Intel’s Challenges

The New York Times writes:

A handful of missed deadlines and scrapped designs are hardly Intel’s only worries. Assuming that the board promotes Mr. Otellini to the top spot, he will face the daunting task of reinventing Intel – a challenge that calls to mind the 1980’s, when Mr. Grove turned the company, then an embattled memory chip pioneer under assault by aggressive Japanese competitors, into the world’s dominant maker of microprocessors. Its chips run 80 percent of all PC’s.

This time, though, Intel’s main foe is not an external enemy, but a saturated PC market. The company has had plenty of warning: an Intel co-founder, Gordon E. Moore, anticipated decades ago that the power of computers would accelerate at an exponential pace. So each new generation of technological advance is a threat to the previous one, and no computer maker is safe from the trend.

Intel has overcome other market shifts in the past, and under Mr. Barrett, it has taken steps toward surviving in a post-PC world in which computing power has jumped into a myriad of hand-held gadgets for consumers, like cellphones, cameras and music players.

In other words, no longer is Intel’s success assured so long as it efficiently stamps out ever faster processors. If it is to continue to prosper, Mr. Otellini must find a way to translate its power in the world of PC’s into that of the high-end machines that run corporate data centers, while making deeper inroads into the new consumer markets.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.