Article Review #6 Intel CEO Will Retire Early --- Exit of Tech Veteran Otellini Comes as Chip Giant

Grapples With Rise of Gadgets

Current Management Situation:

Intel Corp. was hit with the surprise departure of its longtime chief executive, Paul Otellini, as the company makes most of the chips found in personal computers. Currently in the highly competitive industry, Intel is pushed to restore its reign over the high-tech sector amid an industry shift to smartphones and other mobile devices. he management change shows !ust how "uickly the landscape has changed for Intel, which with software partner #icrosoft Corp. once dominated key technical standards and drew much of the profit from the computing industry. Certainly the news was a shock for the world$s largest maker of microprocessors as the company struggles amid a shaky economy and a mobile gadget fren%y that is significantly decreasing demand for Intel Corp$s PC chips. In #ay &'(), Intel C*O Paul Otellini will retire as an officer and director of the company, ending a four-decade career with the company. +lthough everyone expected #r. Otellini to stay in his position until Intel,s mandatory retirement age of -., after eight years #r. Otellini felt it was time for a new leader to take over the difficult !ob. + successor for Otellini will be sought by the board of directors, which will consider external and internal candidates to take over the helm of the chip manufacturer.

Background of the Issues:

Otellini is the fifth C*O, in Intel,s /. year existence and was known as a very strong leader who managed the company through challenging times and market transitions. C*O since since &''.., Otellini is also recogni%ed for a series of advances at Intel, including cutting costs significantly, beating back competition from +dvanced #icro 0evices Inc., navigating through long-running antitrust investigations and extending Intel,s lead in manufacturing technology. 0uring his tenure, sales rose to an estimated 1.).. billion this year from 1)2.2 billion, while profit is expected to reach 1('.3 billion from 12.- billion in &''.. 4till, shares have fallen about /5 since he became C*O, and are down (65 since the end of +ugust. On the other hand, unfortunately, #r. Otellini, in a decision that would prove controversial, in &''- sold off an unprofitable Intel business that used +7# designs, betting that the company would eventually make its better-known x2- technology offer the battery-conserving features of +7# chips. Intel believes it has achieved rough parity in power consumption, and expects to use new manufacturing processes to achieve further gains in energy efficiency.

What are the issues?

1) Intel is swamped b huge market changes!"C landscape has drasticall changed#

Intel and the technology industry as a whole is also on a !ourney and on that !ourney the scenery has changed. It$s true that the PC landscape has drastically changed and continues to change. Our management strategy team believes that Intel has been struggling to find its place in the fast-paced mobile market. here is a ma!or shift in technologies from PC$s to mobile devices. 7ecently among consumers the line is blurring between what is a PC and what isn$t. 0evices like smart phones and tablets are proving to many that computing can take place on a number of different platforms. 4ince the release of the +pple iPad, a product that challenged the industry and forced Intel to turn introspective and re-think their product strategy. he iPad has done "uite a bit more than !ust challenge Intel and the industry as a whole, it has also challenged consumers to re-consider what exactly a personal computer is and what their needs are with one. 4imply put, those who we expected to lead the PC industry may not be those who lead in the future. he truth is innovation does not stand still and if Intel does not take advantage of this huge opportunity -someone else will

&8 0ecreasing demand for desktop and laptop computers that house Intel Processors
he newly appointed C*O of Intel will have to struggle with the continuously decreasing demand for desktop and laptop computers which house Intel Processors. he overarching factor is that, since the introduction of +pple Inc.,s iPhone in &''6, personal computers have been superseded by mobile phones as the focus for most innovation in hardware and software. Intel, which sells more than 2'5 of the chips that serve as calculating engines in PCs, faces slumping demand for those products and has shown limited progress in placing its technologies in mobile phones and tablets. +lthough Intel chips have been selected for a handful of mobile phones outside of the 9.4., the company faces a continued struggle in a market where most chipmakers use technology licensed from 9.:.-based +7# ;oldings P<C. .

