Intel's latest reorganization sets stage for succession

The latest leadership shuffle among Intel's top ranks and the departure of Pat Gelsinger sets the stage for the chip maker to name an eventual replacement for CEO Paul Otellini.

On Monday, Intel announced a reorganization that gives Sean Maloney and Dadi Perlmutter, both executive vice presidents, joint responsibility for a newly formed group that oversees the development of Intel's microprocessor families. Maloney will take responsibility for the group's business and operations, while Perlmutter will oversee product development.

Both Perlmutter and Maloney are widely believed to be leading candidates to succeed Otellini as CEO. Maloney has long been a rising star in the company, most recently as the head of the company's sales and marketing organization. Perlmutter is another rising star. He led the team that developed Intel's Pentium M processor and most recently oversaw development of the Core architecture and the Atom -- products that have been critical to the company's recent success.

The two other groups, which cover Intel's sales and manufacturing operations, will be headed by Tom Kilroy and Andy Bryant, respectively. Bryant is an executive vice president and Intel's chief administrative officer, while Kilroy is a vice president who headed the company's former Digital Enterprise Group.

Conspicuously absent amidst the leadership shuffle is Gelsinger, a senior vice president and former chief technology officer, once considered a possible candidate for the CEO position at Intel. Gelsinger is leaving to join EMC as president and chief operating officer of information infrastructure products.

"People who get to be CEO of Intel usually have spent some time in Intel's field organization or running it. Pat had never checked off that box," said Nathan Brookwood, principal analyst at Insight64.

The reorganization appears to set the stage for either Maloney or Perlmutter to be named as a successor to Otellini.

Otellini was named CEO in May 2005, replacing Craig Barrett, who held that position for seven years. Before being named CEO, Otellini served as president and chief operating officer of the company for three years.

While Maloney and Perlmutter are in the running to succeed Otellini, a final decision may still be a few years off. Otellini has held the CEO post for five years and retains the title of president, the position held by previous CEOs before they took over. Otellini's eventual successor is likely to be promoted to president first and serve in that position before taking on the CEO role.

The last time Intel made a major reorganization like that announced Monday was in 2005, just before Otellini was named CEO. At that time, the company broke up its main product group into smaller groups, each focused on product platforms for specific applications, such as mobile applications and servers.

This time around, the re-consolidation of Intel's product groups into a single unit reflects the growing architectural and technical similarities between chips used for different applications.

"It's like everything old is new again. It really is kind of going back to the old structure and it probably makes sense," said Dean McCarron, principal analyst at Mercury Research.

"Back in 2005, Intel had very different CPUs that it was pushing in desktop products, in notebook products and in server products, and today as a result of some of the changes largely instituted by Dadi Perlmutter they have one basic CPU design that they then adapt in minor ways for notebooks and desktops and servers," Brookwood said.

Copyright © 2009 IDG Communications, Inc.

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