New No. 2 is key to Intel's succession
The appointment of Renée James as president demonstrates the board's commitment to a new strategy to help take Intel chips into new devices.
Intel (INTC) is going to some pains to make it appear the appointment of Brian Krzanich as chief executive is an orderly succession.
While Krzanich is being given the keys to the car, he's not sitting in the front seat all alone. There's a president next to him. The two share an "executive office," giving this president extraordinary power.
Those who have commented on this note that said the president, Renée James, is a female person.
That's not the story.
The story is that Renée James is a software person. She's not even an engineer. She's a business major from the University of Oregon. Making such a person CEO might cause engineers to storm the castle. Making her president is just an evolution. An Intel lifer, old "BK," is still in charge.
Still, putting a software person on top of Intel is a bit like making an engineer chief executive of Avon Products (AVP) or hiring a journalist to run, well, anything. It's unusual. There has to be a story here.
In the case of Renée James, the story is that she has been running the company's software units -- including the embedded software outfit Wind River Systems -- and that she ran a group that tried to build Intel-run data centers a decade before the cloud was a thing.
If the latter plan were to be resurrected, it would put Intel into direct competition with OEMs, including Dell (DELL) and Hewlett-Packard (HPQ), which are staking their futures on managing hybrid clouds. Or it could make Intel more like First Solar (FSLR), which has regained its footing by building, managing and selling-on large solar energy plants to utility companies.
A gold jumpsuit
In addition to all this, of course, James was also once a personal assistant to legendary CEO Andy Grove, making him appear a more knowledgeable user of technology than he actually was. The early Intel CEOs were like TV engineers who never watched "I Love Lucy," the most innovative show of its day.
It does makes me wonder -- did she get Grove into that gold cleanroom jumpsuit I saw him dance in during the 1997 E3 show in Atlanta? It would prove she can convince anyone of anything, and that's what Intel needs right now.
The elephant in the room here is Apple (AAPL), now the world's biggest buyer of CPUs, and a longtime customer of Samsung and Qualcomm (QCOM). Intel's future now depends on getting deeper into Apple's pockets. Apple has gotten so big that newspapers like The Guardian have speculated it could just buy out Intel.
That's not going to happen. But two things are needed to get the Apple account -- an ability to negotiate deals and a willingness to talk software. Krzanich may run a great factory, but he lacks both of those skills. James has them.
A hardware-software split
I heard Jim Cramer on the TV recently saying that Intel made a huge mistake in buying McAfee, the security software outfit James now runs, and not buying ARM Holdings (ARMH), whose low-power chip designs are now licensed to a host of Intel's fabless competitors, including Apple and Samsung.
I doubt James even now has the power to do an ARM deal, but given how few companies there are now that run their own CPU fabs -- there are four -- chances are Intel has already produced ARM designs for someone, and could easily do it for someone else.
If, that is, Apple were given the same autonomy in design that Samsung gives it, along with the full software resources of a company Intel's size.
I've written before that Intel should be broken up, along hardware-software lines. Functionally, this succession does that. The question is whether James can take advantage of it, managing Krzanich, managing this change, managing Apple and transforming Intel from a PC chip company selling to OEMs into a provider of chip-based solutions to customers' problems.
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