SAN JOSE, Calif. – For 45 years, Intel Corp.’s succession plan has been so orderly it was boring. With this week’s unexpected announcement that Paul Otellini will step down in May as CEO, the field to replace Otellin is wide open with a strong possibility of the first chief executive coming from outside the company.
Speculation about Intel’s next CEO cover the waterfront with the least predictable being the most likely. At this stage in its history, some think Intel needs its Lou Gerstner, a savvy star-CEO from outside its industry who can shake up the chip maker’s model and get ahead of a rapidly changing industry.
It’s anyone’s guess who can transform the x86 giant the way R.J. Reynolds’ exec Gerstner re-made the struggling IBM into a modern day services giant. But there’s a broadly felt sense that change is needed.
Intel’s core PC business is slowing. The Wintel duopoly that dominated it has fractured. Microsoft embraced ARM in Windows 8 and Windows Phone; Intel rides Linux and Android in servers and smartphones.
More importantly, the old Intel formula of following Moore’s Law looks like the wrong prescription for the next era. Increasingly, systems need greater energy efficiency, not raw horsepower. And new semiconductor nodes are coming more slowly and offering less bang for the buck in process technology investment.
“Intel still sees its advanced processes as key to its continuing success,” said Will Strauss, principal of Forward Concepts (Tempe, Ariz.). “It'll be interesting to see if Otellini’s successor is a physicist [like Gordon Moore], engineer [like Qualcomm CEO Paul Jacobs] or business manager [like Otellini]. I vote for an engineer with business experience.”
Otellini gets kudos for many accomplishments in his eight-year reign. His big shortfall has been failing to better position Intel in mobile markets that have supplanted PCs as the clients of choice. Intel’s latest Atom chips have a handful of design wins in smartphones and tablets, but they represent a few drops in a barrel full of ARM-based designs.
In the short term, Intel’s Ultrabook—geared to stem the rising tablet tide—has been a disappointment. Analysts said they will probably not reach even half of Intel’s target of becoming 40 percent of client shipments in the last quarter of the year.
Otellini, 62, was expected to serve until Intel’s mandatory retirement age of 65. The announcement that he will retire in May comes a year ahead of expectations, a sign of concern about the company’s future.
Paul Otellini's decision to retire at age 62 was unexpected.
So what’s next will probably be something and someone new and unexpected to chart a fresh course. Intel must re-think its mobile strategy. It probably will rethink its manufacturing strategy as well, including how it approaches the foundry opportunity.