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4/27/2006
11:04 AM
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Intel To Speed Product Releases, Cut Costs

Intel CEO Paul Otellini, speaking Thursday at Intel Analyst Day in New York, gave a sobering analysis of the chip giant's missteps over the past year, including an admission that its server road map was weak and its execution off the mark.

On the channel side, Intel has traveled a rocky road since the end of third-quarter 2005, according to Anand Chandrasekher, senior vice president and general manager of sales and marketing. Many of the channel problems centered on product availability, he said.

"The channel is very dependent on our motherboards. Supply to the channel [was at a] 65 percent support level," Chandrasekher said of product shortages through the end of last year.

The shortfalls have begun to be corrected, he noted. "It was a pretty tight environment. In Q1 and Q2, our support level has improved,” he said.

Intel’s poor performance in the server market stemmed from pressures the company had previously downplayed, Chandrasekher said.

"We lost share on the server side largely because of road map inadequacies. Or we didn't meet the needs of the market, or our competitor had a better product,” he said.

For much of the past three years, industry observers have said AMD’s Opteron server processor has gained--and even overtaken--Intel's Xeon platform. As a result, AMD managed to boost its market share since last year, while Intel has lost it.

Based on better supplies, and a new product road map, Chandrasekher said he thinks Intel will start to win back market share in the second half of the year.

Also at the analyst event, Otellini said Intel has undertaken a 1,000-developer effort to develop technology to enable handheld devices to carry full PC capabilities and connectivity. The first units, expected to be available by the end of the decade, will be pocket-size, have an all-day battery life, be fully PC- and Web-compatible, and sport consumer-electronics price points, he said.

"There are some things that are true about Intel that are not changing," Otellini said. "We have always relentlessly pursued technology and products. That's what pays the bills. It's not going to change."

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