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The executive shakeup at Intel that saw vice president Pat Gelsinger leave for EMC appears to have been quite sudden.

Former Intel vice president Pat Gelsinger

(Credit: Intel )

An Intel blog dated September 13 shows clearly that Gelsinger was scheduled to appear in the No.2 speaker slot at the Intel Developer Forum--which started on September 22--behind CEO Paul Otellini. The entry in the agenda states: "Tuesday: Keynotes from Intel President and CEO Paul Otellini, IDF veteran and senior VP Pat Gelsinger."

The announcement of Gelsinger's departure came on September 14.

In the final IDF agenda, Gelsinger was removed and his speaking slot went to Sean Maloney, who, prior to IDF, was promoted, along with David "Dadi" Perlmutter, to co-manage the massive Intel Architecture Group. Maloney, an executive vice president, had been Intel's sales chief, and many observers see him as the odds-on favorite to be Intel's next chief executive. (Current CEO Paul Otellini, though, is likely to be in his post for some time to come.)

Gelsinger, now 48, had been considered to be one of the contenders for the CEO slot and he had had made it clear publicly that he wanted to be president of Intel. He was a leading figure in the development of some of Intel's most popular chips, including the 80486 microprocessor and the Pentium Pro, the latter of which brought Intel into the lucrative workstation and server markets.

The 30-year Intel veteran was Intel's chief technology officer but, in a sideways move, became co-general manager of Intel Corporation's Digital Enterprise Group--his most recent title.

Gelsinger is also an author who has written about balancing work, family, and faith.

SAN FRANCISCO--Sean Maloney has some issues with the European Commission's antitrust case against his company, Intel, which he says must either "thrive or...die."

Last week, Maloney was promoted, along with David "Dadi" Perlmutter, to co-manage the reorganized--and massive--Intel Architecture Group. Maloney, an executive vice president, had been Intel's sales chief, and many observers see him as the odds-on favorite to be Intel's next chief executive. (Current CEO Paul Otellini, though, is likely to be in his post for some time to come.)

Sean Maloney, executive vice president

(Credit: Intel)

On Monday, the European Commission published a "nonconfidential version" of its May 13 decision against Intel, which imposed a fine of $1.45 billion against the chip giant. That decision found that Intel broke EC Treaty antitrust rules (Article 82) by engaging in illegal practices to exclude competitors from the market for x86 processors, which are the basis for a vast swath of consumer and business computers.

The EC action was based on complaints from Intel's chief rival, Advanced Micro Devices. Intel appealed the decision in July to a European court, saying that "evidence was ignored or misinterpreted."

In an interview this week at the Intel Developer Forum, Maloney explained how Intel's business model, forged after a near failure of the company in early 1980s, requires it to be aggressive.

"I joined the company in 1982. We were getting our butt kicked by Asian competitors," Maloney said. "A few years after I joined, [then president] Andy Grove made the decision, let's focus on microprocessors. We exited all the other businesses, we laid off a third our staff. The company was hemorrhaging money," he said.

In 1983, Intel abruptly exited the memory chip business after Japanese manufacturers drove down prices and made that business unprofitable.

"So we picked one thing to do well, and we put everything behind that," Maloney said. "We're not like a Samsung that has 50 different businesses, or a Sony with 20 different businesses, or an Apple with a bunch of different businesses. We were a company that specialized. If you're a company that specializes, you either thrive or you die. You don't have eggs in other baskets."

As a specialist in PC processors, Intel achieved tremendous success. "As a consequence," Maloney said, "the scrutiny has come along with it. Some of the scrutiny is fair. Some of it we're strongly pushing back on."

He continued: "We can show how the consumer has benefited from the microprocessor in terms of constant, constant price reductions. It's pretty unmatched in every other industry. The industry has a long history of cutting prices. And I don't know a single day in the last decade when you couldn't walk into a shop a buy competitor's product. We believe it's an open market."

Updated at 3:45 p.m. PDT, adding discussion about Sean Maloney and David Perlmutter.

Intel Developer Forum chip news took a backseat to a major executive shake-up at the chipmaker on Monday.

Much of the spotlight now falls on two key executives, Sean Maloney and David "Dadi" Perlmutter, who will co-manage the reorganized--and massive--Intel Architecture Group.

