By Charles King, Pund-IT, Inc. March 19, 2014
Technology vendor strategies tend to arrive in public so fully formed that it’s easy to assume that they are similarly constructed. Instead, creating strategies whether they focus on specific products, markets or entire organizations tends to be an organic process that evolves according to continuing, often subtle changes in the marketplace and the growing understanding and experience of the leaders involved.
That’s certainly the case with what’s been happening at Intel since Brian Krzanich was appointed to the CEO position in May 2013, replacing Paul Otellini, who had held the position since 2005. In a way, the two could not have been more different. Though Otellini joined Intel in 1974 and held senior sales, management and executive positions, including leading the Intel Architecture Group, he was the first company CEO who had not been formally trained as an engineer.
In contrast, Krzanich holds a patent in semiconductor processing and joined Intel in 1982 as an engineer. After serving numerous roles in fab plant and supply chain management, he rose to lead the company’s manufacturing organization before being named Intel’s COO in 2012. If you assume that background (along with shifts in the broader IT marketplace) would result in significant, complementary changes in Intel’s overall direction, you would be correct.
Those points have become increasingly clear in the first quarter of this year through speeches by Krzanich and other Intel executives at events, including the Consumer Electronics Show (CES), the Mobile World Congress (MWC) and Intel’s Q1 2014 earnings call, and public comments on a variety of issues related to Intel’s current and future states, including what has changed at the company and what will not.
Among those latter, abiding characteristics are the company’s continuing pursuit of Moore’s Law (such as the upcoming 14nm process “Broadwell” CPUs) and its elemental focus on developing the best solutions for PCs, which has been described as a continuing yet evolving “$30B annual business” for Intel. But it is also moving forward with significantly different or essentially new cross-company efforts, including:
- We are a “system on chip” (SOC) company: Initially launched in 2008, Intel’s SOC strategy continues to gain momentum and drive benefits for itself and its customers. In essence, SOC describes highly integrated products that can be adapted for a widening variety of computing processes and products, from the tiniest embedded chips to enterprise class data center solutions. But Intel’s SOC efforts have also paid off practically, leading to standardized components that can be reused across numerous platforms while also increasing the simplicity, efficiency and reliability of the company’s manufacturing processes.
- Market responsiveness/velocity: The impact of those SOC benefits are particularly clear in how quickly Intel is responding to shifts in the marketplace. This isn’t just a matter of speed but of velocity, since accurately changing direction is equally important. One example is the effort behind Galileo, a low cost Arduino-compatible board Intel introduced last October. Krzanich has noted that a decade ago, similar efforts would have taken Intel one to two years and millions of dollars to develop. In the case of Galileo, Intel engineers developed and began shipping the boards just two months after identifying the market opportunity.
- From WinTel to “all-OS” support: Numerous changes are roiling the IT industry but the fundamental shifts in long-established partnerships, including the one between Intel and Microsoft are the most disorienting. The companies certainly continue to work closely together—Intel’s “Ultrabook” and smart phone strategies bear that out—but they also need to adapt individually to evolving markets. One sign of that point is Intel’s plan for “all OS support” in which the company will deliver solutions supporting all major OSs, such as Microsoft Windows, Linux distributions, Google’s Android and Chrome, and Apple’s OS and iOS simultaneously. Some might see this as evidence of the devolution of Wintel but we consider it more a sign of Intel’s flexible response to increasingly diverse IT markets and developer communities.
- “If it computes, it does it best on IA (Intel Architecture)”: This central message has been emphasized numerous times. Some may have considered it simple braggadocio—a massive and massively successful vendor claiming its primacy in the face of market and global challenges, but we believe something deeper is afoot. A decade and a half ago, Intel was the leading vendor in PC silicon and ambitious upstart servers and other markets. Today, IA continues to lead in PCs and notebooks, as well as data center solutions from SMBs to supercomputers. The company certainly has challenges, particularly in highly mobile tablets and smart phones and embedded markets. But it also has goals and roadmaps it is executing and improving on effectively, even ruthlessly. Taken in this context, Intel’s comments are less bragging than simple statement of fact.
With few exceptions, IT business strategies tend to be in a state flux, shifting and adapting to account for changes in the marketplace and technological developments. Knowledgeable vendors recognize this and use opportunities like industry conferences, trade shows and earnings calls to state and discuss elemental changes in focus and direction. In our view, Intel has spent much of 2014 with that goal in mind and has largely succeeded in clarifying its strategy.
How successful it will be remains to be seen. As many have and continue to point out, the company’s challenges—particularly in mobile—are significant technologically and competitively. Additionally, some of Intel’s core efforts will require fundamental changes in its corporate culture. That can be a tough prospect for any company but tends to grow in scope and complexity according to an organization’s size and history.
But while that is the case for many IT vendors, Intel has often used its leadership successions to institute broader changes. While obviously successful and influential, Intel is a manufacturing concern at heart and CEO Brian Krzanich’s previous roles in the company’s fab organization mean that he understands its strengths and weaknesses on a level that would be beyond most other C-level executives. That understanding is likely to ensure the success of new and future strategic shifts, bolster the company’s adaptations to technology and market evolution, and help place Intel Inside everything.
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