Intel Outside
Can an old school CEO restore the company as a certain “lifestyle” company once did?
It is wild to me how badly Intel has dropped the ball in recent years. Yes, it perhaps at least symbolically started with not doing everything within their power — quite literally — to develop the initial chips for the iPhone. But hindsight is still 20/20 there. It’s everything that has happened since which is truly devastating. And continues to be.
So can yet another CEO change shake the company out of stasis? Certainly Patrick Gelsinger, formerly a 30-year Intel vet, sounds like the right person for the job. Don Clark and Steve Lohr for The New York Times:
The leadership change is designed to address that issue, returning an engineer to the top post. Mr. Gelsinger, who is 59 and joined Intel when he was 18, got his college education with the company’s help and swiftly rose in its technical ranks. He was the lead architect of the widely used 80486 microprocessor and managed development of 14 chip projects.
Mr. Gelsinger became Intel’s first chief technology officer and for years hosted the company’s annual conference for hardware and software developers. He learned management skills from Andrew Grove, Intel’s acclaimed former chief executive.
Again, all of that sounds great. The 486 wasn’t my first Intel chip, but it was the one I really grew up with. I worked that chip to death — well, technically the hard drive died on that machine — and the fact that I still remember it, says a lot about the kind of loyalty and brand cache Intel built up back in the day. “Intel Inside” and all that.
And yet, listening to what Gelsinger is actually saying is mildly worrisome already. Mike Rogoway of The Oregonian was relayed some of what was said during a recent Intel all-hands announcing the CEO change — one thing in particular stands out:
“We have to deliver better products to the PC ecosystem than any possible thing that a lifestyle company in Cupertino” makes, Gelsinger told employees Thursday.
That is, of course, in reference to Apple. And specifically in reference to Apple’s new (and first) laptop-class chip, the M1. From the get-go, it sounded like that chip might smoke the vast majority of Intel’s chips out of the gate. And now that many of us have such machines (I’m using one right now to type this), that can be confirmed. These machines are so much faster, with such longer battery life, than their Intel versions. I would say it’s almost a joke, but it’s not that funny. Certainly not if you’re Intel.
So yes, they have to compete with this “lifestyle” company. Sure, it’s a throwaway line, but history does some funny things with such lines. It recalls another famous derisive comment about Apple, of course.
“PC guys are not going to just figure this out. They’re not going to just walk in.”
That was then-CEO of Palm, Ed Colligan talking about the (still-rumored at that point) iPhone. They would, of course, just walk in. They would, of course, just figure this out.
At the same time, Intel still controls some 80% of the PC and server market for chips. This is true even after years of manufacturing delays for new chip processes, while their rivals (and “lifestyle” companies) lap them:
In July, the company said its 7-nanometer production would arrive a year later than previously planned. That followed a three-year delay in the introduction of the preceding 10-nanometer generation, which is only reaching mainstream use now. Those holdups have allowed TSMC and Samsung to lay claim to better technology for the first time, with TSMC already producing 5-nanometer silicon at volume for Apple and others. That timeline suggests other customers could move to better TSMC production before Intel would.
The above is why Intel is talking with folks like TSMC about outsourcing some of their chip production. Something that would have been unheard of until recently. But activist investors will do that.
Anyway, back to Gelsinger. The question now is if the prodigal son returning can right the ship. Is this akin to Steve Jobs returning to Apple and is this TSMC outsourcing akin to the Microsoft deal/investment? That’s probably a stretch and too tall an order, of course. And again, Intel is still in a better place than Apple was when Jobs returned.
Still, there’s a bit of an Anagnorisis feeling here. Like Blackberry back in the day. They’re not dead (yet), but they know they’re in real trouble. Which is a good first step, I suppose. If years late.
