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Intel Admits To Falling Behind AMD
Vicegrip writes "CNN is carrying a Fortune story covering an analyst meeting held on Thursday. There, CEO Otellini admitted Intel has fallen behind AMD with lost market share, technological leadership, and recently profitability. Intel also announced cuts to 1 Billion in spending." From the article: "Intel's market share recently slipped below 80%, and Otellini strongly emphasized the need for market share gains in all his remarks. On the other hand, he also suggested that Intel's recent market share losses (to AMD, whose name was not mentioned) were in line with historical variations which tracked to Intel's product generations."
Here is an Intel internal memo from the CIO's office. Intel is going to be firing (aka "redeploying") nearly 1200 people.
April 26, 2006
IT's first steps in 'relentless pursuit of efficiency'
Understand IT's response to Otellini direction
As Paul Otellini outlined in his April 25 Exec Connect Webcast, Intel faces significant challenges in Q2 and beyond as we adjust to meet our new business climate. With 2006 revenue now projected to be approximately 3 percent below 2005 and spending reduced by approximately $1 billion, Paul has given clear direction that Intel must "re-structure, re-size, and re-purpose" in a "relentless pursuit of efficiency." As a result, all organizations, including Intel Information Technology (IT), have been given new spending and headcount targets and a corporate effort has been launched to determine how to streamline Intel to make our company more agile and more competitive long term.
IT's response
IT's response is clear. We must rapidly adjust our programs and headcount to meet our new Plan of Record (POR) spending and headcount targets. And we must streamline our organization to maximize the services and programs we can deliver to the company while executing on our commitments to keep Intel running and to deliver on new capabilities.
Our immediate first steps are to stop selected programs completely, scale back other programs, and remove unnecessary overhead across the organization. The identification of these programs will be completed in roughly 30 days.
To create a more efficient IT, we must develop a more compact, less hierarchical organizational structure, reduce process and operational overhead, and selectively reduce jobs in some skill areas. Identifying specific actions in this area will take 60 to 90 days to complete.
Redeployment will be necessary
Taking these steps will require the redeployment of some IT personnel. Redeployment, or the effort to move employees to areas of greater return when there is a change in business conditions, is a standard practice that allows Intel to remain competitive and increases opportunities for employees. We anticipate some redeployment will begin before the end of this quarter and all redeployment will be started by the end of Q3.
I know this is a difficult time and redeployments are not always easy. And I know these actions are absolutely necessary to improve our competitiveness and effectiveness as an organization. You will hear more at the coming business update meetings (BUMs). I urge everyone to attend.
If you were unable to watch Paul's live Webcast, replays are available at the Webcast Exec Connect Events Site.
Thank you,
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AMD's response will be a chip known currently as K8L. Whether it will launch on AM2 or AM3 is anybody's guess, but it will supposedly come out sometime in 2007. Intel will have at least 5-6 months with the performance crown since AMD can't beat Conroe with their current K8 processors on s939 or AM2.
The question is: can Intel retain the performance crown once they gain it? The last time Intel was the top dog performance-wise was back when the Pentium IV 3.2C was their flagship desktop part. That lasted until K8 hit the streets.