15:48 PM

Intel Reorg Moves Maloney Into Key Position

Intel [INTC] has reorganized its operations moving Sean Maloney from his position as chief marketing officer to co-head a new division: Intel Architecture Group (IAG) that consolidates all of its product divisions.

Mr Maloney is responsible for business and operations at IAG while co-head Dadi Perlmutter oversees product development and architecture

Additionally, Andy Bryant, chief administration officer, becomes head of the Technology and Manufacturing Group, responsible for its global manufacturing and investment of billions of dollars in new facilities.

Tom Kilroy takes over Mr Maloney's former job as head of the Sales and Marketing group.

Intel also said that Pat Gelsinger, a senior VP has left to join EMC. And Bruce Sewell, general counsel, has also departed.

Foremski's Take: The reorganization takes advantage of Sean Maloney's considerable skills in running large businesses within Intel. The chief marketing officer role is not as challenging as it once was because Intel has won the microprocessor wars.

Intel's domination of microprocessor markets reached a new 4-year high in the second quarter.

The executive changes and the departure of Pat Gelsinger are related to a succession strategy for the top job at Intel. The most recent moves place Mr Maloney into the best position to eventually replace CEO Paull Otellini.

But Mr Maloney will have to prove himself. He'll have to make sure that Intel will be able to hold onto its lead and preserve its high profit margins in the face of considerable challenges in the client computing sector.

The evolution of the PC into the notebook and now into the netbook and mobile devices, brings the danger that cheap, powerful chips will undermine Intel's high margin microprocessors.

Intel's renewed partnership with Microsoft and its operating systems offers a way to keep competitors at bay.

High performance graphics processors combined with high speed broadband connections to cloud based applications could route around the need for X86 architectures in many types of client computing systems -- not just netbooks or mobile devices. For example, there are several smart phone operating systems with ever larger numbers of applications that are not X86 based. These could move up into larger client systems.

Intel's Atom is designed to extend the X86 architecture into netbooks and smart phone apps. But there is no guarantee Intel will be able to establish the same dominance in future cloud-based client computing systems.

It was unsuccessful once before when it tried to establish its StrongARM architecture in the mobile phone industry.

That's because the Telecom companies hold a strong position in determining the applications, operating systems, and features that run on mobile phones -- as Apple has found out. They have no desire to become commoditized in the same way that Intel and Microsoft commoditized the PC industry and managed to consolidate the majority of that industry's profit margins.

The Telcos control the broadband networks which is why Intel is such as strong supporter of WiMAX. This technology could potentially vault over the walled markets controlled by the Telco and cable companies. That's why WiMAX is being built into Intel chipsets even though there is yet little WiMAX infrastructure.

Mr Maloney used to head up Intel's comms chip group -- he knows all about the challenge the Telcos pose to Intel.

Mr Maloney has always been given the toughest jobs at Intel. And this is going to be one of the toughest yet.