Otellini takes over at Intel, fleshes out strategy

At annual meeting, Craig Barrett hands the reins to the chipmaker's fifth CEO--who assures shareholders the PC market remains vibrant.

Paul Otellini took over as CEO at Intel's annual meeting on Wednesday, as the company shed more light on how it sees the future.

Paul Otellini
CEO, Intel

Otellini, a 31-year veteran of the company and the fifth CEO at Intel, told analysts and shareholders that the PC market continues to be a vibrant one.

PC shipments have grown 36 percent in total during the last three years, an increase of 55 million units, he said. Shipments of personal computers are expected to cross the 200 million mark this year, with much of the growth coming from notebooks.

The market, however, is an increasingly international one that will be driven by developing markets, he said. In 1995, Intel had dealers in four cities in emerging countries. Now it has dealers in 1,275 such cities. A decade ago, 15 percent of PCs ended up in emerging nations; today, the percentage has risen to 38 percent.

To this end, Otellini said, the company is trying to develop new products that will fit the circumstances of these markets, both economically and otherwise.

"We found that selling products designed for North America isn't the best recipe," he said. "They need to be much more rugged, much more sensitive to dirt, much more sensitive to power interruption."

Health care represents another large opportunity for Intel, and the company will take a multifaceted approach. One part of the effort will involve wiring hospitals and doctor's offices in an effort to make billing and diagnostics easier, said Andy Grove, the company's outgoing chairman. The chipmaker will also promote Intel-based servers to perform the massively demanding computing tasks required by drug designers and genetic engineers.

A tale of two CEOs
Paul Otellini has taken the
reins from Craig Barrett. Here's
a look at both executives:

Mr. Chips takes final bow
(March 4, 2005)

(March 1, 2005)

(Nov. 11, 2004)

(Nov. 11, 2004)

Paying a price to be No. 1
(Oct. 29, 2004)

(Oct. 19, 2004)

(Aug. 11, 2004)

Barrett weighs in
(June 1, 2004)

(Oct. 22, 2003)

Otellini named Intel's president
(Jan. 16, 2002)

The company, though, will also try to leverage its expertise in making nanosize transistors for the biotechnology field.

Back in 2003, Intel teamed up with a research outfit to see how semiconductor equipment could be used to detect cancer cell anomalies--but this is the first time Intel has talked about turning projects like this into a commercial enterprise.

"The technology can be used for the analysis of protein structures," Grove said. "We hope to drive them (manufacturing technologies) into product development, probably in combination with people who already have expertise in the area in marketing and sales."

Much of the shareholder meeting, however, was given over to history.

With the promotion of Otellini to CEO, Barrett will become chairman. Grove, meanwhile, will step down as an active member of the board. The fourth employee hired at Intel, Grove served, among other jobs, as president, CEO and chairman.

Otellini differs in many ways from his predecessors. He's the first Intel CEO not to be an engineer. He came out of finance and sales.

On the other hand, like earlier CEOs, he's a lifer, having arrived at Intel after turning down job offers at Advanced Micro Devices and Fairchild, and after obtaining an MBA from the University of California, Berkeley. Before business school, the San Francisco native worked briefly at a law firm and during summers sold snacks in the stands at Candlestick Park.

More important, Otellini has stressed that he has no major plans to change the culture or underlying strategy of the company. Even though

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