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Intel reorganizes around platform groups

Intel restructures into three groups to lead its efforts in platforms for mobility, the digital enterprise and digital home.
/ Source: Reuters

Intel Corp. Monday reorganized its corporate structure, introducing new businesses focused on mobile electronics, corporations and homes and eliminating a money-losing group centered on communications.

In a move that comes months before the succession of a new chief executive, the world’s largest chip maker also shook up its product and sales management team, and said the company’s vice president of sales was leaving the company to attend to a family health matter.

Before the changes, the Santa Clara, California-based company had divided itself into two major business, one for its computer chips and one for its communications products. But in recent years, the line between computing and communications has blurred, with notebook computers now including wireless radios and some cellular phones now as powerful as older PCs.

The reorganization -- creating groups for mobility, enterprise, home, health and global markets -- follows a plan to build “platforms,” or bundles, of Intel chips and software for various technology markets.

The “platformization” of Intel is a mantra of company president Paul Otellini, who later this year will take over as chief executive from Craig Barrett, 65, who has reached the company’s mandatory retirement age.

The reorganization is perceived as one of Otellini’s first big moves as the designated heir to one of the world’s most powerful technology companies.

“This is just the beginning of many major transformations they’re going to have with Craig leaving,” said Apjit Walia, an analyst with RBC Capital Markets, who expects Otellini to seek out companies to acquire in the communications space.

Intel, which delayed several products and canceled an initiative to develop chips for televisions, has said it has recovered from product blunders that helped push its stock down by nearly a third last year. Last week, the company reported a record $34 billion in annual sales, rallying its stock.

The chip maker did not announce any financial charges or cost savings. Tom Beermann, a spokesman, said Intel was in the process of determining if and how the changes would affect the financial reporting of business units.

'Platform' products
The new corporate structure makes “Intel’s entire structure consistent with our platform products strategy,” Otellini said in a statement.

The communications group, which had an operating loss of $791 million last year, has been dropped, although its product lines -- primarily for mobile phones and networking equipment -- will be distributed among the five newly formed businesses.

Sean Maloney, the executive vice president who ran communications and is believed to be a possible successor to Otellini in years ahead, will now lead the mobility group, which includes flash memory, cellular phone chips, and mobile computer microprocessors, including the Centrino brand of notebook chips.

Before the changes, Intel had two main operating units -- the architecture group, which encompassed computer microprocessors and supporting chips; and the communications group, which included flash memory, cellular phone chips and networking products.

The digital enterprise group will include the Itanium and Xeon products for computer servers, networking products, and other computing technologies designed for business, and the digital home group will develop products for consumer electronics and living room entertainment.

The digital health group, which will be led by Louis Burns, who had run desktop computing, will explore new opportunities for Intel’s microprocessors in healthcare research and personal health. A “channel products group” will combine existing organizations into a central operation for selling products into local markets.