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The future of Intel, which over the past few decades has become the dominant supplier of processors to PCs around the world, lies in new and emerging markets like the cloud and the Internet of things, according CEO Brian Krzanich.
In a blog posted on the Intel Website April 26, Krzanich said the company is in the process of evolving from a PC chip supplier to a vendor that is supplying the technology that not only drives the infrastructure for cloud computing and the billions of intelligent devices and systems that make up the Internet of things (IoT), but that also powers the connectivity crucial to the new digital world and will be the foundation for future innovations.
And despite comments by some in the industry, it will be done while driving the continued advancement of Moore’s Law, which the CEO said has much more life to it.
“Our strategy itself is about transforming Intel from a PC company to a company that powers the cloud and billions of smart, connected computing devices,” he wrote. “We head into that future with tremendous assets and advantages: our spirit of innovation, our technology and manufacturing leadership, and the trust of our customers.”
Krzanich’s blog comes after a tumultuous few months that most recently included the announcement last week that the world’s largest chip maker will slash about 12,000 jobs—about 11 percent of the 107,000-plus-person workforce—as it accelerates its transformation. The company also has seen a significant shakeup in its leadership ranks, from the hiring of former Qualcomm executive Venkata “Murthy” Renduchintala to oversee such areas as client devices and the IoT to the departure of longtime Intel veterans Kirk Skaugen and Doug Davis (who will retire at the end of the year). Aicha Evans, corporate vice president and general manager of Intel’s Communications and Devices Group, also was rumored to have resigned, although it was recently reported that Evans eventually decided to stay with Intel.
The turmoil has caused some in the industry to question whether Intel is in decline. However, Patrick Moorhead, principal analyst with Moor Insights and Strategy, saw Krzanich’s column as a reiteration of the strategy that the CEO outlined last week during a conference call with analysts and journalists to discuss Intel’s most recent financial quarter. The column was to help clarify the strategy for employees and others in the industry who may not have known what to make of the earnings announcements.
“There is no ambiguity on Intel’s priority,” Moorhead told eWEEK in an email. “It’s the cloud and data center. While most of Intel profit dollars come from client PCs, Intel has a priority and it’s the data center. The PC is a ‘thing’ in the IoT, nothing more, nothing less. What this means to investment was answered last week, which [was] disinvestment in traditional, non-specific PCs.”
The PC market has been contracting since 2012, driven in large part by the rise of smartphones and tablets. In the first three months of the year, global shipments of PCs declined by 9.6 percent to 11.3 percent over the same period in 2015, according to analysts with IDC and Gartner. Intel has seen declines in its client business, but has been able to offset some of the losses with gains in its data center group and other units.
Intel CEO Krzanich Outlines Company’s Strategy Around Cloud, IoT
Intel was late in responding to the trend toward mobile devices, and under Krzanich has been pushing hard into growth markets like the IoT, wearables, the data center and the cloud.
In his column, Krzanich said Intel’s strategy was driven by core beliefs about the importance of the cloud in “shaping the future of the smart, connected world—and thus Intel’s future”—that the things in the IoT are made more valuable by their connections to the cloud, that innovations around memory and programmable technologies like field-programmable gate arrays (FPGAs) will drive the development of new devices and that 5G will be crucial to an always-connected world.
In addition, Moore’s Law—the prediction by lntel co-founder Gordon Moore that has driven computer technology for five decades—will continue to advance, despite the belief of some people that it has run its course.
“The law says that we can shrink transistor dimensions by roughly 50% at a roughly fixed cost, thus driving twice the transistors for the same cost (or the same number of transistors for half the cost),” Krzanich wrote. “This concept has fueled the technology revolution all of us have lived through. … In my 34 years in the semiconductor industry, I have witnessed the advertised death of Moore’s Law no less than four times. As we progress from 14 nanometer technology to 10 nanometer and plan for 7 nanometer and 5 nanometer and even beyond, our plans are proof that Moore’s Law is alive and well. Intel’s industry leadership of Moore’s Law remains intact, and you will see continued investment in capacity and R&D to ensure so.”