Without any doubts, Intel Corp. faces major challenges going forward as it needs to reshape its strategy in a manner that would sustain its current advantages in personal computers and unlock new opportunities for the world of ultra-portable always-connected devices. The former chief executive of Advanced Micro Devices, the company which once was the arch-rival of Intel, Hector Ruiz, wrote a column where he gives advices to the future CEO of the world’s largest chipmaker.
In addition to traditional businesses, the new chief exec of the world’s largest semiconductor needs to concentrate on new challenges, such as ultra-mobile connected computing, cloud computing, contract manufacturing and a number of others.
It is not a secret that Intel is not the company it was a decade ago, when it could use its dominance to sway nearly every aspect of the computing market in its favor. Back in the days, Intel developed standards that became de-facto standards on the market due to the fact that over 80% of PCs used its microprocessor. While Intel continues to dominate personal computers and in many ways defines the destiny of desktops, notebooks and servers, Intel has hard times to establish positions on the market of smartphones and media tablets. The vast majority of the latter utilize ARM-licensed chips as well as various open hardware standards and open-source programs. The former head of AMD gives the next CEO of Intel three advices in his column in BusinessWeek magazine: invest into R&D, split the company’s businesses and do both things quickly.
Invest into R&D
Hector Ruiz reckons that Intel has more resources than most to invest in R&D and a proven reputation for continuous innovation, therefore, if the company makes a serious commitment to developing technology for that market, it could quickly outstrip competitors. Intel should re-position itself as a leader in computing of all kinds. The former chief executive of AMD advices Intel to increase investments into mobile technologies. But a natural problem is that in the end Intel will compete against all ARM partners, a pretty hard task. Still, Intel used to compete against many microprocessor rivals as well and only AMD survived.
Split the Businesses
The former chief exec of AMD also urges Intel to become a portfolio company, with self-governing business units, each of which has a clear vision and value proposition: one dedicated to big data and the high-end servers, another concentrated on the PC and related markets, and a third completely focused on mobile chips and communications. With intelligent restructuring, they all can benefit enormously from the parent’s superior manufacturing capability.
In fact, at present Intel already has different business groups, which have their own roadmaps, but generally aligned strategies. Will Intel be able to efficiently operate if the strategy of the micro-server business unit will not be lined up with the strategy of the mobile chip business unit, or the two divisions end-up developing two different micro-architectures for different purposes?
Intel has been on the market of ultra-mobile solutions for well over a decade now, but it never has taken it as seriously as many other companies (or has taken it too strategically), which is the reason of the company’s current problems. That needs to be fixed. As the world is transforming, Intel seems to remain essentially a PC- and server-centered company with a mobile business unit. A smart restructuring could help to change Intel’s way of making business,
Mr. Ruiz believes that Intel needs to start acting now.