Pat Gelsinger’s Tech Background Key To Intel’s Rebound: Partners

Intel partners tell CRN they are optimistic about how Pat Gelsinger’s deep experience in software and hardware could help Intel fight against competitors like AMD. ‘I think every successful Intel CEO has been an engineer,’ one says.

Erik Stromquist has been a longtime loyalist to Intel, but even as the leader of a Chromebook provider that largely sells Intel-based products and as a member of Intel’s channel board of advisers, he knows the past few years have been tough for the chipmaker and good for its competitors.

But Stromquist and several other Intel partners now have a renewed sense of optimism for the chipmaker’s future after Intel named VMware CEO Pat Gelsinger — the architect of Intel’s game-changing 80486 processor — as its next chief executive. The Santa Clara, Calif.-based company said Wednesday that Gelsinger will become CEO and join Intel’s board of directors on Feb. 15.

[Related: 7 Big Things To Know About Intel’s New CEO, Pat Gelsinger]

“I think Intel needs to roll up their sleeves, and they need to fight. And if that’s the guy that’s going to do that, then that’s exactly what they need,” Stromquist, president of Portland, Ore.-based CTL, told CRN. “They need some of that old-school Intel.”

Stromquist and several other partners who spoke to CRN said they are not surprised Intel’s board decided to part ways with current CEO Bob Swan after only two years, given Intel’s manufacturing issues that have resulted in multiple product delays, the market share Intel has lost to AMD, Nvidia’s ascendance in the AI market and the rise of alternative architectures like Arm.

Swan, a finance professional who has no technical background, was a relative outsider when he was named CEO of Intel in January 2019 following several months of leading the company on an interim basis. Prior to that, he was the company’s CFO and had only been with the company since 2016, having joined after previously spending one year at an investment firm and over nine years as CFO of eBay.

For some Intel partners, while Swan has improved the company’s financial position and was credited by Intel for “re-energizing the company’s culture,” he may have not been the best fit to make complicated decisions for products that are deeply technical.

“I think every successful Intel CEO has been an engineer,” said Randy Copeland, CEO of Velocity Micro, a Richmond, Va.-based PC system builder for the enthusiast and commercial markets. “When they started getting away from engineers at the helm, that’s when they started to swerve.”

What Pat Gelsinger Can Bring To Intel

Intel’s deeply technical product portfolio is why many partners believe Gelsinger — who has an associate’s degree, bachelor’s degree and master’s degree in electrical engineering and who served as Intel’s first ever chief technology officer — is a great fit for the company’s next chapter.

Wallace Santos, CEO of Maingear, a Kenilworth, N.J.-based PC system builder for the enthusiast market, pointed to AMD CEO Lisa Su and Nvidia CEO Jensen Huang and how their technical backgrounds have impacted their respective companies’ product strategies and long-term plans.

“I think that’s where Pat’s going to shine,” he said. “I think he’s going to look at the architectural lineup and say, ‘Here’s where we can make adjustments. Here’s what we can do to keep the future bright.’”

With Intel in the process of potentially outsourcing more chip production to external foundries, Santos said an engineer like Gelsinger could be more willing to sacrifice short-term profitability to make a decision on manufacturing that would benefit the company’s products in the long term. The chipmaker is exploring its options due to issues identified last year with its next-generation 7-nanometer silicon process, which Intel said on Wednesday has improved.

“Putting all the pride aside and being able to recognize where you stand and say, ‘hey, you know what, this makes more sense architecturally for the firm in the in the long term,’ only an engineer can make those moves,” Santos said. “Because if you talk to a person that doesn’t understand that and they make a decision based on financials alone, they’re probably going to make their own decisions.”

Copeland, of Velocity Micro, said Gelsinger may need to make even more difficult decisions and consider scrapping existing product plans in order to become more competitive against AMD, which recently claimed that it has surpassed Intel in the key metric of single-threaded performance for CPUs.

“I think they’re still burdened by designs that are on the drawing board that may be uncompetitive, and I hope they don’t continue with those,” he said. “I hope they ball up a few pieces of paper and seek out the designs down the road that are going to be more competitive. That’s what [AMD CEO] Lisa Su did.”

But Gelsinger won’t be alone in making those decisions.

A principal architect at a solution provider company that works with Intel said Gelsinger will know to surround himself with trusted advisers so that he can focus on the bigger picture.

“He’s proven that he can get stuff done. Look what he’s done with VMware,” said the architect, who asked to not be identified because he wasn’t authorized to speak on the matter.

