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Candidates emerge to succeed Intel CEO Otellini

Agam Shah | Nov. 20, 2012
Three top executives promoted Monday at Intel are among the leading candidates under consideration to replace Paul Otellini as the company's CEO, according to sources familiar with the chip makers' plans.

Intel could expand its foundry commitment and start taking big orders from third parties to make chips within the next two years, McCarron said. Intel already makes FPGAs (field-programmable gate arrays) in small volumes for third parties on its 22-nanometer manufacturing process, which is considered the industry's most advanced.

Another internal candidate who may be considered is Dadi Perlmutter, an executive vice president who runs the Intel Architecture Group, which is responsible for chip design. Outside candidates such as Pat Gelsinger, an ex-Intel executive and now CEO at VMware, may be considered for the role, but analysts said Gelsinger will likely not rejoin Intel.

Otellini became Intel CEO just as the company was losing processor market share to rival Advanced Micro Devices and struggling with chip development. Otellini put in place a tick-tock strategy to update chips on a yearly basis, which stabilized the product research, development and chip manufacturing cycles.

Otellini also diversified the company's operations through acquisitions of companies such as Wind River and McAfee, which at the time was considered an unexpected move. Intel is now adapting McAfee's products to add on-chip security features. Intel also acquired Fulcrum, Qlogic's InfiniBand assets and Cray's high-performance computing interconnect assets, with which the company is growing its networking, storage and server presence in data centers. Intel also bought wireless assets from Infineon, which will be used in Atom processors for smartphones and tablets.

Intel's acquisitions under Otellini were strategically sound and more relevant than acquisitions made by Intel under Barrett, said Insight 64's Brookwood.

Otellini also guided Intel through multiple antitrust cases and helped the company grow in the PC market. Apple shifted from the PowerPC processors to x86 chips in 2005 and 2006.

But Otellini made his mistakes, among them failing to see the quick development of the mobile market and the company's ultrabooks initiative has been a disappointment, analysts said. The PC market started slowing down due to alternative computing devices like tablets and smartphones and in an attempt to renew the PC market, Intel pushed ultrabooks as a new category of thin-and-light laptops with tablet features.

"Otellini was a big cheerleader for ultrabooks, but ultrabooks aren't looking as shiny as they did a year ago," Brookwood said.

Otellini to his credit speeded up Atom's chip development to tackle ARM, but Intel has a long way to go before making an impact in tablets and smartphones, analysts said.

ARM dominates smartphones and tablets with its low-power processors, while Intel has failed to catch up with its x86 processors, said Roger Kay, president of Endpoint Technologies Associates.

"I think Paul committed the company to its own x86 architecture at a time when an alternative was taking root in the market," Kay said.



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