news analysis Intel selects consummate insider as next CEO. Can he take Intel beyond the PC?
The 54-year old executive--who will take over as Intel's CEO next May after 30 years with the company--tends to discuss the chipmaker's strategies in the context of global economics, often in intricate, paragraph-size sentences. He's been one of the advocates of lowering the cost of computers to bring them within reach of the billions of people living in emerging markets and of tapping engineering resources in countries like Russia, China and India. For a number of years, he represented Intel at the Davos World Economic Forum, mingling with the likes of the King of Jordan and Newt Gingrich.
He also was one of the figures behind Intel's push into graphics. The company's effort to make standalone graphics chips failed. But by integrating graphics into chipsets, Intel has become the world's largest producer of 3D graphics silicon in the world, pressuring Nvidia and ATI Technologies.
The switch to Otellini from current chief Craig Barrett could help Intel recover from some of its marketing and manufacturing missteps of recent years. Barrett was unable to fulfill Intel's strategy of more broadly diversifying into cell phones, communications equipment and other markets. Barrett is also known to be somewhat abrupt.
"Otellini is extremely smart and very personable. He'll be a breath of fresh air for Intel when he takes over as CEO," said an executive at a chip company that does extensive business with Intel. "We always perceived him as one of the good guys."
Dean McCarron, principal analyst at Mercury Research, called Otellini "an appropriate choice. He certainly has a lot of experience in how Intel does things."
On the other hand, Intel might actually need the touch of an outsider, said Kevin Krewell, editor in chief of the Microprocessor Report.
"At IBM and AMD, it took someone from the outside to decide what to keep and what to get rid of. IBM and AMD were struggling before (Lou) Gerstner and Hector (Ruiz) came in," Krewell said.
Intel is not nearly in the same dire situation as IBM and AMD were when new CEOs took over, Krewell noted. The company still makes billions in profits. Still, Intel has yet to seriously tackle the issue of how to move beyond microprocessors.
"A lot of people thought that under Barrett, Intel tried to diversify, and the vast majority of it hasn't panned out," Krewell said.
Otellini also has been associated, rightly or wrongly, with many of Intel's major gaffes of the past few years. He was one of the executives who publicly extolled the virtues of Rambus memory, before subsequently admitting that Intel miscalculated. He unfurled the push into consumer electronics in January of this year, saying Intel wouldbring down the cost of big televisions with a new chip. Nine months later, the chip was canceled.
During the years Otellini ran Intel's microprocessor group and served as president, the chipmaker continued to ratchet up the speed of its microprocessors, although engineers at the company also said heat was a problem. That issue came to a head this year when Intel killed the 4GHz Pentium 4, a product Otellini announced.
Technically, Intel is not the only place Otellini has worked. The San Francisco native had a job as a vendor in the stands of the city's Candlestick Park while in school.
He attended the University of San Francisco, graduating in 1972. Rather than go to law school, he chose to get an MBA at Berkeley. On graduating in 1974, he had three job offers: one at Fairchild Semiconductor, one at AMD and one at Intel. "I chose wisely," he joked once, paraphrasing a line from one of the Indiana Jones movies, in which Jones randomly chooses the glass that doesn't contain poisoned liquid.
In the early 1970s, Silicon Valley was just getting off the ground, and executives had to do things like drive forklifts to hit sales goals.
"We had to make the end-of-quarter shipments," he said. "The warehouse was across the street on Walsh Avenue."
Over the years, Otellini held several jobs. He managed the relationship between Intel and IBM from 1980 to 1985, when IBM selected Intel's microprocessors for its first PC. Otellini then managed the chipset business. In 1989, he served as technical assistant--the Intel equivalent to being a chief of staff--for then-CEO Andy Grove. A year later, he became the general manager of Intel's microprocessor business.
In 1992, Otellini was asked to head up sales and marketing. He initially declined and, according to a source at Intel, wrote a long letter explaining why he didn't want to do the job. He took the position, however, and began to rise rapidly. From 1998 to 2002, Otellini oversaw the Intel Architecture Group, effectively becoming responsible for the chips, boards and chipsets designed for PCs. In 2002, he became president and chief operating officer.
Like Barrett, Otellini will serve in the CEO role for only about five to six years. New bylaws at Intel prevent the chief executive from serving after turning 60. Otellini is 54.
Intel has not yet named a successor to take over the spot of president and chief operating officer. One Intel source indicated that an operations expert would provide balance. One choice could be Lou Burns, who manages the desktop processor group and formerly worked as chief information officer. He has worked with Otellini for a number of years. Since 2002, Burns has become one of Intel's regular speech makers.
Another possibility is Sean Maloney, who runs the Intel Communications Group. He served as Grove's technical assistant and oversaw sales in the Asia-Pacific region during the go-go '90s. The Communications Group, however, has been losing money.
Sunlin Chou, who runs the technology and manufacturing group, could also be a candidate, but he's older than Otellini.