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Longtime Intel CEO Paul Otellini announced Nov. 19 that he is retiring, leaving a massive void at the top of the world’s largest processor maker. Of course, speculation abounds over why he’s retiring. Some say that Otellini has had enough and wants to enjoy his wealth. Others, however, claim that Otellini was pushed out by Intel’s board, after directors felt he failed to see the changing times and capitalize on the mobile world.
Whatever the case, Otellini is going. And when he’s finally replaced in May, major changes can be expected. Although those changes will happen most rapidly inside Intel, his departure will also be felt across the processor industry. Otellini is a major force in the chip field, and to say that his retirement will be felt for years to come might just be an understatement. His importance to Intel, processors and even PCs is tremendous.
But with Otellini’s plans now known, it’s time to figure out how his departure might impact Intel and the processor market, in general. Not surprisingly, the void he leaves could be both good and bad for all parties involved.
1. A new view on the desktop market
For years now, Otellini has followed the same strategy in the desktop PC market: deliver new processors each year that only slightly improve the power offered in those that came before them. The issue is not necessarily innovation, but Otellini’s Steve Jobs-like decision to offer only some of what customers want one year, so he could deliver everything they want the next year. Hopefully, that will change with his replacement.
2. Some renewed interest in smartphones
Smartphones caught Otellini off-guard. After ARM-based chips were loaded into the vast majority of handsets, Intel realized it needed to respond. However, the company’s processors have proven to be too battery-hungry and not nearly as powerful as customers would like. A new CEO will likely bring a sense of what needs to be done to get Intel to where it should be in the smartphone market.
3. Tablets might finally take center stage
Tablets have also proven to be a conundrum for Intel and Otellini. Despite Otellini’s best attempts at bringing processors to tablets, Android-based vendors have ignored his company’s chips. What’s worse, they’re still not even ready for slates. With a new CEO, that will undoubtedly change.
4. Power consumption will be the top of the new CEO’s list
Across Intel’s product line, from the Core i7 on down, power consumption has always been a bit hit-and-miss. Sometimes, the company’s chips do the best job on power savings, while in other cases, they completely miss the mark. Considering the growing importance of mobility across PCs, look for power consumption to be a major concern for Intel in the coming years.
Intel CEO Otellini: 10 Things That Will Result From His Leaving
5. An eye on sales and marketing again
Intel made its name in the processor market by delivering products that had better marketing than those of rival Advanced Micro Devices. There was a time, after all, when AMD products were the only processors enthusiasts would buy because they knew that the chips were superior to Intel’s. The average consumer, however, bought PCs with Intel chips because of the company’s superior marketing. Lately, that marketing has slipped. Let’s hope that changes with a new CEO.
6. An AMD boost?
As Intel moves into a new phase in its history, there’s a chance—a small chance—that AMD could capitalize on that shift. After all, the company is the only other major processor maker in the PC market, and part of Otellini’s appeal to his company’s board was his ability to woo PC makers. With him out of the way, AMD might find the opening it needs to start making some more inroads into the PC market.
7. ARM capitalizes
ARM couldn’t be happier to see Otellini go. Over the last couple of years, Otellini has focused nearly entirely on improving Intel’s standing in the mobile space. Once he leaves, a new boss with new ideas will replace all of that work. In the meantime, ARM has the time it needs to cement its power in the mobile market. It’s a great opportunity for the chip designer.
8. Opportunities for consolidation
Whenever a major executive announces his or her departure, talk of acquisitions and mergers in the industry crop up. Why? It’s simple: When the leader in the space loses its chief executive, other companies smell weakness. And when they smell that weakness, they look for ways to become stronger. Acquiring other companies is the best way to achieve that. Don’t underestimate the possibility of consolidation in the processor market as Otellini’s transition gets under way.
9. Trouble in Intel’s executive ranks?
When chief executives leave a company, there are typically some issues with morale. If a new CEO is chosen from within, those who didn’t get picked get angry. And since CEOs tend to have their favorites, those who were held in such high regard might lose their standing under a new rule. There’s a real possibility of dissension in Intel’s executive ranks.
10. Get ready for more departures
Following that, the entire industry should expect more departures from Intel before this is all over. As mentioned, some dissension is likely, and head hunters will come fishing for some top talent to lead divisions at other companies. In addition, some of those Otellini might have protected could be pushed out. Intel’s bloodletting isn’t over just yet.