Intel's James: We missed the iPhone's impact on the market

ASPEN, Colo.--Intel has been struggling get its mobility business back on track, but that turnaround isn't happening as quickly as many would like. In the second quarter of 2014, Intel's Mobile and Communications group, which houses its wireless chip business, had a total revenue of $51 million, down 67 percent from the previous quarter and down a whopping 83 percent year-over-year.

But when quizzed about how the company so dramatically missed the mark in mobility, Intel President Renee James was refreshingly candid. Speaking at the Fortune Brainstorm Tech conference here, James admitted that Intel grossly underestimated the impact the iPhone and other smartphones would have on the computing market. "We didn't anticipate that (these smartphone) devices would become general purpose computing devices," she said.

"We led in the first wave of mobile with Wi-Fi and Centrino," James said, referring to the company's Wi-Fi product line. But she said the company initially viewed the iPhone as part of the phone market, not the computer market. "Apple gave us the guiding light and we missed that … or were slow to it."

But James is confident that Intel's current strategy will help it turn around its mobility business. "This company has a culture of reinvention and we are in that phase," she said. Specifically, Intel wants to make its mark in the Internet of Things area, where it intends to bring better performance and capability to lower-power devices.

Indeed, Intel is making headway with its Internet of Things Group. In the second quarter, that group had revenues of $539 million, up 12 percent sequentially and up 24 percent year-over-year.

James also was bullish on the company's inroads in the tablet market, where Intel hopes to regain some lost ground. Intel aims to ship its chips inside 40 million tablets by the end of 2014, the vast majority of them running Android. If Intel hits that goal, the company will have about 15 to 20 percent market share in tablet chips. At the end of second quarter, the company said its chips were in 10 million tablets.

James was also very candid about her own career, noting that she failed significantly when she oversaw Intel's data center business, which was eventually shuttered by the company. James said that she thought this was a business they should be in and she wrote the business plan for it. Even though Intel devoted a large sum to building this business, James said the company didn't have the tools to pull it off. "Here's what I learned: Being right too soon is almost as bad as being wrong," she said about the experience.

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