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Business News/ Industry / Infotech/  Intel CEO Krzanich seeks to change ‘Intel Inside’ to everywhere
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Intel CEO Krzanich seeks to change ‘Intel Inside’ to everywhere

Intel is seeking to branch out as consumers increasingly use smartphones and tablets that don't contain its processors

Intel chief executive officer Brian Krzanich. Photo: AFPPremium
Intel chief executive officer Brian Krzanich. Photo: AFP

San Francisco: Intel Corp. chief executive officer Brian Krzanich will take the stage at the International Consumer Electronics Show on Monday with the message that the chipmaker will do what it takes to remain relevant as consumers switch to mobile devices for computing tasks.

Krzanich, who will make a keynote presentation tonight at the 150,000-attendee trade show in Las Vegas, is set to feature a first public showing of some of the mobile and wearable technology from Intel’s new devices division, led by former Apple Inc. executive Mike Bell, said a person with knowledge of the plans. Krzanich will also emphasize how Intel has accelerated the pace at which it brings new products to market, said the person, who asked not to be identified because the presentation isn’t yet public.

The world’s largest chipmaker, which dominates the market for semiconductors that run traditional computers, is seeking to branch out as consumers increasingly use smartphones and tablets that don’t contain Intel processors. With the personal-computer market forecast to decline for a third consecutive year and Intel failing to win significant market share in phones, Krzanich is working to ensure that the company doesn’t miss new opportunities such as wearable devices and other personal technology.

PCs are slowing so you have to offset that with something else, said Patrick Wang, an analyst at Evercore Partners in New York, who has the equivalent of a sell rating on Intel shares. The biggest challenge is it takes a lot to move the needle at Intel.

Robert Manetta, a spokesman for Intel, declined to comment.

PC-dependent

The Santa Clara, California-based company, which Krzanich took over in May, remains heavily dependent on servers and PCs. Intel has more than 80% of the market for PC processors and more than 95% share in server chips, according to researcher IDC. In November, the company forecast that sales will be about the same as the $52.6 billion it will report for 2013, below the $53.7 billion analysts were projecting, according to the average of estimates compiled by Bloomberg.

Since becoming CEO, Krzanich, a former semiconductor factory manager, has taken steps to diversify Intel’s business. He has said Intel will focus on providing what the market wants in chips rather than following the company’s traditional method of designing and producing products aimed at determining the direction of technology. In addition, the company’s plants, which Intel says are the industry’s most advanced, may produce chips for rivals, he said in November.

Not insular

However the market moves, wherever the compute need is, we want our products to do it best, Krzanich told analysts and investors at a meeting at the company’s headquarters that month. “We’d become insular. We’d become focused on what was our best product rather than where the market was moving."

The 53-year-old also has said he’s speeding up the time it takes from design to production of new chips and concentrating efforts on lower-power products. Intel has a new processor called Quark, which it’s trying to get into everything from household appliances to industrial equipment.

Krzanich’s openness to producing chips for other companies and to listening to what his customers want is a departure from predecessor Paul Otellini, who had said smartphones and tablets wouldn’t be used as PC replacements, according to Stacy Rasgon, an analyst at Sanford C. Bernstein & Co.

They had their head in the sand, said Rasgon, who has the equivalent of a sell rating on Intel shares. Their push now is to make sure they don’t get blindsided again.

Hurdles remain

The CEO, who like his five predecessors was an internal appointment, may need to go further to make what Intel produces central again. While wearable devices could become the next billion-unit market, according to Rasgon, Intel isn’t fast enough at rolling out new products, he said.

Intel shares, which gained 26% in 2013, fell less than 1% to $25.78 at the close in New York on 3 January.

Evercore’s Wang said Intel’s factories might be its best bet for getting into new markets. The company will spend $11 billion this year on plants and equipment to maintain its lead in transistor technology. Intel said it is more than a year ahead of competitors in the manufacturing of the fundamental component of all semiconductors.

To participate in the market for smartwatches, glasses and the so-called Internet of things, where Intel has no track record in designing chips that are any better than alternatives, the company should open its factories to rivals such as Qualcomm Inc., which are more likely to win, said Wang.

That’s a step further than Krzanich may be ready to take and would require the shutdown of some of Intel’s own efforts to get into smartphones and tablets because there’s no point in empowering a competitor to undermine your own research and design efforts, he said.

Any wins with new products for wearables or similar devices won’t have an immediate impact, according to Rasgon.

“It’s not going to be anything meaningful in 2014", he said. BLOOMBERG

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Published: 06 Jan 2014, 03:50 PM IST
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