$ecommendations % If we were leading Intel#

1) &se the transition period to focus on the compan 's current strengths

and challenges
<ooking forward we suggest that the =oard keep and also use a deep roster of internal executives to choose from in the transition period. >hile Otellini has been a good C*O and the transition will bring some uncertainty to Intel$s future. he company$s current strengths and challenges should be the main focus of the =oards and investors. +s a strategic management team, we would consistently work on more innovative and collaboration strategies within the organi%ation. ?oing forward, Intel has a lot of options. In the press release announcing Otellini$s resignation, Intel also announced the promotion of 7en@e Aames, =rian :r%anich, and 4tacy 4mith to the position of executive vice president. +long with 4ean #aloney, 0avid Perlmutter, and +rvind 4odhani, these managers are the leading candidates from inside Intel. he C*O is important, but for a behemoth company like Intel the overwhelming ma!ority of its strengths and weaknesses lie within the rest of the company.

() )e*elop a +ablet,"C h brid strateg

Our strategic management team anticipates "uite a bit of innovation in hardware, software, and services in the category over the next few years. >e suggest that Intel develop a good strategy around the ablet B PC hybrids, which is a tablet with a detachable keyboard. >e predict this to be one of the most interesting platforms we will see over the next few years. his new innovative product, if done right, will give consumers a two-in-one experience where they can have a tablet when they want it and a traditional mouse and keyboard experience when they want it, all in the same product.

-) "artner or .oint *enture with /pple to capture large mobile and "C market share
In order to regain market share, we suggest that Intel partner or !oint venture with apple in the mobile and PC market. Interestingly, our strategic management team has researched the market and it has revealed that +pple is looking to merge its operating system for mobile devices and personal computers. In order to regain market share, we suggest maintaining a loyal, profitable, business relationship with +pple. >hat has been a fundamental issue within the technology industry is that the bulk of consumer product companies are simply chasing +pple rather than emerging as leaders themselves. >hy not !oin forces on several pro!ects with +pple and emerge as a leader once more.

0) 1ocus on e2panding the Intel Brand into the non!pc fast!growing computing market#
Our 4trategic #anagement eam has performed detailed marketing and consumer

research which indicated in the beginning many consumers bought an iPad as a partial PC replacement. Consumers were in the market for a new PC but instead bought an iPad. 9ltimately reserving their old PC as a backup for when they need a mouse and keyboard. >hat is interesting to the last point is that once integrating an iPad consumers reali%e they need the PC less and less for many tasks, especially when the iPad is paired with a keyboard. +s those in the industry who make PCs are already figuring out, tablets are a viable computing platform and having a tablet strategy is essential for anyone currently competing for PC market share. Intel purchased embedded computing company >ind 7iver in &''3. >e believe that Intel should leverage these ac"uired technologies to >ith access to >ind7iver$s customers we suggest that Intel expand more deeply into the large, lucrative market that includes robotic gear, smart wireless routers, and in-car entertainment systems. 9ntil now, Intel has generated annual sales of about 1( billion, a fraction of its total last year of 1)6.- billion, from non-PC machines. Con-PC computingDa category that excludes smartphones, netbooks, and traditional computersDgenerated 13'' billion in sales in &''6. he combination of Intel$s rock-solid computer hardware and >ind 7iver$s embedded operating systems is a perfect match for the computing needs of the automotive industry. Intel should partner with the world$s leading automobile manufacturers, to provide them with complete in-car computer systems. his strategic move that we suggest will give Intel the opportunity to enter a market four times larger than the market for PCs, and which continues to grow twice as fast.

$eferences:

1. Intel CEO Will Retire Early --- Exit of Tech Veteran Otellini Comes as Chip Giant Grapples With Rise of Gadgets Clark, D., & Lublin, J. S. (2012, Nov 20). Intel CEO will retire early --- exit of tech veteran otellini comes as chip giant grapples with rise of gadgets. Wall Street Journal. Retrieved from http://search.proquest.com/docview/1171332274?accountid=25283 httpEBBarticles.marketwatch.comB&'(&-((-(3BindustriesB).&.(..(F(Fintel-corp-paul-otellini-andy-bryant httpEBBonline.ws!.comBarticleB4=(''''26&)3-)3'//)-2-''/.66-)6(6)-'-'(.&-&.htmlG :*H>O704IIntelJCorpJproblems