"This didn't happen overnight. This has been in the works for a few months," Intel spokesman Chuck Mulloy said.

Dadi Perlmutter represents the successful Israel development team.

(Credit: Intel)

Perlmutter's rise is not a mystery. He is connected to the Israel-based team that was responsible for the successful Centrino chip platform. "He managed the team that launched the technology that became Centrino," Mulloy said. And he headed the development of the equally successful Intel Core 2 duo--which is closely tied to Centrino--family of products.

Some observers believe that Israel's power efficiency-centric development group saved Intel, when its traditional strategy of cranking up single-core chip speeds to unsustainable levels began to falter.

And Apple CEO Steve Jobs heaped superlatives on Intel's dual-core architecture at Apple's annual shareholder meeting in April 2006. "This new (Intel Core Duo) chip is phenomenal--it blows away anything other suppliers have, including our former suppliers," Jobs said. Apple made the switch to Intel, largely based on the new--at that time--Intel Core architecture.

Maloney, most recently, has been Intel's globetrotter (unofficially) and its sales chief (officially). He travels constantly and had been based in the critically important Asia-Pacific region from 1995 to 1998, managing Intel's sales and marketing activities there. He was promoted to senior vice president in 1999 and executive vice president in 2001.

Maloney also led the Intel Communications Group, which was not considered to be a success in ... Read more

Intel's Pat Gelsinger

(Credit: Intel)

Editors' note, Monday 6:16 a.m. PDT: Intel and EMC have officially announced executive changes as outlined below. See the new story for more details.

Intel is expected to announce a management shakeup Monday that will see Senior Vice President Pat Gelsinger leaving after 30 years at the chip giant, according to a report in the New York Times.

Management changes will include sales and marketing chief Sean Maloney taking over the company's major chip businesses, while laptop chips head Dadi Perlmutter will take over engineering for all chip divisions, according to the report.

The official announcement is expected before the market opens Monday, according to one person familiar with the changes.

Gelsinger, senior vice president and co-general manager of Intel's Digital Enterprise Group, joined Intel in 1979. He led Intel Labs, which encompasses many Intel research activities, and was Intel's chief technology officer.

Gelsinger has been a high-profile presence at many Intel forums over the years including its marquee Intel Developer Forum event.

Maloney, Intel's sales chief, is also considered to be a possible successor to Intel CEO Paul Otellini.

Intel representatives declined to comment on the report.

Update, Monday 5:36 a.m. PDT: The Wall Street Journal reported overnight that EMC is expected to announce Monday that it is hiring Gelsinger to run its storage products business, along with some software units.

A rip-out-the-carpet PC refresh of both software and hardware is in the offing as Microsoft's latest operating system and new laptop designs converge later this year.

Intel's Mooly Eden, general manager, Mobile Platforms Group, speaks at the Intel Technology Summit in San Francisco

(Credit: Brooke Crothers)

At the Intel Technology Summit in San Francisco on Wednesday, an executive described the imminent mobile future, including a major refresh of Netbook silicon, better-designed "ultrathins," and turbo-powered high-end laptops.

Netbooks may undergo the biggest change. Models that appear after Windows 7 ships in October will see the most significant overhaul internally since the Netbook category debuted back in the spring of 2008. Intel's new "Pine Trail" Atom silicon will collapse most of the core chips onto one piece of silicon, improving the power efficiency and boosting performance.

"There will be integrated graphics inside the same (processor) core so you get better performance," said Mooly Eden, general manager of the Mobile Platforms Group at Intel, describing how the graphics processor and main processor will be grafted onto the same chip--an Intel first.

The segment just above Netbooks is ultrathins. These sleek, sub-$1,000 laptops should appear in greater varieties from more PC makers later this year, according to Intel--about the same time Windows 7 hits the streets. Aesthetics will be crucial. "You can't sell a keyboard and a screen," Eden said, describing the ideal ultrathin laptop design. "You have to sell something that somebody will desire. We need to go beyond the great CPU, great performance...to something that a normal consumer can look at say 'I want that.'"

One of the challenges for Intel is making sure these sub-one-inch-thick designs don't overheat. Eden described the use of laminar air flow technology to cool a laptop's outer skin. "This is the difference between thin comfortable and thin uncomfortable," he said.

