the game, both companies have released version one of their products. Subsequent
releases increase versions to two, three, etc.
You will be assigned to be either Intel or Microsoft. During class, multiple, independent games are
played at the same time. The identity of your competitor will remain secret until the end of the game.

How is the game won?

The object for each company is to maximize its cumulative profit, which is displayed in the Values section
on the top right corner of the screen. Companies compete against their opponents, but they also compete
against other players representing the same company. At the end of the session, the instructor will be
able to determine which of the Microsoft players and which of the Intel players earned the highest
cumulative profits.

How is cumulative profit calculated?

Cumulative profit is the sum of profits earned in each round, discounted by the rate displayed at the upper
right of the screen in the Values area. So, for example, if the discount rate is 2.0%, and 12 rounds have
been played, the cumulative profit would be:

12
πi
π cum = ∑ 12− i
i=1
(1.0125)
where π cum is the cumulative profit and πi is the profit in round i.

© 2015 President and Fellows of Harvard College

Strategy Simulation: Competitive Dynamics and Wintel V2

Students can set the price of their company’s products. What information
do we have about costs?
Marginal costs for Microsoft are $0. Intel’s marginal cost per microprocessor appears at the upper right of
the screen in the Values area (note that these values may differ from the values in your simulation
depending on the configuration chosen by your instructor).

Are any costs incurred by releasing a new product?

Yes. The cost incurred by releasing a new product is displayed at the upper right of the screen in the
Values area. Initially, release costs are the same for both companies. Release costs increase for each
team by the same predetermined percentage each time a new version is released. So, for example, if the
increase in release costs are 10% and Microsoft has released three new versions of its operating
system—they are currently selling version four—and Intel has released two new versions of its
microprocessor—currently selling version three, the cost of releasing the next version is 10% higher for
Microsoft than for Intel.

Are release costs depreciated?

No. They are incurred entirely in the same round as the release.

In each round, how is profit calculated?

Intel’s Profit
If Intel does not release a new version of its microprocessor, its profit for the round is calculated as
follows:

π Intel = q( pIntel − mcIntel )

where π Intel is Intel’s profit for this round, q is the number of PCs sold in this round, p Intel is Intel’s price
this round, and mcIntel is Intel’s marginal cost.

If Intel does release a new version of its microprocessor, its profit for the round is:

( )
π Intel = q pIntel − mcIntel − rcIntel

where rcIntel is Intel’s current release cost.

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Microsoft’s Profit
Calculation of Microsoft’s profit is different because in addition to revenues for PCs sold in the current
round, it also earns revenues from its installed base of PCs; that is, PCs sold in previous rounds.
The number of PCs in Microsoft’s installed base is the sum of PCs sold during the previous years. The
size of the installed base in round one is zero. The table below shows sample calculations, assuming the
size of Microsoft’s install base is set to equal the 5 previous years:

Round PCs Sold (MM) PCs in Installed Base

1 5 0
2 6 5
3 8 11
4 9 19
5 8 28
6 10 36
7 9 41
8 6 44

Microsoft’s revenue per PC in its installed based depends on whether the PC is running the current
version of Microsoft’s OS or an older version. Revenues for each new PC and for each old PC are
displayed at the upper right of the screen in the Values section.
If Microsoft does not release a new version of its operating system, its profit for the round is calculated as
follows:

π MS = qpMS + qnewPCs rnewPC + qoldPCs roldPC

where π MS is Microsoft’s profit for this round, q is the number of PCs sold in this round, p MS is
Microsoft’s price this round, q ne wPCs is the total number of PCs sold in the five previous rounds that are
running the current version of Microsoft’s OS, qoldPCs is the total number of PCs sold in the five previous
rounds that are running an older version of Microsoft’s OS, rnewPC is revenue per PC running the current
OS, and roldPC is revenue per PC running an older version of its OS.

