Just days before Thanksgiving, Intel investors got a major dose of turkey in the form of Paul Otellini's sudden announcement that he would retire, effective May 2013. This was a shocker because Intel was always known for long-planned, orderly transitions of power, and Otellini has no clear successor.
PSO, as Intel staff call him, started with the firm right out of UC Berkeley in 1974 on completion of his MBA. In that time, he worked his way through the ranks of a company that had traditionally been led by engineers.
It wasn't always smooth. He had the misfortune of being the general manager of the Pentium line when the infamous Pentium Bug came to light in 1994, but it was his boss Andy Grove who did most of the spear catching for that.
Still, in 2002, he was appointed President and COO, positions saved for the incoming CEO, and three years later, Craig Barrett stepped into the Chairman's role and Otellini took the reigns. They don't get more planned and orderly than that, even in the Vatican. It was also a rarity in this industry, where people play musical chairs and jump from company to company. Otellini is one of the rarest of Silicon Valley executives in that he's only worked for one company his entire career.
In his eight-year tenure at the most dominant chip maker in the world, no one can say Otellini had it easy. Intel was a mess when he took over and was under one anti-trust cloud or another for virtually his entire run. He's had to clean up, account for and atone for messes not of his making for far too long.
Intel's product line was a confusing mess in 2005. AMD had grown a pair and became extremely competitive, with three major innovations Intel had dismissed: memory controller on the CPU instead of a front-side bus, 64-bit x86, and dual-core CPUs. Intel was caught looking on all three cases, although more than one person has told me there was one person raising alarm bells: Pat Gelsinger, probably the most significant engineer in the company's history. Word is he saw where AMD was going and tried to get someone to listen, but no one would.
Perhaps Otellini did. He instituted the "tick-tock" strategy of a new architecture and a manufacturing shrink every alternating year. Intel got 64-bit multicore religion and gained back much of the market share it lost to AMD.
The one area where he couldn't cut it, though, was mobile. Intel destroyed AMD really without even trying, as AMD fell into a habit of mediocrity and came out with new processors that were on par with mid-range Intel products, rather than leapfrogging them.
But it was ARM Holdings, a company that makes no chips and sells nothing more than designs, that would be PSO's undoing.
The rumor going around is Paul was nudged out because Intel has failed to gain any ground with the Atom processor, despite four years and who knows how many millions of dollars and engineering hours. ARM is as dominant in smartphones and tablets as Intel is in PCs and servers, and Intel's board must be feeling the heat.
This has led to a second rumor: that Intel is looking outside the firm to bring in someone with fresh eyes and perspective who can slowly reinvent the company as a successful mobile player and take on ARM.
The question is who? Scott Forstall's schedule has recently cleared up, but he's a software guy, and after the Sun Microsystems debacle, I think the industry learned not to put software guys in charge of hardware companies. Some people are hoping Gelsinger will prove a modern-day Prodigal Son and return to save the company, but I suspect that ship has sailed.
Whoever it is, he or she will face a significant challenge, because Intel's culture is like no other. That is a sink-or-swim company in which employees thrive immediately or flame out fast. It's not a place for everyone. No one has an office; they all have cubicles. Even PSO. Bringing in a new person not only requires a tough executive match but a cultural match to boot, and that won't be easy.
For now, it's a waiting game. After 39 years, Paul Otellini leaves Intel in much better shape than he found it, with a question mark hanging over its future. But that's always the case in this sector, isn't it?