SAN JOSE, Calif. – Despite a recent series of product missteps, Intel Corp.’s board on Thursday selected the semiconductor giant’s day-to-day operations chief to replace CEO Craig Barrett, who will step aside to become board chairman in May.
Paul Otellini, a 30-year Intel veteran who oversaw the Pentium microprocessor’s launch in the 1990s, has been viewed as the most likely candidate for the job since 2002, when he was appointed president and chief operating officer.
But doubts have been raised in recent months as the world’s largest chip maker repeatedly shuffled its product lineup, canceled projects and found itself in the unusual position of following the lead of its much smaller rival, Advanced Micro Devices Inc.
“I think there’s a certain monkey on Paul’s back here, taking over the reins of the entire corporation,” said Rick Whittington, an analyst at Caris &Co. “He’s not only got to get the processor group, which he’s been in charge of, back on track, but the entire company.”
Former CEO Andy Grove, who will step down as chairman in May and become an adviser, expressed confidence in the upcoming team of technologist Barrett and Otellini, who has a background in finance, marketing and sales.
“We now have … a technologist manufacturing person with a sales product guy,” Grove said. “At least on paper, the complementary nature of these two is closest to the ideal than anything we ever had before. I really like that.”
It’s the first time in the company’s 36-year history that a nonengineer has been named chief executive.
Otellini, 54, will take over a company that is the dominant supplier of the microchips that serve as the brains of personal computers. The problem is the PC market isn’t growing as fast as it used to.
Intel has been shifting from its focus on building chips that simply run faster. Instead, it’s trying to design according to how its chips and other technology are used. Last year’s successful launch of Centrino Mobile Technology is the first of many upcoming examples.
“To do that, we had to truncate some efforts, we had to focus and we had to make some choices,” Otellini said. “Intel, as big and resource-intensive as we are, doesn’t have unlimited resources. It’s a matter of choices and priorities.”
He also took some of the blame for the company’s cancellation in October of a much-hyped chip for large-screen televisions.
“What was wrong was we made the decision to go public on that before we were sure it was mass-produceable in high volume and reliable,” he said. “There was nothing wrong with the risk. The mistake was an error in judgment on my part to go public early on it.”
In fact, analysts believe Intel’s greatest need is to expand beyond its core PC business.
“They need to have a new strategic vision going forward,” said Apjit Walia, a semiconductor analyst at RBC Capital Markets. “Primarily, they have to figure out the current trajectory of Intel from where they’re a pure PC play into a company that can seek new areas of growth.”
With the PC business slowing, Intel also must branch out – something that it’s been attempting in recent years with mixed results. It’s a shift similar to the 1980s, when Intel’s focus moved from the cutthroat business of memory chips to microprocessors.
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