Kent Tibbils, vice president of marketing at ASI, a Fremont, Calif.-based distributor, said he’s excited about Intel being led by someone who has deep experience in both hardware and software. Intel already has a large software organization of 15,000 people, and the company has been making bigger investments in hardware-software integration, most notably with the recent launch of oneAPI.

But Gelsinger has also made tighter hardware-software integration a higher priority as VMware’s CEO, most notably with Project Monterey, which is focused on driving next-generation data center architecture using SmartNIC technology from Intel, Nvidia and other companies.

“Given where Intel’s moving on the server side and the data-centric side, I think his background in those two areas are really, really good for the company,” Tibbils said.

Dan Young, CEO of Xidax, a Salt Lake City, Utah-based PC system builder for the enthusiast market, likened Intel hiring a software-minded executive like Gelsinger to Microsoft’s hiring of Satya Nadella, who he credited with transforming Microsoft into a software subscription company and for forging a tighter relationship with Apple for its Office products.

“I think this guy may be able to make Intel products more emotionally connected to endpoint consumers,” Young said. “With software, you really have to do that. You got to sell it as a solution instead of just specifications, so I think that’s refreshing.”

The Challenges Ahead For Gelsinger

While Intel partners agree that Gelsinger has what it takes to lead Intel, they said he has plenty of challenges ahead, and it’s not just limited to the company’s manufacturing issues.

“They have to do some radical, radical things here,” said Dominic Daninger, vice president of engineering at Nor-tech, a high-performance computing system integrator.

He said he is skeptical if Intel’s upcoming Ice Lake server processors, the latest in the Xeon Scalable lineup, could make a big enough dent in AMD’s growing influence in the data center.

“Ice Lake looks like it’s going to be a nice increment in performance and that kind of thing, but it does not appear to be anything that’s going to blow AMD out of the water,” Daninger said.

The chipmaker also faces tough competition in the AI market from Nvidia, which increasingly sees itself as a “data center-scale computing” company with its own servers and reference architecture. Intel is currently making multiple pushes in AI, including with its $2 billion Habana Labs acquisition from 2019, but Daninger said Nvidia is much further along at this point.

“I don’t really think that they’ve got nearly as strong a play as somebody like Nvidia does at this point,” he said.

An executive at a system integrator that sells servers and PCs said Intel has suffered from a “focus problem” in recent years and that Gelsinger will have to inherit questionable decisions the company has made in divesting certain products and businesses.

As an example, the executive pointed to Intel’s decision to get rid of its Omni-Path Interconnect technology last year as Nvidia paid $7 billion to acquire Omni-Path’s only competition, Mellanox Technologies, so that the GPU maker could own more of the network side in data centers.

“[Intel] needs to increase their focus on the network and become stronger to compete against Nvidia-Mellanox,” he said.

While Intel decided to spin off Omni-Path Interconnect into an independent company, the chipmaker has continued investing in other areas of the network, including SmartNICs.

But the challenge is not only in investing in the right products. It’s also about positioning those products in a way that will allow them to resonate the most with customers, partners said.

“Intel has cut back to be so thin in their marketing that they’ve allowed themselves to become a commodity,” said Copeland, of Velocity Micro. “They’ve opened the door back to AMD, from a messaging standpoint.”

Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 96 on the 2020 CRN Solution Provider 500, agreed that marketing needs to become a bigger focus.

“I think Pat needs to get Intel more focused on ingenuity versus speeds and feeds,” he said. “Pat needs to look at a result oriented, value outcome versus product enhancement outcomes. He needs to look at what it means today to align with Intel. With VMware, it was very clear the ingenuity and innovation they brought to the market, especially in the midst of the pandemic and work at home. He needs to bring that same directional mindset to Intel.”

Venero said he would also like to see Gelsinger step up Intel’s partner engagement.

“As a 25-year technology veteran, I am looking forward to letting him know about the challenges and struggles partners have had with Intel over the last several years,” he said.

That means a whole lot of work for Gelsinger when he becomes CEO and joins Intel’s board of directors on Feb. 15, but partners said Intel can still make a comeback, just as it has before.

“Over the long term, I would not bet against Intel,” Stromquist, of CTL, said. “I’ve seen their ups and downs. I’ve seen some of their big downs, and then I’ve seen them rally and fight. I’ve been waiting for them to do this, because we do hitch our wagons to Intel. So I think this is a positive change, and we’ll see what happens.”

Steve Burke contributed to this story.