Intel's strategic shift from engineering to market-driven platforms under Paul Otellini

¶ … Intel Corporation between its revised mission and strategies on the one hand, and its implementation strategies on the other, specifically under the leadership of Paul S. Otellini, President and Chief Executive Officer of Intel Corporation. Mr. Otellini has the distinction of taking over Intel Corporation directly from the iconic Andy Grove, known for his combative and confrontational leadership style and engineering-centric view of the company and its direction. Mr. Otellini on the other hand brings a decidedly market-driven approach to Intel, complete with segmented-based market strategies for entertainment, imaging, healthcare, and many vertical markets of data visualization (Business Week, 2006), (Business Week 2007) and (Intel 2007). Central to Mr. Otellinis' vision is defining Intel's products as a platform instead of merely a component. The cancellation of the Pentium 4 development is a direct result of this change in direction and would previously would have never happened in the engineering-centric culture of the company previously (Business Week 2006).

Strategic Goals and Direction

Mr. Otellini sees the need for Intel to become a much more critical contributor to the evolving digital content, digital data analysis, and digital entertainment ecosystems that are expanding globally (Business Week 2007) versus aggressively moving down price/performance curves and in each product generation, further validating Moore's Law. The alliances with digital content and digital entertainment providers, including Apple, long seen as a niche and even irrelevant PC maker by Andy Grove (Business Week 2007) are completely re-ordering the approach Intel is taking in reinventing its core marketing message and position. Intel's branding of the latest consumer market process, the Viv, exemplifies this rejuvenation of market focus. The platform-centric approach Mr. Otellini sees the future of Intel as defined by platforms that are created through collaboration with third party content, electronics and system-wide platform technologies. As a result of this focus on 2006 Intel launched three major platforms: Intel Centrino Duo mobile technology platform, which is designed to deliver improved, more energy efficient performance compared to previous generations of Intel Centrino mobile technology; Intel vPro technology platform, the first PC platform optimized exclusively for business and it customers, offering improved security, manageability, performance, and energy efficiency; Intel Viiv technology platform, which enhances the entertainment experience breadth and depth of both consumer and commercial customers (Business Week 2007). Intel defines their development priorities using these three platforms as the foundation for investing in future growth. Mr. Otellini sees this as being highly market-focused in terms of defining future product direction and development. This strong focus on three specific platforms has lead to a major departure away from mainstream manufacturing of communications and application processor businesses, resulting in the sale of multiple production centers and a de-emphasis on processor-centric marketing to more customer-driven planning (Business Week 2006, 2007).

An example of the level of commitment the company has shown in these three platforms is the announcement that the Fab 23 facility in Colorado, used for mass production of processors, is now for sale. Otellini has often commented (Business Week 2006) that the focusing purely on platforms will save Intel as much as $2B to $3B a year starting in 2008.

Summary

In evaluating the more market-centered direction of Intel, it's clear that the platform-based approach to product design, management and execution is working. No longer are engineering and marketing separated from one another, there is extensive use of cross-functional teams and a clear focus on the customer and their needs first, over and above purely manufacturing efficiency. There is also an appreciation for the unique and often highly specific needs of specific vertical market segments the company is pursuing, as evidenced by the medical imaging focus (Intel 2007) in addition to the wider partnerships in digital content including Sony and the new-found alliance with Apple.