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Intel Reorg Pushes Veteran Gelsinger to EMC

Intel (NASDAQ: INTC) today announced a corporate reorganization that sees the company returning to an old structure it had previously broken up, and in the process has one of its most well-known executives leaving the firm.

Pat Gelsinger, senior vice president of the Digital Enterprise group, the first CTO of Intel and founder of the Intel Developer Forum, which takes place next week, will leave the company after 30 years to become president and chief operating officer at EMC (NYSE: EMC).

Gelsinger, 48, was left without a position after Intel combined his group with the Mobility group with the new title of Intel Architecture Group (IAG), which will be co-managed by Sean Maloney, executive vice president of sales and marketing, and David "Dadi" Perlmutter, who headed the mobility group.

The other part of the reorg involves putting Andy Bryant, former CFO and now executive vice president and chief administrative officer, in charge of the Technology and Manufacturing Group (TMG).

Normally that group is run by people with advanced degrees in science and technology, but Intel has been focused on operational efficiency lately, in which Bryant has played a major role for some time, according to an Intel spokesman.

Also departing Intel today is Bruce Sewall, the firm's chief counsel. An Intel spokesman said Sewell is pursuing an opportunity at another company, and when that company is ready, the news will be formally announced.

Stunning loss

But it was the departure of Gelsinger, so readily identified with Intel and a company loyalist, that was the shocking news. Analysts feel that there was only one reason for him to leave: the CEO's position that he wanted wasn't coming his way.

"It must have been clear to him that with the reorg at Intel, the likelihood he would get to the top of Intel had significantly dropped," Nathan Brookwood, research fellow with Insight 64, told InternetNews.com. "Every time you have an organizational change like this at Intel, you see a couple of people departing."

It mirrors a recent change at Intel's arch-rival AMD (NYSE: AMD), where a reorg left Randy Allen, a top executive and one of the most loyal company men, on the outside. Allen is reportedly enjoying a lengthy time off before deciding his next move, and already has had job offers.

The two executives may have been from rival firms, but they had a lot in common: total dedication to their companies; were very well liked by analysts, the press and in the industry; and both had stellar reputations.

"It's strange. We've seen two of the ultimate company guys and two of the industry's biggest Boy Scouts depart under strategic reorg circumstances, and you gotta wonder, what were these companies thinking? It is kind of ironic," noted Jim McGregor, chief technology strategist with In-Stat.

McGregor felt Gelsinger's fate was decided a while ago when he took over the Digital Enterprise group. "Everyone expected him at one time of being the heir to the throne, but only to being pushed to one side as a group manager. Quite honestly, I think in many respects they are losing the best spokesman in the company, hands down," he said.

Brookwood agreed, and couldn't get over the timing. IDF is Gelsinger's creation. Now he won't be there. Maloney will speak in his slot, right after CEO Paul Otellini opens the show on Sept. 22. "IDF won't be the same. He could have at least waited a few weeks and done this at IDF or the week after, so there would be some swan songs," he said.

In announcing the appointment of Gelsinger, EMC also announced that Howard Elias was promoted to president and chief operating officer for information infrastructure and cloud services, and that Joe Tucci, chairman and CEO, had signed on to run the company through 2012.

At that point, both Brookwood and McGregor felt Gelsinger becomes a very likely candidate to take over the helm of EMC.

The impact on Intel

The impact on Intel has been somewhat overshadowed by Gelsinger's departure. Insight 64's Brookwood said parts of this reorg make a lot of sense, and parts leave him confused. "The one that made the most sense was combining Mobility and Digital Enterprise, although it wasn't that long ago that they had an Architecture group that they split up," he said.

This reorg is in many ways back to the future for Intel. "They split up IAG five years ago, now they are bringing it back together. They had kind of started to eliminate two in a box [two managers heading a group], they got rid of that, went to one in a box, now they are back to two in a box with Sean and Dadi," said Brookwood.

In-Stat's McGregor said he's not surprised. "They got to the whole point where their whole product strategy is run off a single core. It's just a matter of how you mix and match and pin outs and bonding and what. I think keeping them separate was more of a challenge," he said.

Gelsinger was not available for an interview by press time.