Report: Intel Approached Top-Level HP Executive As Potential Successor To Otellini

Intel earlier this month offered a top HP executive a high-level management position at Intel, despite the chipmaker’s tendency to promote from within, The Wall Street Journal reported on Monday.

<a target="_blank" sb10001424052748703292304576212752076672480.html"="" article=""""> Intel reportedly pursued Todd Bradley, executive vice president of HP's Personal Systems Group, who eventually decided to remain at HP. Bradley was often mentioned as a possible candidate to replace Mark Hurd as CEO at HP. Instead the CEO post went to Leo Apotheker, an HP outsider and former CEO of software firm SAP AG, who now faces the task of retaining those executives who were in the running for HP’s chief executive position.

Intel potentially faces a similar situation as it considers bringing in executive talent from outside in order to broaden the company’s portfolio and prepare for CEO Paul Otellini’s expected retirement at age 65. Otellini -- who came up through the ranks at Intel himself -- is 60 years old.

Todd Swank, vice president of marketing at Northern Computer Technologies, a Burnsville, Minn.-based system builder and Intel partner, said Intel’s interest in executives outside the company makes sense given industry trends toward mobile over on-site computing and migration to the cloud. ’It makes sense to me that they’re looking for new blood, because it looks like the landscape is changing so rapidly,’ he said. ’It wouldn’t hurt for them to get some new opinions from outside.’

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According to the report, Intel is under pressure from investors to show that it’s making progress in the hot smartphone and tablet markets, especially as rivals Nvidia and ARM work together to challenge Intel in the desktop and server markets. Bradley’s experience as former chief executive of Palm prior to joining HP in 2006 could be useful to Intel as it seeks, in turn, to challenge ARM in the mobile market.

However, according to Swank, an HP executive may not offer the greatest departure from Intel’s current thinking. ’HP is not that far of a stretch for Intel, since HP has obviously been a customer of Intel’s for a long-time and have shared Intel’s vision of the technology landscape for a long time,’ Swank said. ’They could have looked for someone from a completely different field, someone from a company that isn’t on the x86 architecture. But HP has had a lot of synergy with Intel in its marketing and product roadmaps.’

Next: Intel Partners On Otellini’s Succession

Nor has Intel done anything besides courting Bradley to indicate that a leadership overhaul is coming. ’Intel is not letting anyone go; it’s not a big shakeup or anything,’ Swank said. ’They’re adding to their resources. It’s a smart move for Intel. You wonder how HP feels about Intel trying to pick off its executives though.’

Jon Layish, president of Red Barn Technology Group in Binghamton, N.Y., also said courting executives from a different company might not help their relationship, but it is likely to help Intel. ’It can be taken as a bit of bad manners,’ he said. ’But as far as one having significantly more insight then another, I can’t imagine someone from HP has a tremendous amount of insight over Intel. I don’t know if they have spoken to other executives from other companies, but it’s not uncommon to bring in other kinds of talent. That’s why grad schools often don’t accept their own undergraduates. Bringing in people from outside is healthy.’

Despite the possibility that even unconfirmed reports of Intel pursuing HP’s executives can influence industry and investor perception, a system builder who requested anonymity told CRN it won’t affect the two companies’ long-standing relationship. ’HP is a lot more diversified than Intel,’ the system builder said. ’Intel has mostly been a hardware manufacturing company, they are not known for providing services or offering total solutions. Bringing in a new face will lead Intel toward more diversification and new markets to help grow the company. I don’t think it would hurt their relationship with HP.’

On the other hand, for a company that is known for promoting within to suddenly turn to someone from outside could cause some tension, according to Swank. ’If their looking outside for a successor to Otellini, that’s going to ruffle some feathers, ’he said. ’At that level, I’m sure there’s a pecking order for whose next in line. If it’s out that people outside the company are being considered, then people in the company who believe themselves or their colleagues to be next in line all of a sudden start asking questions like ’why am I not next in line.’ But that’s business. We all have to deal with those issues.’

According to The Wall Street Journal, an Intel spokeswoman declined to comment about Tom Bradley and said it is premature to discuss Otellini’s succession, given his age. However, the report goes on to note that Intel usually appoints a chief operating officer in advance in order to eventually succeed the CEO, as was the case with Otellini himself between January 2002 and May 2005.

Next: Change And Continuity At Intel ’Typically, if you look at Intel’s executive history, all the CEOs have come from within,’ said the system builder who requested anonymity. ’Intel is looking for some fresh ideas to expand and grow their business from someone who can think outside of the box. If they’re constantly promoting people they may not be able to look outside the industry.’

Andrew Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based system builder, said it’s unlikely for a company that has not typically hired from outside to make an exception and bring someone in, ultimately, for its top position. ’This is a bit unusual for Intel,’ Kretzer said. ’They had always adhered to that ’two in a box’ relationship model. I’d be awfully surprised if they pulled from outside of the company for this position.’

Nevertheless, the system builder added, the tendency toward internal promotions has yielded good results for Intel to this point. ’I would not say that it’s been a problem for Intel so far,’ the system builder said. ’Otellini has done a good job leading Intel and diversifying its business by, for example, buying a lot of ISVs in addition to hardware solutions.’

Layish agreed, touting Intel’s willingness to communicate necessary information to its customer base. ’For a very large company, Intel is phenomenally in touch with customers and being receptive to what they have to say,’ Layish said. ’Being 'Chip-zilla' they can take a ’buy our chips or don’t’ attitude, but they treat their customers very well.’

The system builder said Intel’s efforts at diversification include an upcoming major launch on the server side in Q4 of this year that may include Sandy Bridge-based server platforms. ’I don’t think they would bring in an outsider in time for that though. Paul’s not leaving anytime soon,’ the system builder said. ’Still, it’s better to groom someone early enough. If they come in at the last minute, they could be caught off-guard as to what is happening at the company.’

Intel has seen its share of change at the top in the last few years. In September 20009, longtime executive Pat Gelsinger left Intel for storage vendor EMC as Intel underwent a major reorganization of its executive structure. The company divided its business into three organizations: the newly formed Intel Architecture Group, which is responsible for Intel's component business; Intel Technology and Manufacturing Group, which is responsible for global manufacturing; and the Intel Sales and Marketing Group.

The reorganization also involved promoting Sean Maloney to vice president and general manager of the Intel Architecture Group. According to The Wall Street Journal, analysts saw Mahoney as a likely successor to Otellini. Then last year Maloney suffered a stroke and took a medical leave of absence from the company. According to the report, Maloney remains in the running for the CEO position, although Intel has not yet begun the search for its next CEO.