Intel has stumbled. The stock price has declined 25% this year. The company has cancelled a succession of high-profile projects. The competition, Advanced Micro Device, has taken a lead or two in product development. For two decades the most formidable Silicon Valley company, Intel suddenly looks mortal.
No mystery here. Intel is caught in an age-old difficulty: making the transition from a technology-centric company to a consumer-centric one.
As long as the game was about faster chips, Intel was preeminent. The corporate culture was dedicated to very smart people making very fast chips. In the words of the New York Times, “Until recently, selling Intel chips was easy: faster was better.
But now the industry is becoming consumer centric. Everyone, IBM and HP, have taken a bead on the home and especially the living room. As Fred Zieber says, “There may be a tremendous global war for control of the living room. For its part, the NYT says, Intel now seeks to make “complete systems aimed at both computing and consumer electronics markets.
What a difference the consumer difference makes. When technology-centric, the corporation can turn in on itself. But when consumer-centric, the corporation must open up to who the consumer is, what the consumer needs and how the technology will be used. In the language of the Intel motto, its no longer “all inside.
To its credit, Intel understands the importance of the technology-consumer transition. In May, it will appoint its former head of marketing, Paul S. Otellini, as CEO. Dan Hutcheson, president of VLSI Research Inc., says, “As [Otellini] came into power, Intel tried to become a more aggressive marketing company. Otellini has called for a consumer orientation.
But its a tough transition and lots of charlatans who would be happy to help. I did a project for a company, one dominated by engineers, and I watched in astonishment as they had called in a corporate culture guru who was there to help make them more sensitive to the consumer. The gurus “idea was that these engineers needed to be more empathic, intuitive and feminine.
Oi! Why is it that marketing types keep insisting that the secret of consumer centricity is to move from the left brain to the right brain, from rationality to intuition, from pragmatism to dreaminess, from maleness to femaleness.
In fact, there is no important difference between the way marketers and engineers think. The best ones are identical. Both of them like to go to the edge of what we know and peer over. Both marketers and engineers are, to use the famous phrase of Levi-Strauss, “searching after that other message, the one not now implicit in the code.
Contrary to popular opinion, engineers may be more creative than marketers. They move from orthodoxy to creativity without a seconds thought. No need to urge these people to ‘think outside the box. They spend their lives there. Or, as my client said with, anxious disapproval of her engineering colleagues, “Every time I live the room, they start building a machine. Precisely, machines is how they think. I’ve also worked with HP engineers and they were Teflon, sliding between ideas with not a trace of effort or difficulty.
But, finally, there is a challenge for Intel here. To be consumer centric, they must add new rules of discovery. Its still necessary to make chips go faster. (Though, God knows, this should be enough. IBM is promising a chip called “Cell that performs 16 trillion mathematical operations a second. Yes, ‘trillion.) Its now necessary to find out what the consumer wants to do with this extraordinary processing power. The living room may be the new competitive objective, but it is also from an engineering point of view terra incognito.
What is happening in the living room cannot be coxed from a slide rule, or its latter day equivalent. It cannot be surmised from our own living room. It must be found out, and this means leaving the rationalities of the lab. Now its necessary to step off orthodoxy twice, once from technological edge AND again from the domestic edge. The first takes us into the realm of pure technical possibility. The second into the digital home the consumer is in the process of creating.
Forget left brain and right brain, rationality and intuition, engineers are plenty lateral enough. But they must now factor in the end user and this mean taking up residence in the consumers life, or at least the consumers neighborhood, or at least paddling by from time to time in the ethnographers dinghy.
This is another way of saying that rocket science just got a little more difficult. Consumer centricity requires of wedding of the engineers creativity with the consumers creativity. Not so very difficult, but it is something that requires a substantial change in the present rules of engagement.
Can Intel do it? If they can make itself a global leader in semiconductors and creates revenues of more than $30 billion a year, I guess the answer has to be yes. The only thing that can screw things up is the advice of a marketing consultant.
Bulkeley, William M. 2004. IBM to Unveil a Powerful Chip for Home-Entertainment Market. Wall Street Journal. November 29, 2004. (for Zieber quote)
Markoff, John. 2004. The Disco Ball of Failed Hopes and Other Tales From Inside Intel. New York Times, November 29, 2004. (all other quotes and details, gratefully acknowledged) here