New Intel CEO preps for massive marketing push of new brands

New Intel CEO preps for massive marketing push of new brands

Summary: Intel CEO Paul Otellini is investing in marketing as he seeks to remake the image of the world's largest chipmaker in highly competitive markets

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TOPICS: Intel
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potellini1.jpgPaul Otellini, the first non-engineer to become CEO of Intel, this week took further steps to remake the image of the world's largest chip company as it realigns its focus in fast moving markets and against fast moving competitors such as Advanced Micro Devices.

Sources close to Intel said the company had chosen Burson-Marsteller, Hill and Knowlton and Ogilvy as the winners of a very competitive bidding process. It is believed that the contracts are amongst the largest ever awarded in Silicon Valley or in the tech industry itself.

Just nine months into his tenure, Mr Otellini's marketing background and expertise have come into the fore with changes to the Intel logo and consolidation of its marketing/media messaging through just three large public relations companies.

The three marketing communications companies will each be responsible for the North Americas, Europe, and Asia regions respectively. The move will enable Intel to launch large marketing campaigns around several new families of products in the consumer, mobile, enterprise, and communications markets.

The lucrative contracts were hard won contests that took several months of presentations and pitches and involved almost every large corporate communications company in the world. The choice of the three companies is interesting in that they are all owned by the same parent company WPP Group.

The company's name derives from 'Wire and Plastic Products' a public company that Martin Sorrell took a stake in 1985 to build a massive marketing/communications empire that has invested in or acquired more than 80 companies. WPP's 3rd quarter revenues were 1.348bn pounds sterling.

Of further interest is that WPP companies won a huge contract in 2004 with Samsung--the largest Asian chip maker. Samsung and Intel are increasingly becoming competitors in the consumer electronics markets,  in cell phone and communications chip markets, and in flash memory chip markets.

Intel faces a rapidly changing market. In a recent interview I conducted with Anand Chandrasekher Intel's top sales guy, senior vp of worldwide sales and marketing, the company said that the demands of enterprise users had changed and it was revamping its microprocessor designs.

The focus now is on low electric power consumption rather than raw speed, and more efficient design of multi-core microprocessors, on-chip memory caches and pipelines to speed parallel processing applications.

Mr Chandrasekher also said that the VIIV consumer electronics platform will be a key part of Intel's efforts to establish its technology in home based digital products.

The massive marketing shakeup sets the stage for Mr Otellini's plans for massive marketing spending as Intel seeks to establish its new brands and a new consumer and enterprise image. Mr Otellini helped establish the "Intel Inside" campaign which is considered a text-book example of marketing success.

However, in December 2005, Mr Otellini scrapped the "Intel Inside" campaign and launched the "Leap ahead" brand in January 2006. The famous Pentium brand name has also been retired.

Intel competitor Advanced Micro Devices has managed to grab a rare advantage over Intel with its Opteron line of server microprocessors because of Intel's long running attempts to establish its 64-bit Itanium line of microprocessors in large enterprise systems against Sun's SPARC and IBM's POWER microprocessors.

But so far AMD has done little to blunt Intel's massive dominance of the chip industry and its 62 per cent operating margin business--an impressive achievement for a chipmaker which has to make huge capital investments and plan designs and production several years into an uncertain future.

Intel's strength has always been in its manufacturing prowess. Under Craig Barrett, the chairman of Intel and its former CEO, it developed the ability to quickly build, equip and ramp up production of millions of chips in state-of-the-art facilities.

Mr Barrett developed a system of chip fabs in which each is copied exactly and production yields are reproducible. High yields are essentially in this business because the chip fabs are fixed assets and have to be operated at high capacity levels no matter what the user demand.

Mr Otellini has a degree in Economics and is the first Intel chief that is not an electronics or chemical engineer. He is also a member of Google's board of directors.

Here is some more information on the latest moves by Intel.

Topic: Intel

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  • Mature markets

    Times are changing, and it was a good move by Intel to recognise this and appoint Mr. Otellini. His background in economics (which I did not know about) and strength in marketing are the ones which count for chip makers today.

    AMD look set to continue to make headway into Intel's _old_ market in the near future, so they will need to develop new sectors (more profitable, but more risky) if they are to continue to be the big boys.

    The WPP connection is a good point, Mr Sorrell has proven to be an extremely driven and capable operator. His lot consistently have a good product, and deep roots - a compelling combination.
    Fandorin