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Intel tries to diversify as smartphones and tablets have no need for its processors

Posted in Industry updates, Sensor networks and devices by Manas Ganguly on January 8, 2014

Declassifying Inte’s future plans from the CEO’s CES key note address

Intel Chief Executive Officer Brian Krzanich will take the stage at the International Consumer Electronics Show 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 at the 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 executive Mike Bell. Krzanich could also emphasise how Intel has accelerated the pace at which it brings new products to market.

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.

Intel Insular

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.

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.

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

Listen to the Market

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 replace PC, says Stacy Rasgon, an analyst at Sanford C Bernstein & Co. “They had their head in the sand,” said Rasgon. “Their push now is to make sure they don’t get blindsided again.”

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.

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 internet of things, where Intel has no track record in designing chips that are better than alternatives, the company should open its factories to rivals such as Qualcomm, which are more likely to win, said Wang. But that’s a step further than Krzanich may be ready to take.

Reported from Economic Times Article under the topic: CEP Chips in with Intel everywhere

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