Intel’s Software Inside Is on the Rise

The Krzanich appointment represents Intel’s continued focus on making chips smaller, cheaper and, now, less power-hungry — the company’s traditional secret sauce. Like outgoing CEO Paul Otellini, Krzanich, 52, served as chief operating officer and previously held several manufacturing positions across the company since he joined Intel in 1989. Historically, Intel moves CEOs out when they turn 60 suggesting that there will be another eight years before another successor takes over.

Of the four that were elevated last November, “only James represents something strikingly new for Intel. In a company traditionally dominated by old, balding white engineers, James has been the face of Intel’s software business since joining the company via its acquisition of Bell Technologies in 1988, “ observes Hachman, a former west coast editor at PC Magazine. James, who holds a business degree from the University of Oregon, also served as chief of staff for former chief executive Andy Grove, giving her the stamp of legitimacy. James even carries a red pen — a notorious Grove trademark — as a reminder of her roots.

“James was instrumental in three major acquisitions: Intel’s 2007 acquisition of physics middleware developer Havok for an undisclosed amount, the 2009 acquisition of embedded software company Wind River for about $884 million; and Intel’s $7.68 billion purchase of security giant McAfee in 2011. Intel contributes to the Linux kernel, developed its own Hadoop implementation, co-developed the Tizen mobile OS with Samsung, and writes its own software compilers for its microprocessors,” according to Hachman.

For a company that owns over 80 percent of both the PC microprocessor market, about as much in the server market, and is busy trying to make inroads into phones, tablets, and low-power convertible Windows tablets, it may sound strange that software would loom so prominently, but other observers readily anticipate the time when a future Intel CEO could have extensive software experience. About 70 percent of a smartphone’s research and development costs now derive from software.

Creating one’s own software and fabricating one’s own chips allows a company to optimize its combined performance in ways that other manufacturers can’t match. In a business sense, selling the software and silicon together also allows customers to save money and simplify their own development efforts.

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