Paul S Otellini

Chief executive whose gentle manner helped Intel’s growth

Paul S Otellini, who as chief executive expanded Intel’s already commanding chipmaking business but failed to build a company franchise in mobile phones, died on Monday at home in Sonoma County, California. He was 66.

The company, based in Santa Clara, California, said he died in his sleep but did not specify a cause.

Otellini led Intel from 2005 to 2013 and was the first leader of that Silicon Valley giant who was not trained as an engineer. He rose mainly through Intel’s sales and marketing ranks after joining the company in 1974, but he held other positions as well, including chief of staff for Andrew S Grove, the longtime chairman and chief executive who was credited with turning Intel into the dominant supplier of microprocessor chips for personal computers. Grove died in 2016.

Where Grove and his immediate predecessor, Craig R. Barrett, were tough taskmasters, Otellini was known for a softer, more personable touch. “He solved problems without yelling like some of his predecessors,” Barrett said. “Probably the best decision I made as CEO was to recommend him as my replacement.”

Through the 1980s and ‘90s, Intel solidified its position in personal computers as advances in manufacturing produced chips that ran software faster. But Otellini faced a series of challenges when he became chief executive in May 2005. At the time, Intel’s chips consumed too much power and generated too much heat. Rival Advanced Micro Devices (AMD) had introduced attractive processors that grabbed a sizable chunk of the market. AMD followed up with an antitrust lawsuit against Intel that prompted government investigations in the US, Japan, South Korea and Europe.

Otellini battled back by listening to customers, former colleagues said. That approach was recognised when he received an onstage hug in June 2005 from Steve Jobs, then Apple’s chief executive, who had agreed to switch to Intel technology for the company’s popular Macintosh computer line. Otellini pushed Intel to develop more energy-efficient chips, fueling a trend in which laptop computers were beginning to supplant desktop models. In the case of winning Apple’s Mac business, Otellini also agreed to offer very low prices.

“He was willing to take an upfront hit to forge a partnership,” Andy Bryant, Intel’s chairman, said.

But Otellini later admitted to making a major miscue in the mobile market. Those devices were mainly built using chip technology developed by ARM Holdings, which drew much less power than PC chips and was licensed to multiple manufacturers that competed on price and features.

Intel for a time built ARM chips, too, but that business was unprofitable. Otellini dropped it, opting to court phonemakers with Intel’s mainstay x86 chip design.

Intel was still in the running as a supplier when Apple was developing the first iphone, which was introduced in 2007, ushering in what would become a giant market for smartphones. Otellini underestimated the iphone’s sales potential and viewed Apple’s price demands as onerous.

“We ended up not winning it or passing on it, depending on how you want to view it,” Otellini said in a 2013 interview with The Atlantic magazine. “The world would have been a lot different if we’d done it.”

Though Intel missed the smartphone boom, it won over internet companies like Google and Facebook on the way to grabbing nearly all of the market for chips used in data centres. In all, Intel estimated, the company’s annual revenue rose to $53 billion from $34bn under Otellini.

He also left a legacy as a peacemaker when Intel settled its court battles with regulators and AMD. “That was driven by Otellini more than anyone else,” said Hector Ruiz, a former AMD chief.

Paul Stevens Otellini, the son of Dave Otellini, a butcher, and his wife, Evelyn, was born in San Francisco on 12 October 1950. He received a bachelor’s degree in economics from the University of San Francisco and an MBA from the University of California, Berkeley.

He is survived by second wife Sandy Otellini, son Patrick and daughter Alexis.