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Shaking Up Intel's Insides

How its incoming CEO intends to make the chipmaker more market-focused

Long before announcing a sweeping reorganization of Intel Corp.'s (INTC ) operating divisions on Jan. 17, CEO-designate Paul S. Otellini had been telling the world about a major shift in the chipmaker's strategy. Gone were the days, he said, when the company could get by with a single-minded focus on microprocessor design. Intel would instead focus more on bringing together chips and software into so-called platforms designed to perform specific tasks, such as showing movies on home PCs or keeping corporate computers virus-free. "For the first three decades of the company, we made mostly discrete chips. But they weren't designed to be used together...and they weren't marketed together," Otellini told BusinessWeek in November.

Now he's making it clear to employees that, under his leadership, Intel truly is entering a new era. Otellini, who officially takes the helm on May 18, will be the first chief executive without an engineering degree at a company where gearheads have reigned supreme. He believes that to keep Intel growing, every idea and technical solution should be focused on meeting customers' needs from the outset. So rather than relying on its engineering prowess, Intel's reorganization will bring together engineers, software writers, and marketers into five market-focused units: corporate computing, the digital home, mobile computing, health care, and channel products -- PCs for small manufacturers.