FUTURISTIC GROOVES

As Paul Otellini prepares to take charge at Intel next week, is the giant chipmaker heading in the right direction?

Many conglomerates like IBM, Cisco, Dell, P&G, GM, etc. are having all something in common. They all face new challenges due changing market conditions (in microeconomic terms, the aggregation of formerly distinct markets, enhanced market clearing and efficiency), changing world economy, competition from emerging markets, changing technology landscape.

Furthermore, the forces of globalisation, technology, and economic liberalisation are combining to make life harder than ever for established companies. Incumbents must understand how powerful forces are aggregating once-distinct product and geographic markets, enhancing market-clearing efficiency, and increasing specialisation in the supply chain. They should respond by adopting a new approach to strategy– one that combines speed, openness, flexibility, and forward-focused thinking. Mature companies must learn to be young at heart. Boundless new opportunities await executives who recognise that the days of slow change are over.

Next week at May 18th, Paul Otellini will take over the wheel from retiring chief executive, Craig Barrett. For several years Otellini was the right-hand man of Barrett. But Otellini is Intel’s right-hand man in another sense, too. For he is the architect of the firm’s new strategy — change of direction that Otellini calls a “right-hand turn”. The world’s largest chipmaker now faces three big challenges — but Otellini believes his plan can address all of them at once. Is he right?

The Economist has summed up the three challenges which are facing for Intel’s new boss, Paul Otellini.

• Intel, along with its rivals, is embracing a new approach to chip design, in which performance is improved not through higher clock speeds, but by adding further processing “cores” to its existing chips.
• The second challenge is that the personal computer (PC) market has matured. Intel still makes most of its money selling the processor chips at the heart of PCs. Mr Otellini cannot, and must find new sources of growth, in the PC market and beyond it.
• The third challenge is the growing competitiveness of Intel’s main rival, Advanced Micro Devices (AMD). In recent months Intel has suffered a string of embarrassments, some self-inflicted (such as the cancellation or delay of several new products), but others at the hands of AMD.

Will Intel keep its dominant position in the chip market? Take position in from them unfamiliar markets? Or markets which aren’t explored yet. As most of you are familiar with technology convergence it seems like that business model convergence is the new thing out there in the business world. What do you get when combining Intel’s and Dell’s product range? When taking a look in the long-term future, it seems like that many conglomerates as we know today have to team-up to adapt with foreseeing new market circumstances.

When writing about consumer power lately is it not that we, consumers, demand a “swiss pocketknife” rather than a range of scattered products isolated from each other?