Intel is also designing new fans that are better at getting hot air out faster. "We are putting a lot of effort into designing fans," said Eden. Intel demonstrated the fan technology at the conference Wednesday.

Intel described laminar air flow technology to cool the skin of ultrathins

(Credit: Intel)

And how does Intel see these segments breaking down into screen sizes? Netbooks will have 10-inch class displays, while the "sweet spot" for ultrathins will 13.3-inch, though some larger ultrathins may have 15.6-inch screens, according to Eden. He also said there may be "some experimentation" with 11.6-inch designs.

Higher up the laptop performance scale are Core i7 mobile processors, also due around the same time that Windows 7 hits the streets. Eden showed how the gigahertz speed--or "clock speed"--of individual mobile processor cores will instantly spike in performance to accomplish a task then, in the next instant, go idle--what Intel calls HUGI or Hurry Up and Get Idle.

HUGI is a power-saving technology: the faster a task is accomplished, the faster the processor can return to idle mode--a state that uses only the bare minimum of power. Along these lines, Eden did a demonstration of Turbo Boost technology.

In the demonstration, one of the cores (inside, let's say, a mobile quad-core chip), would jump well over the processor's rated speed. For example, a processor rated at 2.0GHz, for example, may run one of the cores at 2.60GHz (or higher) while the other cores are idle. In the gaming world, this is referred to as overclocking.

A common theme of all these laptop designs was power efficiency, above and beyond Intel's traditional message of performance. All-day computing--on battery power only--seems to be one of the major rallying cries within Intel.

Intel marketing chief Sean Maloney

(Credit: Intel)

Unleashing innovation is key no matter what laptop category you're talking about--whether Netbooks or low-cost notebooks, said Intel's sales chief, ahead of this week's Computex trade show in Taipei.

I spoke briefly with Intel's marketing chief Sean Maloney--who is at Computex this week--on Monday night and asked him about how the wave of low-cost, thin notebooks based on his company's "ULV" (ultra-low-voltage) chips may affect Netbook sales.

New, aesthetically appealing, inexpensive notebooks, such as the $699 Acer Aspire Timeline, could make Netbooks less attractive, which pin a lot of their popularity on bargain-basement pricing.

Maloney said Intel is not going to fret over sacrificing one category of laptops because it needs to protect another.

"It's a loser mentality to not develop one segment because you're worried about the other," he said. "I think we have several years ahead of us where we can innovate the heck out of any of these categories without getting defensive about the other one. You just need to unleash innovation in all of the segments and see what happens."

And what about the new 3G-capable Netbooks--which Qualcomm had dubbed "smartbooks"--appearing at Computex from Asus and upstarts like Mobinnnova which are tied to the ARM processor and sold through telecommunications providers? "The more the merrier. The more innovation there will be. It's good for the industry to have competition," Maloney said.

New ULV notebook wave: Acer Aspire Timeline has a number of the same specifications and attributes of the upscale Dell Adamo but is priced more than $1,000 below the Adamo

(Credit: Acer)

Maloney continued. "We've shipped very large numbers of Netbooks through service providers in the last year and a half. Most of the service providers around the world have been shipping Netbooks for some time," he said. Hewlett-Packard, for instance, is now selling an Intel Atom-based Netbook at Verizon stores in the U.S. with 3G built in.

And, how important is the rollout of the new ULV chips? "This is a big announcement and it's kind of on par with the original announcements we made with the original Centrino," Maloney said.

"Fashion is going to play an ever-bigger role (in notebooks). It's like the cell phone industry four or five years ago. An incredible number of designs are coming out in the thin form factor."

"Very light, very thin, and incredibly long battery life," he said of the ULV laptops. Sounds a lot like the evolution of the Netbook--except it isn't called a Netbook. But, as Maloney said, may the best product category win.

Intel said Netbook cannibalization of notebook PC sales is about 20 percent in Europe, according to a news report Wednesday. But this trend may ebb later this year when the "affordable" ultra-thin laptop category takes off, leading to a cannibalization reversal of sorts.

Christian Morales, Intel's European sales chief, said Netbook sales were about 16 percent of all notebook sales globally, and a little higher in Western Europe, according to Reuters. "In Britain and Italy they may account for as much as a quarter of all notebook sales," he told Reuters.

