New Intel CEO Brian Krzanich was a consensus pick that will be able to keep continuity flowing at the chip giant, maintain manufacturing excellence and largely stay the course. That path could be comforting or alarming depending on your point of view.
On Thursday, Intel said Krzanich will replace Paul Otellini on May 16. Renee Smith, who led Intel's software push, will become president. Given Krzanich is a manufacturing wonk it's clear that Intel will stay the course on using its fab expertise to its advantage. One bonus could be that Intel will ramp its young foundry business and ultimately win Apple's business.
The nagging question: What will Intel pay in the long run to maintain continuity today? Should Intel license ARM? When will the mobile plans pay off? Is Intel footing the manufacturing and Moore's Law costs for the industry when good enough computing will do?
Analysts were generally supportive of Intel's move because it was predictable. However, a few observes didn't think Krzanich was a great pick. Piper Jaffray analyst Auguste Gus Richard, who has been critical of Intel's model for months, said:
We view the selection of Mr. Krzanich as the company staying the course and not a positive development. In the post PC era, the company needs to transform the company and culture to adapt to a changing landscape. We continue to believe Intel needs to license ARM and focus on becoming a direct-to-OEM foundry. Promoting the COO is doubling down on the manufacturing roadmap and does not address the issues the company is facing.
We believe the rise of mobile and the decline of the PC has radically altered the semiconductor landscape. In this transition, Intel has lost its near monopoly status, as PCs are no longer the growth engine of the semiconductor industry. Mobile and ARM have ascended to dominate the microprocessor landscape. We believe the mobile ecosystem wholeheartedly rejects x86 and by extension Intel.
There's little question how Richard really feels about Intel's CEO pick.
Morgan Stanley analyst Joseph Moore disagreed and thought Intel's strategy is fine.
Manufacturing has been the clear success story at Intel for the last several years under Brian’s leadership. We have spent time with Brian and believe that he will not make any major changes to Intel’s bigger picture strategy.
Deutsche Bank analyst Ross Seymore sang a similar tune as did other analysts:
We have always viewed manufacturing as Intel’s core sustainable advantage and Mr. Krzanich understands this aspect of Intel’s business better than anyone else. The push into the foundry business is perhaps the clearest evidence that the company intends to press its manufacturing advantage into adjacent markets.
The bottom line here is that Krzanich will stay the course. Perhaps he surprises by taking Intel in a new direction in the post-PC era. But one thing is clear: Intel's CEO pick will make in interesting business case study in a few years. Intel is clearly going for continuity, but there may be a price to pay for that stability later.