Tech Industry

Intel's new divisions cut wide swath

The new units aim mostly at providing "building block" computer components which get sold to other companies--not necessarily products sold directly to consumers.

Unlike many corporations, Intel does not provide a hierarchical diagram of who reports directly to the chief executive. The secrecy is for competitive purposes, a spokesman said.

Nonetheless, No. 1 chipmaker has partially lowered the veil to better outline its four-pronged business structure, hatched earlier this year.

Under the new plan, the company is Intel divides to conquer? organized into four business units: the Intel Architecture Business Group (IAGB), which controls PC processors; the Network Communications Group (NCG), which makes chips for switches, modems, and other telecommunications products; the Communications Products Group (CPG), which makes communications products that can incorporate NCG chips, and the data services group known as the New Business Group (NBG).

While each division will focus on separate markets, they share similarities. All will aim mostly at providing "building block" computer components which get sold to other companies--not necessarily products sold directly to consumers. Intel's data services, for instance, will be sold to Internet service providers, who in turn will sell them to competitors.

All of the divisions are headed up by seasoned Intel executives.

The IABG, headed up by general manager Paul Otellini, remains the largest group, responsible for approximately 80 percent of the revenue and nearly all of the profits for the chipmaker. Although previously focused on PC and server processors, the group has recently expanded to control processors for handhelds, chipsets, motherboards, graphics chips, and other PC components.

Intel's TV set-top box ambitions are also coming out of this group. Recently, IABG executives announced a $50 million investment into Pacific Century CyberWorks to bring high-speed cable access to Asia. The company is also investing to build Internet infrastructure and content on a regional level internationally, according to vice president Claude Leglise.

The NCG, managed by Mark Christensen, is one of the fastest-growing groups and has made several recent acquisitions, including. Level One ($2.2 billion according to documents filed with the SEC) and Softcom Microsystems ($150 million). One intense focus for the group will be on programmable network chips, which serve as the nerve center of switches and other communications products. By being programmable, these chips can fit into a wider variety of products and cut development time. Home networking falls into this group.

The CEG, meanwhile, controls the development and sale of network appliances, switches, and other communication devices. Most of the products are targeted at small businesses. Acquisitions for this division, which is run by vice president John Miner, include Dialogic ($830 million) and Shiva ($185 million).

Lastly, there is the NBG, a catch-all outfit that will explore new opportunities. Headed up by Gerhard Parker, the group's first project will involve building and manning the Intel Data Centers, a collection of "bit farms" that will store data, host Web sites, and in general serve as a backbone for ISPs.

Last year, Intel bought e-commerce software developer iCat for this division. Rather than sell iCat as a software product, Intel will market iCat as a service, renting software and server space and selling consulting services to small businesses, according to Doug Schulze, manager of iCat.

To complement the main business groups, various internal venture capital and business development groups are seeking out alliances with third parties. Software and Internet content, for example, are not directly marketed by Intel. Instead, this activity is mostly handled through venture investments. Senior vice president and board member Les Vadasz oversees these efforts.