Netbooks are small, inexpensive laptops--typically below $500--designed for Web browsing, email, and less-demanding media applications.

Intel Netbook share was about 16 percent in March of this year.

(Credit: Intel)

Intel's marketing chief, Sean Maloney, presenting at the company's investor meeting on May 12, said that the share of Atom processor-based Netbooks out of the total mobile PC market was about 16 percent in March. (See "Netbooks Mix of Mobile PCs" chart.) And he showed that the market share for Netbooks--month to month--hovers around 15 percent.

"The market has not all lept over to Netbooks," Maloney said at the meeting. "We're very comfortable with having established the (Netbook) category. We believe now that Netbooks are an under-distributed product line." Cannibalization, when it occurs, tends to affect low-end laptops based on Celeron processors, he said. "Atom is eating into Celeron. And we're quite fine with this," Maloney said.

Intel's ramp of inexpensive ultra-thin "CULV" laptops may eat into Netbook sales

(Credit: Intel)

Then later in his presentation, alluding to Intel Consumer Ultra-Low-Voltage (CULV) chips due to appear in inexpensive laptops starting in June, he said that this is "an opportunity for upsell. We don't need to give this stuff away. The industry doesn't need to give this stuff away. We can reach new price points and we can also get paid for it." CULV processors will be based, to a large extent, on Intel's Core 2 architecture, which offers better performance than the Atom chips used in Netbooks.

Maloney's comments imply that CULV-based laptops will offer stiff competition for Netbooks, especially high-end Netbooks priced above $400. Many CULV notebooks should fall into the $599 to $799 price range--the upper range of Netbooks--according to Ashok Kumar, an analyst at investment bank Collins Stewart. And some major PC makers expect CULV to become one third of total latop sales by next year, Kumar said.

Though no one can forecast how popular these new inexpensive thin laptops (think: MSI X-Slim series or a hypothetical $800-$900 Apple MacBook Air) will be, Intel is obviously expecting the category to take off. (See "Ultra-Thin Affordable Volume Ramp" chart.)

Maloney said growth markets for Netbooks are children--he said this market is still under-served--as well as Netbook bundles with telecommunications service providers. Verizon, for example, is now offering Hewlett-Packard Netbooks with 3G functionality built in.

Netbooks had a rocky start last year in some markets, Intel's marketing chief said at the Intel investor meeting Tuesday.

"In the first period--June, July, August of last year--there were some in the retail channels that were shipping (Netbooks) as notebooks," Sean Maloney said in a question-and-answer session that was streamed over the Web. "They were running ads that had a continuum of notebooks and had this Netbooky thing in there--it was called a notebook. They had very high return rates and a couple of these guys had return rates in the 30 percent range, which is a disaster."

Maloney continued. "So we gently went back to some of those chains and said if you segment them differently and state up front what they do and don't do, things will be healthier. You've seen some of the European channels saying this (Netbook) product does not do X and being very black and white and very clear."

Intel's marketing chief Sean Maloney showed this slide Tuesday and did a live demonstration showing what a Netbook can't do.

(Credit: Intel)

At the investor meeting, Intel demonstrated on stage the performance gap between a Netbook and a mainstream notebook. In the demonstration, a Netbook and a notebook ran the same high-definition video of the NBA basketball playoffs. The video on the Atom processor-powered Netbook was jerky and dropped frames, while the Core 2 chip-based notebook's video was smooth.

The point was obvious: the Netbook's Atom silicon falls short in performing some tasks that a mainstream notebook handles with relative ease.

Along these lines, it also became clear at the meeting that there is a struggle brewing to clearly define to consumers the difference between Netbooks and upcoming ultra-thin notebooks, also referred to as the Consumer Ultra-Low-Voltage or CULV category of laptops. CULV notebooks--due in June--are expected to be priced in a market segment just above Netbooks.

Intel executives were peppered with questions from the audience--mostly representatives from Wall Street firms--about Netbooks. One audience member wondered whether Intel "had considered doing an informational advertising campaign" and asked: "Do you find that at all necessary to clear up some of the misapprehensions about what you can and cannot do with these devices (Netbooks)?" This question elicited the response from Maloney quoted above.