Intel's Too-Modest Proposal for Its New CEO

Intel's Too-Modest Proposal for Its New CEO
Brian Krzanich at a roundtable meeting titled "Insourcing American Jobs" in the Eisenhower Executive Office Building in Washington, D.C., in 2012
Photograph by Joshua Roberts/Bloomberg

Historically, Intel has handled leadership turnover with the same precision it applies to making intricate transistors. Not this time: Since outgoing Chief Executive Paul Otellini announced last November that he was planning to retire, the company seemed out of sorts as it struggled to find a successor. As the months ticked by, Intel turned to committees and consultants for guidance and started to look outright hapless.

On Thursday, the company finally tapped Brian Krzanich, a 30-plus-year veteran and its chief operating officer, as the new CEO. The company was quick to highlight Krzanich’s latest work, which has included oversight of its chipmaking factories—essential to Intel’s efforts to expand beyond PCs and servers into the mobile and device markets. Intel has a one to two-generation lead over competitors’ manufacturing technology, and the company has bet that advantage will result in state-of-the-art chips that mobile and device makers can’t ignore.

So Krzanich, who officially takes over on May 16, is the safe choice. Like his predecessors, he’s a company man steeped in Intel’s traditions, though unlike incoming President Renée James and Chief Financial Officer Stacy Smith, he hasn’t spent a ton of time in front of investors or the press. Investors appeared to sense his lack of razzle-dazzle, as shares ticked down by a hair after the CEO change was announced.

That’s further evidence that many would have liked to see Intel hire an outsider with some new ideas and strategies. The company has spent something of a lost decade trying to get into the mobile and device business and is just now starting to produce the kinds of low-power chips that smartphone makers would actually consider using in mass-market products. Worse, the x86 architecture of Intel’s chips is completely different from that of the chips found in the vast majority of phones, tablets, and other devices, which use designs from Britain’s ARM. This means Intel has to persuade software makers and app coders to redo their work just to use its chips.

The hiring of Krzanich, 52, suggests that Intel will continue along its current path, trying to woo device makers with the promise that its manufacturing edge will outpace rivals for years to come.

As for Otellini’s legacy: In the win column, he guided Intel through massive antitrust battles with little damage to the company’s balance sheet. He crushed a briefly resurgent Advanced Micro Devices. And he kept the PC chip business humming while expanding Intel’s high-profit server chip business in style. But he swung and missed at mobile more than once and was somehow blindsided by the rise of tablets.

Some of Otellini’s other big moves remain works in progress. Intel has acquired a series of software makers in recent years, including McAfee for $7.6 billion, and used those assets to help keep its chips relevant. That has cost an awful lot, though, and the long-term strategy behind it is unclear. Most critically, as things stand, Otellini has failed really to expand Intel beyond the PC and server. History may show that he put the right pieces in place, but now it’ll be up to Krzanich to make it happen.

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