Intel post Otellini: The big challenges ahead

Intel post Otellini: The big challenges ahead

Summary: Intel's new leader has a bevy of challenges ahead and most of them connect somehow to navigating the mobile landscape better.

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Intel CEO Paul Otellini is retiring and leaving an impressive track record, but he's also departing at a key inflection point for the chip giant. In other words, the new Intel CEO will have entirely new challenges to navigate.

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First it's time to give outgoing Otellini his due. Intel's fifth CEO kept Moore's Law humming, improved processors and their power usage, dominated the data center and delivered a steady stream of earnings, dividends and cash flow.

On the flip side, Otellini's Intel has struggled in the mobile race and remains dependent on the PC market in many respects. Acquisitions such as McAfee are still tricky to define.

Piper Jaffray analyst Auguste Gus Richard set the scene:

Intel's CEO of eight years is leaving the company amidst what we see as difficult challenges for the company in the post-PC era. While Intel's manufacturing capability is currently second to none, Samsung is catching up. Increasingly, new designs favor less expensive process technology, not high performance transistors used in PC CPUs. In the mobile era, customers such as Google, Facebook and Apple are designing their own mobile processors and server processors. As the PC market has stagnated, Intel has tried to pivot to mobile and increasingly to foundry. However, Intel has had very limited success in mobile and Intel’s prices for foundry wafers are 3x that of TSMC's.

The new Intel leader---the company said it will consider both internal and external candidates---will face a series of large issues and most of them connect with mobile somehow. Among them:

Is there an answer to ARM? The growth among chip makers is with the likes of Qualcomm and Nvidia, two companies that are capturing design wins for tablets and smartphones. Those mobile devices are eating into PC sales. Intel will have some Atom based phones and tablets, but the jury is out on whether it will get its big hit. Should the ARM architecture continue to dominate, Intel will be a mobile outcast.

Will "good enough" chips be good enough? Intel's main pitch is that its march toward innovation and processing breakthroughs will keep the company dominant. But maybe Intel's march is misguided. Some analysts have argued that Intel is single-handedly funding the innovation in the industry when good enough chips are fine. For instance, Apple has been rumored to move to its own processors. Intel's tick tock cadence may be hitting the point of diminishing returns.

Should Intel be a contract manufacturer? Intel's strength is manufacturing and it could make processors for other companies---Google, Microsoft, Apple etc.---as well as keeping its own brand.

Can Intel diversify from Windows? Intel and Microsoft have been diverging somewhat, but the new leader's fate will still largely be tied to Windows. Without mobile traction---via Android most likely---it will remain tethered to Microsoft in many ways.

Topics: Hardware, Intel, Mobility, Processors, PCs

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11 comments
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  • Intel vs ARM

    It is a bit like iOS vs Android and we know how that is going. It is VERY difficult to withstand the onslaught of a horde of hungry competitors. Many will fail, but the odd one will come up with better ideas and solutions than you can, plus the intense competition creates immense pricing pressures.

    Perhaps a good time to get out legacy wise, just like Bill Gates did?
    D.T.Long
    • A change in the wind at Intel

      First Otellini is out. Now they have bought ZiiLabs Limited - designers of ARM SOCs for ZiiLabs (a subsidiary of Creative). Platform shift time? Is this to refit Atom, or are they adding ARM back into the mix?
      symbolset
  • Second to fall...

    First was the Windows software lead, now the Intel lead. Interesting.
    Tony Burzio
    • I bet

      I bet you pray every day to "fail" as well as they have. pfttt...
      NoAxToGrind
      • Learn to read.

        He said "fall", not "fail".
        Bozzer
    • logical outcome

      It was IBM who created the business for these two companies - in an attempt to finger Apple. But IBM eventually decided to give up, so now both Microsoft and Intel are orphans and it seems they are already out of ideas.
      danbi
  • XScale V2

    Intel had StrongARM, later renamed XScale. In 2006 it was sold to Marvell.

    Intel vs ARM is a false dichotomy. Intel can launch chips using ARM ISA anytime it wants. But currently, the big bucks are coming in from selling x86 chips and Intel tries very hard for x86 to get a foothold in tablet and mobile space.

    Yes, x86 is almost synonymous with Windows, ie. Wintel. The truth is that x86 does not have legacy advantage outside the Windows ecosystem. Linux x86 is only marginally more supported than Linux ARM. On mobile platforms, ARM ISA rules.

    Future trends:
    - Xeon Phi
    - NAND for SSDs
    - Itanium ISA?
    - ARM ISA?
    - Moore's Law?
    JonSawyer
  • What's with

    What's with the disappearing comments????
    NoAxToGrind
    • Garbage collection.

      Yours are up first.
      Bozzer
  • Don't underestimate Intel

    The days of "WinTel" may be over, but I don't believe that the ARM architecture has "won" the mobile space forever just yet...
    Smalahove
    • Of course.

      Because just tomorrow everyone is going to run out and swap their ARM smartphone for an Intel based smartphone.

      Samsung especially no doubt.
      Bozzer