Assessing Intel's Otellini and Advising His Successor

Custom builders offer up a mixed bag of comments about the tenure of the departing CEO and suggestions for the future. By Hank Hogan

By some measures, Paul Otellini's tenure as CEO of chip giant Intel Corp. was successful. When he took over in 2005, revenues of the Santa Clara, Calif.-based company were $38.8 billion. As he leaves midway through 2013, previous-year revenues topped $53.3 billion, a 38 percent increase. Today, Intel rules the PC processor market more completely than ever before. On the other hand, at just over $21, the company's share price has remained virtually unchanged through the years. Also, Intel missed the rise of mobile devices and is only now making inroads into that market.

A similarly mixed bag is seen when channel partners speak about Otellini's era. They recall highs and lows. “Intel has had a great last eight years under Otellini. It is utterly dominating the CPU market, as it consistently puts out a more stable and faster product than the competition,” says Jon Bach, president of Puget Custom Computers. The Seattle-area system builder makes high-end boutique products. In looking back over the last few years, Bach points to some dim spots. Among these are recalls in 2009 due to flaws in solid-state disks and in 2011 in support chips.

Although minor, these issues point to problems both real and perceived. Intel's success comes from producing superior products, along with the ability to effectively market and distribute those products through the channel, Bach says. Consequently, Intel's new CEO needs to either refocus the company on core products that it does extremely well or make the chip behemoth much more agile, he contends.

When asked about Otellini, another up-and-down assessment comes from Joshua Liberman, president of Net Sciences Inc. The Albuquerque, N.M.-based company is the sole remaining integrator in the state that builds everything it sells, according to Liberman.

A plus was Intel's Modular Server, a blade server and storage area network in a single 6U chassis. Another high was outstanding service and support for resellers at the beginning of Otellini's reign. The collapse of that support is one of the lows, however. “This started with the evisceration of the training programs, dropping the in-person events count from four to one per year, and now, to nothing,” Liberman says. Added to that was a hollowing out of technical support. This moved it from what Liberman characterized as among the best in the industry to one of the worst.

To what degree such decisions were directly from Otellini is unclear. But the effect has been a decimation of the relationship between Intel and its channel partners, Liberman says. His advice for the new chief is to rebuild that bond and focus on core strengths.

A FITTING END
This year saw a new pope elected and will see a new Intel CEO named. So it's only fitting to end with Mishawaka, Ind.-based C&M Support Services & Consulting Inc., a reseller that President Mark Moreno says makes a significant share of revenue from servicing the IT needs of midsize and large churches.

As is true for others, Moreno's highs as an Intel partner came years ago. His lows are more recent. For instance, he tells of working to win a significant piece of business based on a particular Intel product, only to find out through a distributor in December 2012 that it had been discontinued. Intel itself had never told him the product was dead. Instead, he had heard over and over of plans for upgrades and improvements.

That is only one example. Moreno cites other cases in which Intel dropped products suddenly, leaving channel partners with orphaned gear and unhappy customers.

Fixing such poor communication is what Moreno sees as a chief priority of Intel's incoming CEO. For it to work, the relationship has to be valued - and seen as valued - by both sides.
As Moreno puts it, “If they want to continue doing business with us as a channel, then they need to act like partners and not like they own our business.”

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