July 20, 2006 10:35 AM PDT

Intel shuffles executive chairs

Thousands of Intel employees woke up Thursday with new bosses, as the chip company made a number of changes to its executive lineup following two poor quarters.

As first reported by CNET News.com, Intel Chief Executive Officer Paul Otellini announced the overhaul of the company's sales and marketing organization in a memo to employees Wednesday following Intel's second-quarter earnings announcement. The announcement was made public in a press release issued Thursday morning.

Otellini moved two executives formerly responsible for sales into other positions and named Sean Maloney, formerly head of the company's Mobility Group, as chief sales and marketing officer. Eric Kim and Anand Chandrasekher had run sales and marketing as a team, but Kim will now run Intel's Digital Home Group and Chandrasekher will oversee a new unit focusing on low-power chips.

The changes take Intel a little further away from the so-called "two-in-a-box" leadership strategy employed by the world's largest chipmaker in recent years. The theory was that major organizations like the Digital Home Group were too complex to be run effectively by a single person.

However, after a review of Intel's operations, Otellini appears to be rethinking this management strategy. "The moves announced today will speed up our decision-making in these critical areas, while allowing me to spend more time on our key strategic issues," he said in both the memo to employees distributed Wednesday and the press release Thursday.

Intel's Digital Enterprise Group will continue to be run by two men, Pat Gelsinger and Tom Kilroy, and Intel's largest organization, the Technology and Manufacturing Group, will also still have two drivers at the wheel. But Kim will run the Digital Home Group on his own, and David Perlmutter will assume solo control of the Mobility Group he had been co-leading with Maloney.

Maloney and Perlmutter were also given the special titles of "peer-plus-one" status, which grants them the power to look across the company and make recommendations on common tools used throughout its operations, said Robert Manetta, an Intel spokesman. For example, Maloney will be able to recommend pricing strategies to various groups, and Perlmutter will suggest common chip architecture building blocks to be used in product development. The individual group managers will still retain the final authority over the types of products they develop, Manetta said.

The executive shuffling is the most prominent change made to the upper echelon of Intel's management since Otellini's last important organizational move in January 2005, which put many of the executives affected by Thursday's announcement in their former roles. The other changes include former Digital Home chief Don McDonald taking a new role as vice president of marketing and brands under Maloney, and Renee James taking over sole control of Intel's Software and Solutions Group with the retirement of Richard Wirt. Bill Siu, head of Intel's Channel Group, also plans to retire, though both Wirt and Siu will stay with Intel for the rest of the year.

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