Intel unveils major internal reorganization

The chip company unveiled five new business units

Intel Corp. announced a massive reorganization of its operating groups yesterday, creating groups to focus on areas such as the digital home and health care and shuffling the roles of a number of key executives.

The chip company unveiled five new business units: the Mobility Group, the Digital Home Group, the Digital Enterprise Group, the Digital Health Group and the Channel Products Group. Previously, Intel had organized its operating units around the chip architecture that each group used in its products.

Over the past year, Intel has altered its approach to the processor market. Instead of marketing the ever-higher performance of its processors, the company now wants to develop a range of features for specific products, such as desktops, notebooks and handhelds, that make those devices easier to use and more secure.

"This is about aligning to the platform strategy, expanding into new areas and adding more emphasis to the growing channel business," said Bill Kircos, an Intel spokesman. The company hasn't yet decided if it will break out financial information for each of the new segments.

The new organizations will help the company focus on these individual platforms, Intel said in a statement. The leaders of all the new groups will report to CEO Craig Barrett and President and Chief Operating Officer Paul Otellini. In May, Barrett will become chairman of the board of directors, with Otellini succeeding him as CEO. A replacement for Otellini has yet to be publicly identified.

"When Paul Otellini started talking about the platformization of Intel, I always thought he envisioned that as cosmetic surgery," said Nathan Brookwood, an analyst at Insight 64 in Saratoga, Calif. But Intel is clearly serious about its plans to remake the company around the idea that the individual components of a system are less important than the system as a whole, as evidenced by the success of its Centrino notebook technology, he said.

Intel is using a "two-in-the-box" management strategy for many of the new groups. Two individuals share responsibility for a given division under this strategy, and most decisions have to be approved by each person in the group. A similar structure is used at Dell Inc., all the way up to the executive levels, where Chairman Michael Dell and CEO Kevin Rollins share decision-making authority.

The Mobility Group will be led by Sean Maloney and Dadi Perlmutter. Maloney is an executive vice president at Intel and previously ran the Intel Communications Group. Perlmutter was vice president and general manager of Intel's Mobile Platforms Group. The older Mobile Platforms Group focused on Intel's Centrino notebook technology; the new Mobility Group adds Intel's XScale processors for handhelds and smart phones, which were previously under Maloney's charge.

Intel's investments in Wi-Fi and WiMax products will also stay under Maloney's leadership in the new Mobility Group, Kircos said.

Anand Chandrasekher had been in charge of the Mobile Platforms Group, but he now assumes a new role as director of Intel's Sales and Marketing Group, replacing Jason Chen, who is leaving the company due to health matters within his family, Intel said. Chandrasekher will run this group with Eric Kim, who was hired last September to improve Intel's consumer marketing expertise.

Don McDonald will lead the Digital Home Group, which will develop processors for digital entertainment devices in the living room. Louis Burns was previously in charge of that effort within the Desktop Platforms Group. But Burns is now the head of the Digital Health Group and is charged with finding opportunities for Intel products within the health care market.

The health group is a new area of focus for Intel. The company has been working on several research projects, such as a network of motion-detecting sensors that could help senior citizens live at home despite the early symptoms of afflictions such as Alzheimer's disease. It provided more details about its work in this area at the recent International Consumer Electronics Show (see story).

Intel's stated goal with these projects has been to spur other companies to develop applications that will require computing power to manage. The company hasn't decided whether it will take the next step and start making products such as sensor networks or nanoscale biocomputing devices, Kircos said.

Intel's business customers will see a lot of Pat Gelsinger and Abhi Talwalker, the new co-leaders of Intel's Digital Enterprise Group. Talwalker had been serving as head of Intel's server division until yesterday, and Gelsinger was previously chief technology officer in charge of Intel's research and development activities. The new Digital Enterprise Group will have responsibility for processors that power corporate products from PCs up through data center servers.

Gelsinger will be temporarily replaced as head of research and development by Justin Rattner, an Intel fellow. Rattner is one of a select group of technologists who have been specially selected as outstanding performers within their fields.

Bill Siu, previously the co-leader of the desktop group with Burns, will take control of the Channel Products Group. This organization will look to develop specific products for local markets around the world. With PC growth maturing in developed markets such as the U.S. and Western Europe, Intel and other PC companies are looking to emerging markets in Asia, Africa and South America as the next source of major growth.

Other operating groups, such as the Technology and Manufacturing Groups, remained unchanged.

Copyright © 2005 IDG Communications, Inc.

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