Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Who’s Next to Run Intel? A Look at the Internal and External Contenders.

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Aside from the headline that CEO Paul Otellini is retiring in May, the most important part of Intel’s press release on the subject was this:

The board of directors will conduct the process to choose Otellini’s successor and will consider internal and external candidates for the job.

For the first time in Intel’s 45-year history, the CEO is retiring without a blatantly obvious successor teed up and ready to take over. And on top of that, the board will conduct a search that includes external candidates. That’s kind of a big deal for a company that has always promoted from within.

Otellini’s own succession was a stage-managed affair. When his predecessor, Craig Barrett, retired in 2005, Otellini was clearly the heir apparent, with practically no other candidates worth mentioning. Barrett’s succession was equally clear as he took over from the legendary Andy Grove in 1997.

For some years, Sean Maloney had been the odds-on favorite, until he suffered a stroke in 2010 that affected his speech and motor skills. His recovery was remarkable, and Otellini assigned him to run Intel China for awhile. Until he retired in September, Maloney remained a dark horse in the eternal succession horse race that Intel inevitably is.

Another potential heir had been Pat Gelsinger. Until September of 2009, when Gelsinger decamped for a job at EMC, and a chance to succeed Joe Tucci as CEO there, the race had been between Maloney and Gelsinger. Tucci recently named Gelsinger to run VMWare as its CEO (EMC is a majority shareholder of VMWare.) While Gelsinger’s name will likely be on the early list drawn up by the headhunter firm hired to conduct the search, by leaving Intel he has effectively burned that bridge and is out of contention.

So here’s the breakdown of internal candidates:

David (Dadi) Perlmutter: Currently chief product officer, he’s a well-respected general manager of the Intel Architecture Group. At Intel’s all-important Developer’s Forum in San Francisco in September, he gave a keynote that was intended to set the table for Intel’s resurgence back to relevance following its ongoing failure to attract significant business in the space. His talk didn’t exactly inspire a lot of excitement. He’s largely seen as Intel’s “Mr. Inside,” who can get things done internally, but for whom the external relations portion of the CEO job isn’t his strongest suit. His biggest success at Intel came with the Centrino line of mobile processors that launched in 2003 and soon dominated the notebook market. He also ran Intel’s Israel operations.

Brian Krzanich, chief operating officer: Promoted to the COO job in a surprise shake-up in January, he had run worldwide manufacturing and is probably the smart-money internal candidate. In the new job, he took over some IT and human resources functions that had previously belonged to chairman and former CFO Andy Bryant. He joined Intel in 1982 and has been an on-the-ground plant manager at Intel’s sprawling complex in Arizona. During 2001-2003 he oversaw a complex transition in Intel’s manufacturing technology across its entire global footprint of factories.

If indeed there is an internal horse race, it is between Perlmutter and Krzanich. But here’s an important precedent: Every single Intel CEO since Andy Grove has been COO first.

Stacy Smith, chief financial officer: If Intel again follows the line of thinking it did when it tapped Otellini, then Stacy Smith will be considered for the top job. Where prior CEOs had been engineers by training, Otellini has degrees in economics and an MBA. Smith, too, has an MBA, and succeeded no less an industry statesman than Intel’s former CFO and now its current chairman, Andy Bryant. And make no mistake about it: In the board meetings where these decisions are made, Bryant’s voice and preference will weigh heavily on the choices of other directors.

Here’s another being mentioned today by virtue of having been among the three — including Smith and Krzanich — promoted to the ranks of Executive Vice President:

Renée James, head of Intel’s software business: At a moment when women run two of Intel’s biggest customers, Hewlett-Packard and IBM, it should come as no surprise that James has made the cut. She’s chairman of the McAfee division that Intel acquired when it bought out that security software company last year, as well as of Wind River Systems, another software acquisition. She’s long been the point person on Intel’s relationship with Microsoft. She’s a University of Oregon graduate (and finished her MBA the same year I was wrapping up my BA there). While she’s officially being mentioned as a contender, and would by no stretch of argument fit the mold of an Otellini-like CEO with an MBA instead of an engineering degree, if the board decides to go in that direction, Smith would get the nod. But at age 47, should she choose to remain with Intel, she’d be an early and official contender for the next round of the ongoing CEO succession horse race.

And while we’re on the subject, here’s another internal name that bears mentioning for the next round of succession speculation, Diane Bryant. Formerly Intel’s CIO, she has of late been managing its Data Center and Connected Systems group. I sat next to her at an Intel lunch in New York in March and saw her give a speech at a major Intel even in San Francisco in the spring. She’s put in 25 years at Intel, is about the same age as James, has an electrical engineering degree, and is a terrific and engaging public speaker. Within a few years she’ll either be recruited away or considered a contender to succeed whoever ultimately succeeds Otellini.

External candidates are hard to find. Everyone I’ve spoken to on the subject is scratching their heads. As I said, Gelsinger will be considered — and ruled out — early in the process. But the fact that the board is even willing to say it will consider an external candidate is a big admission. As I said, the last time there was a leadership transition at Intel, it just happened.

A few names are being bandied about as possibles. Sanhay Jha, the former CEO of Motorola Mobility, will likely be considered. Some folks in my Twitter feed have brought up Scott Forstall, the former senior VP of Apple and head of its iOS software business, but he doesn’t seem a good fit to me. I feel the same way about Steve Sinofsky, the recently fired president of Windows at Microsoft, who’s also been mentioned in my Twitter feed.

Here’s a name that comes to mind: Dave Donatelli of Hewlett-Packard. He’s executive vice president and general manager of HP’s Enterprise Group and widely seen as a heavily-favored contender for the top job there when it becomes available. Trouble is, it probably won’t for at least a few more years. Before HP he spent two decades at EMC. The search firms will at the very least put his name on the list.


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