Otellini takes over at Intel, fleshes out strategy

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the company is now organized around delivering "platforms"--complete bundles of chips to PC and phone manufacturers--these chip bundles will revolve around microprocessors. Otellini also tends to voice the same opinions as his predecessors about the Sarbanes-Oxley Act (it's a bad thing), and U.S. competitiveness (it's declining).

The Barrett legacy
Although he will remain as chairman, Barrett's years of running Intel, first as chief operating officer (1993-1998) and subsequently as CEO (1998-2003), formally came to an end Wednesday.

Craig Barrett
Chairman, Intel

If one had to pick a word to sum up his legacy, "relentlessness" would probably be it. The Hummer-driving, helicopter-flying Barrett tried to take the company into a number of markets--such as Web hosting--with great fanfare and failed. However, when Intel managed to get a toehold in a new field, it methodically exploited its financial and technical resources to gain an advantage.

In server chips, for instance, Intel had a negligible market share in 1995 when the Pentium Pro, the company's first chip specifically designed for servers, debuted. Now, more than 80 percent of servers coming out of factories run on Intel chips.

The server push hasn't gone completely smoothly. Itanium, a server chip promoted by both Grove and Barrett, has been a huge financial failure, and AMD managed to get into the market after Intel overlooked 64-bit chips. Still, Xeon, which debuted in 1998, is the world's biggest-selling server chip.

A similar picture appears in desktops and notebooks. Intel hasn't lost significant market share, despite huge improvements in manufacturing and design at AMD.

"This has been dead flat within statistical limits for seven years," Barrett said during the shareholder meeting, pointing at a chart showing market share.

Intel has begun to colonize other parts of the PC as well. With Centrino, the company added a Wi-Fi chip into the processor and chipset bundle sold to PC manufacturers. In the past two years, Centrino added $5 billion to Intel's gross margin, or dollars after expenses, Otellini said.

This year, the company will begin to promote the Professional Business Platform, which adds a networking chip to the usual bundle sold for desktops.

In a similar fashion, Intel's move into graphics chips flopped, but after the company integrated graphics chips with its popular chipsets, the company became the largest graphics provider in the world.

On the down side, the Barrett years lacked the unexpected successes. An effort to sell consumer electronics failed, twice. Intel vowed to sell processors for cell phones in 2000, and the effort is only just now taking off.

From the beginning of 1999 to the end of 2003, Intel bought more than 35 companies for over $11 billion. Very few of these acquisitions have turned into successful product lines. Much of the technology has later been discarded.