Last week, Intel announced that it was parting ways with its CEO, Bob Swan, and replacing him with Pat Gelsinger, who spent 30 years at the company before leaving and becoming the CEO of VMware. Gelsinger is a well-respected leader and has the engineering background to understand what Intel needs to do to address the significant challenges it is facing.
In a closed-door meeting with some employees, The Oregonian reports that Gelsigner laid out one of the most obvious challenges facing Intel:
“We have to deliver better products to the PC ecosystem than any possible thing that a lifestyle company in Cupertino makes. We have to be that good, in the future.”
On the surface, it appears like he’s taking a pretty obvious shot at Apple. Except, even if Gelsinger was making a joke–which is certainly a very real possibility considering that his remarks were not for public consumption and were addressed to an internal audience–he’s right. Not about the “lifestyle company” part. That’s not the point.
Intel is a chipmaker. There is no reason it should be getting its business handed to it by Apple, a company that happens to be really good at making chips, but is not a chipmaker. Apple makes a lot of things. It makes iPhones, and iPads, and Macs, and headphones, and watches. To power all of those devices, along with all of the other components necessary like displays, and cases, and keyboards, it also designs and builds processors.
Intel only makes one thing–processors. That’s it.
Yet, right now, it’s far behind Apple–at least in terms of performance. That’s embarrassing for Intel, the company that literally invented the microprocessor–the technology that made every company in Silicon Valley possible. If you work for Intel and you aren’t embarrassed, you should be. I think that’s Gelsigner’s point.
He isn’t saying Apple isn’t good at making processors. It’s very good. He said the opposite, actually. He said, “we have to be that good.” There’s really no reason that Intel shouldn’t also be very good–or even better.
I’d argue that if he hadn’t recognized that Intel needs to do better, it would be a very real problem. Instead, he wasn’t afraid to call out Intel’s problem in the most concise and biting way–Intel is getting beat at its own game. A game it invented.
The company has faced significant delays in delivering on its own roadmaps, a factor that led to Apple ditching Intel altogether in favor of designing its own ARM-based processors and outsourcing the production to TSMC.
It’s an acknowledgment that while Intel has long set the standard, it has ceded that to its competition. Apple is setting the bar right now for high-performance, high-efficiency processors. If Intel wants to earn its position back, it will have to match that.
Even more important, is the reason why Intel has fallen behind. For years (decades really), Intel has dominated its industry. As a result, its processors have largely dictated what computer manufacturers are able to build. That type of success can cause any organization to lose sight of its end goal–serving its customers’ needs.
Those customers are tired of being limited by the technological problems Intel is facing. For example, where Apple introduced laptops powered by its own 5-nanometer chips, Intel has struggled to manufacture and deliver its own 10-nanometer versions.
And for Intel, there’s no question that it has no other choice. The company is facing existential questions about whether to outsource its own chip production or even split apart its design and manufacturing capabilities altogether. That would be a significant blow to a company that has long prided itself on being not only the industry leader but an integrated American chip firm.
Still, in Intel’s case, it’s a sign of emotional intelligence that the incoming CEO is asking the question: “How on earth are we getting beat by those guys? I mean, I know they’re good, but, seriously–we’re Intel. This is literally what we do.”
Whether the company has an answer is another story, but if you’re one of Intel’s stakeholders, this is exactly the question you want your leader to be asking.