If Microsoft does release a new version of its operating system, its profit for the round is calculated as
follows:

π MS = qpMS + qnewPCs rnewPC + qoldPCs roldPC − rcMS

where rcMS is Microsoft’s current release cost.

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How is the number of PCs sold calculated?

The number of PCs sold each round is determined by the demand curve, which is the straight black line
that appears in the Scratch Pad on the lower right corner of the screen. As new versions of
microprocessors and operating systems are released, the demand curve shifts right and becomes
steeper. This will effectively increase the number of PCs sold for a given price. However, as more rounds
go by without releasing a new version of your product, the demand curve moves down to the left as
technological obsolescence becomes greater.

How does the SCRATCH PAD work?

The Scratch Pad is intended for you to experiment with different product prices and release decisions.
You can use the Scratch Pad to determine hypothetical profits, depending on whether you and/or your
opponent release new versions of your products and depending on the prices you and your opponent set
for your products. The default price for your opponent is its price from the previous round, but you can
change it using the sliders on the y-axis to test scenarios.
When you change values on the Scratch Pad, the game is not affected. You must separately submit
values from the Scratch Pad in the Input Panel at the upper left of the screen.

How much time do we have in each round to decide on new releases and
prices?
Each round of play is timed, and each team has more time available in the rounds at the beginning of the
game to make decisions than they have near the final rounds of play. The beginning and end round times
are set by the professor and the time for each round decreases exponentially. The duration of rounds that
succeed a release from either team are automatically 45 seconds longer than they would be otherwise.

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What happens if the round ends before we submit our decisions?

If you time out before submitting your decisions, the following default values are submitted for you:

Release new version? No

Your New Price? Last round's price

Does either team have hidden information?

No. All information displayed on your screen appears on your opponent’s screen, too. Scratch Pads
differ in that each team can only view their own hypothetical information regarding prices and releases.

In the ROUNDS PLAYED area, what do the check marks and stars signify?
The check marks indicate future releases of new versions of the companies’ products. A checkmark for
Intel is shown as an empty star for MS.

A shaded star next to a previous round indicates a previous release period for Microsoft or Intel.

Players may signal a future release to the complementor company by placing a check mark next to the
round in which they wish to release a new version before clicking the “Submit” button for the current
decision period.

For example, if game play is in round 4 and Intel wants to signal that it plans to release a new version of
its microprocessor in round 6, the Intel player clicks the box in the Intel Rel column corresponding to
round 6, and a star appears on the other company’s screen. When game play reaches round 6, Intel must
decide whether to release the new version or not and check the “Yes” button to release. Planned releases
are nonbinding.

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When does the game end?

The end point of the game is unknown to the players and is determined by the professor during class. All
games will end at the same clock time. Depending on how quickly they play, different games will get
through more or fewer rounds than others. The maximum number of rounds available for play is 60, and
most games will average between 20 and 60 rounds of play.

Technical Specifications
Computer Technical Requirements
Please visit our website for the latest technical requirements: http://hbsp.harvard.edu/list/tech-specs

Tips to Optimize Computer Performance during a Simulation

1. Restart your computer. Computers that have not been restarted in a long time get slow. A
restart will help your computer’s speed and your overall simulation performance.
2. ONE browser + ONE tab. Simulations work best with only one browser and one tab open.
Opening the simulation in more than one browser or tab will negatively impact performance and
impact your data.
3. Close all other programs and browsers. Running fewer programs will allow your computer to
devote more speed to the simulation.
4. Turn off other wireless devices. Multiple devices simultaneously trying to access the wireless at
the same time can weaken the network strength. You may also have devices that are holding on
to connections from other distant locations. Shut off the wireless on all your devices and turn it
back on for the device you will be using for the simulation.

For technical and account support, contact Harvard Business Publishing Customer Support:

Web http://hbsp.harvard.edu/list/contact-us

Phone 1-800-810-8858 (+1 617-783-7700 outside U.S. and Canada)

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