Wolfe's Den: Why Intel's Reorg Puts Maloney In CEO Successor Seat - InformationWeek
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9/20/2009
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Alexander Wolfe
Alexander Wolfe
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Wolfe's Den: Why Intel's Reorg Puts Maloney In CEO Successor Seat

How Intel's painful efforts to diversify beyond computer processors have dogged president Paul Otellini, and why they'll challenge Sean Maloney, the man viewed as next in line to lead the company following a management shakeup.

On the other hand, there's a feeling that, if Otellini got hit by a bus tomorrow, Maloney would not get the nod, because Bryant is more seasoned. Before joining Intel in 1981, Bryant was much admired by Lee Iacocca, who brought him over to Chrysler from Ford. Rising through the ranks at Intel, he was the company's interface with Wall Street for a decade and a half, astutely managing Intel's financials.

Here's how I characterized Bryant's financial leadership back in February, when Intel doubled down amid the recession, pledging to spend $7 billion over the next two years to upgrade a bunch of its chip plants to next-generation, 32-nm fabrication technology:

"Over the years, I've been impressed with the way Intel manages the massive capital flows involved in funding the construction and operation of chip fabs. If you've ever heard presentations from Andy Bryant, formerly Intel's chief financial officer and now its chief administration officer, you know it has engineered its cash flow as expertly as it does its chips.

Intel has a waterfall model where a few cutting-edge plants crank out the fanciest (and most profitable) processors. When plants age and become not quite so state-of-the-art, they move over to cranking out mainstream product, and so on down the chain. It's a factory flow model Henry Ford would've been proud of."

However, when if you look at succession a few years out, the equation changes, because Bryant is 59 and Maloney is only 53. That's not ageism, but the reality that Bryant doesn't have as much runway ahead of him before Intel's mandatory CEO retirement age.

Maloney's real chops -- and the reason he's the odds-on favorite as Otellini's successor -- come from his combination of sales experience coupled with a technical background. In this regard, he would bring a more balanced perspective to the top job than any of his predecessors. (Robert Noyce, Gordon Moore, Andy Grove, and Craig Barrett were engineering types; Otellini is an MBA.)

Maloney started out doing programming, moved into marketing, progressed into a Silicon Valley version of a Supreme Court clerkship -- he was a special assistant to Grove for three years -- and then became head of Intel's Communications Group (ICG).

Maloney was head of ICG in 2006 when Intel sold its communication processor business to Marvell Technology Group Ltd. for $600 million. I consider the sale a watershed event, and not in a positive sense, because it pulled the rug out from under what might eventually have emerged as Intel's first big success in diversifying away from its singular reliance on PC processors.

ICG made Intel's XScale devices, which were a family of communications and applications processors -- such as the PA9XX series -- which appeared in a variety of mobile phones, most notably a good number of Blackberrys. Though it's recently been edged out somewhat by Freescale on the Blackberry front, Marvell is still a legit player in the mobile arena.

At the time Intel exited the business, XScale chips played variously in both the applications-processing, or baseband end of the equation, as well as in the communications-processing end. (Baseband means the non-radio-frequency stuff; i.e., all the regular processing functions to run the phone which don't involve communicating with the cell phone towers. So-called comm processors handle the CDMA and GSM stuff.)

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