Intel says CEO Paul Otellini’s decision to leave the company was entirely his, but nonetheless it could end up being just what the chip giant needs. A change at the top might pave the way for a shift in strategy that could make Intel more competitive in mobile.
Industry insiders say an Intel-ARM alliance would have been unthinkable for Otellini, but could be just what the company needs. Intel does have a history of licensing ARM’s chip designs, but Otellini sold Intel’s ARM-based chip business to Marvell six years ago in order to focus fully on Intel’s x86 processors. “Otellini was the architect of the … x86 exclusive strategy and has rebuffed the idea that Intel license ARM processors for mobile devices,” says analyst Kevin Krewell of The Linley Group.
Best of both worlds?
A new leader might be more willing to license ARM designs, enabling Intel to combine its inherent strengths with ARM’s power-saving chip architecture. Intel can still make more cuts into a silicon wafer than its competitors, and that “process geometry” gives it an advantage in making tiny, superfast chipsets. “The major advantage Intel touts against ARM vendors is Intel’s process advantage,” says Krewell. “Intel could be even more successful if it had an ARM processor with a smaller process geometry.”
But don’t expect Intel to jump into ARM’s arms; even if it licenses the architecture it will almost certainly continue to make its own Atom line of microprocessors as well. Atom was late to the mobile party, but has already scored several customer wins, including Google’s Motorola Mobility. “Intel has made progress in smartphones with a number of small designs and with a strategic relationship with Motorola, but the smartphone market is brutally competitive with average selling prices in the $15 range, not the roughly $100 average PC processor price Intel has had in the past,” says Krewell.
The PC business has been very, very good to Intel, as has the server business, but even those are now threatened by ARM. Intel’s next CEO will need to protect the company’s core businesses while continuing to innovate in mobile. The company’s past four CEOs have all been internal hires, but this time Intel may need to look beyond Santa Clara.
Who’s next?
“Frankly, many of Intel’s strongest executives have left over the last few years. I believe that is one of the reasons the board is considering an external candidate, which is stunning news considering Intel’s internally-focused corporate culture,” says Krewell. Among internal candidates, Krewell thinks the most likely contender is chief product officer Dadi Perlmutter. At Intel’s recent developers’ forum, Perlmutter told his audience that his company is “reinventing mobility.”
If Intel really wants to reinvent mobility, the company could hire a leader with a history of leading innovation in areas beyond silicon. The technology industry has no shortage of unemployed superstars right now, from Apple’s Scott Forstall to Microsoft’s Steven Sinofsky. Sinofsky is known for his abrasive management style, but according to Krewell this “may not be a handicap at Intel.” But Sinofsky may have already burned his bridges at Intel with his launch of Microsoft’s Surface tablets. The Windows RT version of the tablet, powered by an ARM-based processor, is already on the market, while the x86 version of the tablet is not scheduled to ship until next year.
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