Intel's new CEO is ready to embrace mobile

July 1, 2013: 10:04 AM ET

The growth in wearable computing could also be a new source of profits.

Brian Krzanich.

Brian Krzanich.

FORTUNE -- Intel was slow to enter the mobile market, but the chipmaker says it is now taking steps to speed up development of its Atom chip line for mobile devices. It's also rushing ahead to provide silicon (and services) to another potentially hot market: wearables, a new product category which includes connected glasses and watches.

The company's top executives, new CEO Brian Krzanich and president Renee James, met with reporters Friday morning in San Francisco to answer questions about their strategy to push Intel into mobile and up-and-coming markets like wearables. The duo, both long-time Intel (INTC) insiders, assumed their new positions about a month and a half ago, when former CEO Paul Otellini stepped down. (In other changes, on Thursday the company announced that CTO Justin Rattner is stepping down from his role because he has hit the company's mandatory retirement age.) Over the last few weeks, Krzanich has repositioned many of the company's main product groups under his supervision. He has also vowed to speed up development of Intel's Atom chips for smartphones and tablets.

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At Friday morning's event, Krzanich admitted that in the past, the company hadn't put enough focus on getting its chips optimized for mobile devices. "As companies get bigger and more and more successful, accepting these big changes gets harder," said Krzanich, adding that Intel may have thought it could slow the transition to mobile by pulling people back to PCs. "There was a basic fundamental flaw in that logic," said the CEO.

The PC market has been highly challenging, despite Intel's attempts to push ultrabooks -- a.k.a. super-thin laptops. While the Santa Clara-based company's chips still power the vast majority of PCs, that market is contracting. Meanwhile, Intel has less than 1% market share in tablets and smartphones.

Former CEO Otellini had also tried to pave the way to greater market share in mobile, hiring executives from Palm and Apple (AAPL) to steer the company's mobile efforts. But progress was slow. On Friday, Krzanich and James pointed out a few recent "wins" -- like Samsung's Galaxy Tab 3 tablet, which features an Intel processor. At the same time, companies like Qualcomm (QCOM), which licenses competing chip technology from ARM Holdings, still dominate the smartphone and tablet market and have had a huge head start. And while Intel's new leadership is trying to move faster, it seems to be sticking to the company's historic microprocessor design, x86.

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"There's an architectural advantage to x86 beyond compatibility," said James, referring to the fact that Intel chips work well with computers that run on the Microsoft (MSFT) Windows operating system and mainstream applications.

Intel's new leadership also talked about fresh opportunities in other areas. Krzanich said he thinks growth in the wearables market -- which includes connected devices like glasses, earpieces, and watches -- is going to be explosive. He also said he thinks Intel has a winning model for providing a whole "ecosystem" to support this new market, not just as the chip supplier. Krzanich, who owns a pair of Google's (GOOG) connected glasses, wouldn't elaborate on what exactly Intel is doing on this end, but hinted at a slew of supporting services. "I think it will take about two years to roll that plan out, but I think you'll see an explosion," said Krzanich. Unlike with mobile, it appears Intel is trying to get ahead of the game on this one.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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