Intel should seek outside CEO -- but it won't
Intel CEO Paul Otellini delivering the keynote address at the 2012 International Consumer Electronics Show January 10, 2012, in Las Vegas. / Kevork Djansezian/Getty Images
(MoneyWatch) The personal computer industry used to have a killer annual trade show in Las Vegas called Comdex. It brought out all the movers and shakers, a veritable who's who of an industry that dominated the technology world.
Uncharacteristically early to an after-show party, I walked up to the bar to get the first of what would surely be many drinks that night. Standing there, alone like me, was my counterpart at arch-rival Intel, sales and marketing chief Paul Otellini. We were competitors, but that didn't stop us from striking up a casual conversation.
Nice guy, I remember thinking.
Years later, I was surprised to learn that Otellini was being groomed to become Intel's fifth chief executive officer. Then again, I shouldn't have been. As the world's leading chipmaker, Intel had a reputation for arrogance and a competitive corporate culture, but that didn't define the personalities of its executives. They were unique individuals.
Benign as that sounds, it explains a lot about why Intel has been unable to leverage its unparalleled success in PCs beyond PCs. Despite billions invested in technology and dozens of companies, the chip giant has failed to gain traction in the fast growing mobile phone and tablet markets.
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Intel's top customers are still the same old gang, like PC makers Dell and Hewlett-Packard. That's why mobile chipmaker Qualcomm's market valuation actually surpassed Intel's this year. Qualcomm isn't bigger, but owing to its heritage as an early innovator in cell phone technology, it's certainly the better horse to ride in the mobile space.
While Intel has always been an innovative company, its domination of processors and other chips at the heart of PCs inevitably came to define the way it developed, manufactured and marketed its products. Some might say the reverse is true. In any case, its company culture and the market it serves now move in lockstep.
Having found itself in a similar dilemma two decades ago, IBM brought in an outsider, Lou Gerstner, to shake things up. Gerstner didn't just save Big Blue from breakup or extinction; he changed the company's culture at its core.
That's exactly what Intel needs. And Otellini's surprise decision to retire early presents a golden opportunity to do just that. Sure, Lou Gerstners are hard to come by, but repositioning the company to become a player in today's hottest growth markets has proved to be damn near impossible given the company's current culture. Nevertheless, the risk associated with tapping the first outside CEO in the company's history is significant. And therein lies the rub.
You see, IBM was pretty much on its last leg in the early 1990s. It had little to lose by bringing in an outsider to try to save the company. In contrast, Intel's doing just fine, operationally speaking. And that's why it won't bring in an outsider. It will assess the risk as too high. If it isn't broke, don't fix it.
That brings to mind a little known fact about Intel. The company once had four different processor architectures. When it decided to put all its eggs in one basket, it took a big risk. But that gutsy move ultimately enabled Intel to dominate the PC industry and become the world's leading chipmaker. That's the kind of guts the company needs now. We'll see.
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