Intel's ex-chief Otellini laments missing the iPhone as new boss Krzanich looks to the future

Former Intel CEO Paul Otellini expressed regret that the silicon giant did not or was not able to get its chips inside Apple's (NASDAQ:AAPL) iPhone. The comments highlight Intel's current attempts to catch up in mobile--which Otellini's successor, Brian Krzanich, has pledged to do.

intel paul Otellini

Otellini

In an exit interview with The Atlantic Online, Otellini said he regretted not being in the iPhone. "We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it," Otellini said. "The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do... At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it. It wasn't one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought."

"The lesson I took away from that was, while we like to speak with data around here, so many times in my career I've ended up making decisions with my gut, and I should have followed my gut," Otellini said. "My gut told me to say yes."

Apple wound up going with chipset designs for the iPhone based on architecture form ARM Holdings, and has sold hundreds of millions of iPhones since 2007. Some analysts contend that Intel's x86-based chips at the time could not have fit or worked in the iPhone from a power management perspective. Samsung Electronics has made those chips for Apple for the past several iPhones, though there have been rumors that Intel and Apple have discussed the possibility of Apple moving its chip production efforts from Samsung to Intel.

During a number of exit interviews, Otellini reflected on his tenure at Intel, both the highlights and the missed opportunities. As the Atlantic report notes, during his tenure from 2005 until now, Intel racked up $66 billion in net income, compared with the $68 billion combined posted by Otellini's predecessors. Intel is still the largest chip company in the world, but its lack of presence in the mobile market, especially for application processors and System on a Chip (SoC) designs in smartphones and tablets, has left Intel--and Otellini--vulnerable to criticism from analysts and investors.

In mobile, Intel is trying to catch up to companies that use designs from ARM Holdings, including Qualcomm (NASDAQ:QCOM), Nvidia, Samsung Electronics, Broadcom and MediaTek. ZTE, Google's (NASDAQ:GOOG) Motorola Mobility, Lenovo and others have agreed to use Intel chips, but Intel still trails its peers in mobile design wins. Earlier this week introduced the ZTE unveiled the Android-powered Grand X2 smartphone with Intel's Atom Z2580 processor. ZTE said the gadget will be available in Europe in the third quarter "with both key operators and channel partners."

Otellini's successor, Krzanich, is an Intel veteran but has pledged to move faster in mobile. "We see that we've been a bit slow to move into that space," he said Thursday at the company's annual shareholder meeting, according to Bloomberg. "The base of assets that we have will allow us to grow in that area much faster moving forwards."

In addition to naming Krzanich as CEO, Intel's board named Renée James, Intel's software head, as president--the highest ranking job ever held by a woman at Intel, according to the Wall Street Journal. Her appointment is seen by many observers as an indication that Intel will place a much greater emphasis on software in the future. 

Earlier this month Intel took the wraps off its newest generation of Atom-based mobile processors, code-named Silvermont, and said the chips based on the new architecture will deliver three times more peak performance or the same performance while consuming around five times less power than its existing Atom chips. The chips are aimed at smartphones and tablets, and Intel said that silicon based on the design will be shipping to customers by the end of the year.

For more:
- see this Atlantic Online article
- see this CNET article
- see this Daring Fireball post
- see this Reuters article
- see this Bloomberg article

Related Articles:
Intel unveils new 'Silvermont' generation of mobile chips
New Intel CEO Krzanich promises renewed focus on mobile
Apple could ditch Samsung for Intel in chip production
Tizen generating early momentum among developers
Intel sees Tizen as mobile growth opportunity
Intel CEO Otellini to retire in May, with mobile chipsets still a source of weakness

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