Barrett takes helm at Intel

Electronic News, March 30, 1998 by Jim DeTar

Santa Clara, Calif.--Intel president and COO Craig Barrett continues his ascendancy at Intel, as Intel said last week that at its next board meeting on May 20 the company plans to name him CEO. Mr. Barrett was named president of the company just last year.

Many industry observers were, however, surprised to learn of Andrew S. Grove's decision to step down from the top day-to-day managerial post at the company at the age of 61. Mr. Grove, an Intel co-founder, had serious health problems several years ago that sidelined him for awhile but he had said recently the situation had cleared up and he was apparently in good health.

Mr. Grove, who was named to the post of chairman last year when Gordon Moore retired, explained his decision by saying, "Now I would like to focus more of my time on broad strategic issues concerning the industry and Intel.

"Craig has been the architect of Intel's operations throughout the last decade. Our performance in developing a superb set of products and meticulously ramping them into high-volume production has been the result of the exceptional organization and methodology he has put into place," Mr. Grove said. "He has also grown into an outstanding multifaceted leader and is ready to undertake additional challenges as Intel's chief executive officer.

Regarding his plans, Mr. Grove commented, "I have thoroughly enjoyed being Intel's CEO for the past 11 years, and now I would like to focus more of my time on broad strategic issues concerning the industry and Intel. Craig and I have had a long working relationship and I look forward to a smooth transition of our roles as I continue my work as chairman."

Mr. Barrett will immediately be faced with serious challenges, however, as Intel grapples with the most serious threats to its dominance in recent years. At the same time that a group of large semiconductor makers: AMD, National Semiconductor and Integrated Device Technology (IDT)--backed by IBM's manufacturing capacity--are often successfully challenging Intel for marketshare in the low- and mid-range PC market, Intel must also face the prospect that the venerable PC may not be the primary vehicle for processor sales sometime after the turn of the millennium.

Some market research firms have already forecast that the switchover from PC to non-PC dominance as the primary sales channel for microprocessors and microcontrollers will take place by the year 2002.

As announcements at this week's Embedded Systems Conference in Chicago make clear, newer, tightly integrated personal computing systems seem to be gaining favor as PC sales continue their lackluster growth. For example, when General Instruments last week awarded the contracts for the chips that will go into the next-generation digital set-top boxes it will manufacture for communications giant Telecommunications Inc. (TCI), it picked Motorola, QED and Broadcom Corp. as its providers. GI plans to build 15 million of the set-top boxes over the next few years.

TCI chairman John Malone is quoted by a news service as saying at a press conference "You can't give all the money to Intel and still meet your price objective." Reports also said that neither Mr. Malone nor GI have ruled out using Intel chips in the future, however.

Craig Barrett was interviewed by Electronic News West Coast editorial staff for a "Breakfast In The Valley" article prior to his appointment as president of the company. At that time, he provided a glimpse of his vision for the company, saying he was aware of the diversification of processor applications and the need to change to meet that challenge.

Referring to the network computer concept espoused by Oracle, he said: "The real issue is two-fold: whether you want to have a centrally controlled resource--and the guys basically who are into big server space and server software--the Oracles of the world--are obviously pushing that and pushing that against the people who see the icons pop up in the PCs today--the Microsofts. Whichever one wins out, we think it makes a lot of sense to have an Intel processor, Intel architecture."

In what now seems like a prophetic statement in light of the OS wars that have broken out among Microsoft, Sun, Netscape and others, he said at the time, "But we're not going to take sides on the software issue: Oracle, Microsoft, Sun and whatever else is out there."

Defining Intel's basic business model at that time and the company's relationship with Microsoft, he said: "Our basic business model is selling new, high performance microprocessors and new, high performance PCs. A lot of Microsoft's business is the aftermarket or upgrading and updating what's already an installed base. So there's a little bit of difference in motivation on both sides. But in general the success of both companies is linked to moving the PC market forward."

Intel has in recent months revised that strategy to address more of the mid- and lower performance PC markets as well as to address the graphics-intensive segments like game systems and Internet servers.