Intel's changing times

Intel is making the right moves with its job cuts. It should take the opportunity for even greater change
Written by Leader , Contributor

A company is more than a balance sheet, and layoffs mean more than just increased efficiency. With Intel on course for shedding some 10 percent of its staff over the next couple of years, the impact on the company's culture and self-image will be profound. That's important and necessary: it needs to revise its opinion of what it is, what it does and how it does it.

For too long, Intel has been addicted to the crack cocaine of processor sales. With an overwhelmingly dominant position in the market and a sales cycle fuelled by ever-increasing performance, the money has rolled in as the chips rolled out. These days are ending: not only has AMD become a frighteningly efficient competitor, but easy performance boosts are no longer being given out free with every iteration of Moore's Law.

To its credit, Intel has long realised this and tried to find alternative revenues, but with limited success. With entire divisions being sold off or shut down, and others consistently failing to reach expectations, it's still looking for success. There's no doubting its willingness to investigate new areas such as wireless, displays, universal memory technology, networking and embedded systems, but it's not punching its weight in the sector as a whole. It should be — sales in general are buoyant and the company has the expertise and resources to make an impact anywhere it wishes — but it lacks the killer instinct. Massive success with the x86 architecture has dulled its appetite, and it's failed to duplicate the Centrino marketing success with its pallid and unconvincing Viiv and Vpro messages.

Long term, the future still looks good: Intel's basic silicon technology is unparalleled and has strong room for further growth. At some point, software will catch up and the latent performance benefits in multicore will be realised. For now, though, this year's processors act just like last year's processors, at least in clients and desktops, which makes a high margin upgrade unattractive. The drugs are wearing off.

Look for more than just staff cuts. In every new area it invests in, Intel must learn to see itself as a start-up, using ingenuity and energy to compensate for lack of presence and restricted resources. It can't market itself to success without something special to sell, not in the sceptical, informed and results-oriented IT world, and it won't have something special to sell without that new way of thinking. It can do it — the company retains exceptional people with superb talents — but it won't be easy. We still have faith: the true mettle of people and companies alike is how they cope when the chips are down, and that's one side of the Intel corporate culture we don't expect to change.


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