After Fighting Mobile Trend, Intel Now Embraces It

JUNE 29, 2013, 11:48 AM

After Fighting Mobile Trend, Intel Now Embraces It

By VINDU GOEL

Intel, which became a global behemoth by making the chips that drive most of the world’s desktop computers and laptops, missed the mobile revolution. In tablets and smartphones, the company is a bit player.

That’s hardly news to anyone who follows technology. But it was still a bit of shock to hear the company’s new chief executive, Brian Krzanich, acknowledge that the company actively fought what everyone else could see was an inevitable shift toward smaller, more portable computing devices.“We stopped and we held off and we tried to keep everything” frozen at personal computers, he said Friday during a meeting with a small group of reporters in San Francisco. Mr. Krzanich was certainly in a position to know, since he has spent his entire career at Intel and was the company’s chief operating officer from 2002 until he was given the top job in May.

The PCs-forever attitude was so pervasive that the people working on the company’s mobile-chip line, the Atom, were essentially second-class citizens, without access to Intel’s latest production technologies and the resources lavished on the Core line of PC chips and the Xeon line of server chips.

Now Intel is not just trying to catch up in mobile but also trying to leapfrog the competition. As Mr. Krzanich put it, Intel’s strategy is: “Embrace this and embrace it fast and actually move quicker and try and go ahead of this.”

Transforming Intel into a mobile leader won’t be easy. The company will continue to get the vast bulk of its revenue, which topped $53 billion last year, from PCs and servers. The mobile arena is dominated by other giant companies like Qualcomm and Samsung, which are constantly improving their own chips to make them do more while using less battery power.

But Mr. Krzanich and his No. 2, Renée James, who also ascended to her post in May, said that the Atom chip had now been elevated to the same level of importance as the other lines among the company’s priorities.

One advantage that Intel has, according to Ms. James, is the cross-platform and backward compatibility of its designs. Its x86 standard, which dates back decades in one form or another, allows businesses in particular to use the same software across generations of machines and different kinds of devices.

“We believe compatibility is a value proposition that no one else on the planet can offer,” she said.

Leveraging that notion, Intel is angling to persuade big PC makers like Lenovo, which already uses Intel chips in its computers, to use Atom chips as they move more aggressively into the mobile phone market.

Wearable computers, two-in-one tablet and laptop combinations, and the next generation of smartphone designs could also offer opportunities.

“Whatever is the leading technology today probably won’t be tomorrow. So it gives us the chance to insert ourselves,” Mr. Krzanich said.

One area in which Intel is trying to insert itself — Internet-based television service — is still rough going. Intel’s plan to offer streaming television shows through its own media box has run into opposition from established cable TV players.

“From a technical standpoint, we’ve built a game-changing device,” Mr. Krzanich said.

But the company is still evaluating the business model. Unlike Apple or Comcast or Time Warner, it has little experience in negotiating contracts for entertainment content. “We’re being cautious,” he said.

Like many in Silicon Valley, Mr. Krzanich believes that wearable computers will be the next big wave of computing. He said that in addition to chips for such devices, Intel is also working on a service that could connect all kinds of wearables.

Lately, Mr. Krzanich has been playing around with Google Glass, the Internet-connected eyeglasses being tested by the search giant. But he isn’t sure that glasses are the best form factor for computing.

“I love the Google Glass,” he said. “But there are times when I just want the earpiece talking to me.”

Intelligent earbuds? Now that’s the kind of innovation that would distinguish Intel from the rest of the pack.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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