AR6 Intel CEO Will Retire Early-Final Draft 2

8/13/2019 AR6 Intel CEO Will Retire Early-Final Draft 2

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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, PaulOtellini, as the company makes most of the chips found in personal computers. Currentlyin the highly competitive industry, Intel is pushed to restore its reign over the high-techsector amid an industry shift to smartphones and other mobile devices. he managementchange shows !ust how "uickly the landscape has changed for Intel, which with softwarepartner #icrosoft Corp. once dominated key technical standards and drew much of theprofit from the computing industry. Certainly the news was a shock for the world$s largestmaker 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. Otellinito stay in his position until Intels mandatory retirement age of , after eight years #r.Otellini felt it was time for a new leader to take over the difficult !ob. + successor forOtellini will be sought by the board of directors, which will consider external and internalcandidates to take over the helm of the chip manufacturer.

Background of the Issues:

Otellini is the fifth C*O, in Intels / year existence and was known as a very strongleader who managed the company through challenging times and market transitions. C*Osince since &''., Otellini is also recogni%ed for a series of advances at Intel, includingcutting costs significantly, beating back competition from +dvanced #icro 0evices Inc.,navigating through long-running antitrust investigations and extending Intels lead inmanufacturing technology. 0uring his tenure, sales rose to an estimated 1). billion thisyear 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 sincethe 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 offerthe battery-conserving features of +7# chips. Intel believes it has achieved rough parityin power consumption, and expects to use new manufacturing processes to achieve furthergains in energy efficiency.

What are the issues?


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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 thescenery has changed. It$s true that the PC landscape has drastically changed and

continues to change. Our management strategy team believes that Intel has beenstruggling to find its place in the fast-paced mobile market. here is a ma!or shift intechnologies 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 placeon a number of different platforms. 4ince the release of the +pple iPad, a product thatchallenged the industry and forced Intel to turn introspective and re-think their productstrategy. he iPad has done "uite a bit more than !ust challenge Intel and the industry as awhole, it has also challenged consumers to re-consider what exactly a personal computeris 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 standstill and if Intel does not take advantage of this huge opportunity -someone else will

&8 0ecreasing demand for desktop and laptop computers that house IntelProcessors

he newly appointed C*O of Intel will have to struggle with the continuouslydecreasing 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 mostinnovation in hardware and software. Intel, which sells more than 2'5 of the chips thatserve as calculating engines in PCs, faces slumping demand for those products and hasshown 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 the9.4., the company faces a continued struggle in a market where most chipmakers usetechnology licensed from 9.:.-based +7# ;oldings P


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

and challenges

hile Otellini has been a good C*O

and the transition will bring some uncertainty to Intel$s future. he company$s currentstrengths and challenges should be the main focus of the =oardsand investors. +s astrategic management team, we would consistently work on more innovative andcollaboration 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 promotionof 7en@e Aames, =rian :r%anich, and 4tacy 4mith to the position of executive vicepresident. +long with 4ean #aloney, 0avid Perlmutter, and +rvind 4odhani, thesemanagers are the leading candidates from inside Intel. he C*O is important, but for abehemoth company like Intel the overwhelming ma!ority of its strengths and weaknesseslie within the rest of the company.

() e*elop a +ablet,"C hbrid 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 Inteldevelop a good strategy around the ablet B PC hybrids, which is a tablet with adetachable keyboard. >e predict this to be one of the most interesting platforms we willsee over the next few years. his new innovative product, if done right, will giveconsumers a two-in-one experience where they can have a tablet when they want it and atraditional 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 inthe mobile and PC market. Interestingly, our strategic management team has researchedthe market and it has revealed that +pple is looking to merge its operating system formobile devices and personal computers. In order to regain market share, we suggestmaintaining a loyal, profitable, business relationship with +pple.

>hat has been a fundamental issue within the technology industry is that the bulk ofconsumer 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 leaderonce more.

0) ocus on e2panding the Intel Brand into the non!pc fast!growing

computing market#

Our 4trategic #anagement eam has performed detailed marketing and consumer


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research which indicated in the beginning many consumers bought an iPad as a partial PCreplacement. 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 theyneed 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 aviable computing platform and having a tablet strategy is essential for anyone currentlycompeting for PC market share.

Intel purchased embedded computing company >ind 7iver in &''3. >e believe that Intelshould leverage these ac"uired technologies to >ith access to >ind7iver$s customers wesuggest that Intel expand more deeply into the large, lucrative market that includes roboticgear, smart wireless routers, and in-car entertainment systems. 9ntil now, Intel hasgenerated annual sales of about 1( billion, a fraction of its total last year of 1)6. billion,from non-PC machines. on-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 embeddedoperating 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 themwith complete in-car computer systems. his strategic move that we suggest will giveIntel the opportunity to enter a market four times larger than the market for PCs, andwhich continues to grow twice as fast.

$eferences:


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1. Intel CEO Will Retire Early --- Exit of Tech Veteran Otellini Comes as Chip Giant Grapples WithRise 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>O704IntelJCorpJproblems
http://search.proquest.com/docview/1171332274?accountid=25283http://articles.marketwatch.com/2012-11-19/industries/35251551_1_intel-corp-paul-otellini-andy-bryanthttp://search.proquest.com/docview/1171332274?accountid=25283http://articles.marketwatch.com/2012-11-19/industries/35251551_1_intel-corp-paul-otellini-andy-bryant

AR6 Intel CEO Will Retire Early-Final Draft 2

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