21st: Let's Get This Straight: Media genuflect before Intel's royal-succession pageant

Let's Get This Straight: By Scott Rosenberg. Media genuflect before Intel's royal-succession pageant as Andrew Grove steps down.

By Scott Rosenberg

Published March 31, 1998 8:00PM (EST)

No one could claim real surprise at last week's announcement that Intel CEO Andy Grove would step down in favor of his No. 2 man and heir-apparent, Craig Barrett. This was no boardroom upset; Intel has always groomed its line of succession with the kind of rigorous long-range planning typically found only at places like Windsor Castle or the Vatican.

Now the kingdom of the "bunny people" -- those space-suit-clad folks furloughed from Intel's chip-fabrication plants just long enough to appear in vapid TV commercials -- has a new ruler. And according to most of the press, there's rejoicing in the land. Intel and its profits lie at the center of the PC industry; Intel's leadership remains stable; everyone can breathe easy.

To be sure, Grove has plenty of laurels to rest on: He presided over an insanely fast and lucrative growth curve at Intel, whose profits last year approached $7 billion on $25 billion revenue. He made the cover of Time last December as the magazine's "Man of the Year." The title of his popular management manual -- "Only the Paranoid Survive" -- became a Silicon Valley buzz phrase.

As usual in such valedictory circumstances, the coverage of Grove's rein-relinquishing (he'll remain on board as Intel's chairman) focused on the man's positive achievements and downplayed tales of his brusque, confrontational style. Most stories reported Grove's prediction that the world will soon harbor over a billion computers -- and his plan to spend more time on strategic research, hunting down new stuff for all those boxes to do.

Pay close attention to the news stories, though, and you'll find an undercurrent of unease about Intel's recent performance. "Intel is facing a fresh set of challenges," wrote Steve Lohr in the New York Times. The Washington Post's Elizabeth Corcoran noted that "recently, Intel has been jarred by competition." It's an "unsettling time for Intel," according to Reuters' Kourosh Karimkhany.

Intel does face a number of problems today, including a looming Federal Trade Commission investigation of its dominance of the chip market and a difficult transition from the current generation of Pentium II processors to the new 64-bit Merced chip. But the deepest of Intel's troubles stems from its recent misstep in shunning the low-end, sub-$1,000 PC -- just as that market got hot.

The chip manufacturer's strategy, forged by Grove, had always depended on reaping enormous profits from the top-of-the-line chips that smaller competitors couldn't copy quickly enough. Intel, as Grove himself now admits, failed to foresee that computer buyers would throng to buy a new generation of ultra-cheap PCs -- computers that might not break processor-speed records but that accomplished pretty much everything the average user might ask of them. Now the company is scrambling to regain its footing in this high-volume market -- which it understands it must participate in, despite its slimmer profit margins.

Most publications buried their ritual references to this problem deep in their Grove lovefests. James Surowiecki's otherwise perceptive paean to Grove's management prowess in Slate failed even to mention this issue. "In a sense, it's hard to see what more Grove had to accomplish as CEO of Intel," Surowiecki wrote: "It's among the most productive, profitable and acclaimed companies in the world."

Readers of CNET's News.com didn't need any help to think of one more thing Grove might have accomplished: The Web site highlighted Intel's market troubles in neon. News.com editor Jai Singh's column pointed out that "Grove may have decided to hang up his boots because he failed to practice what he preached."

Singh borrows a page from Grove's management handbook -- the one that describes critical moments in an industry's development as "strategic inflection points." That bit of business-school jargon is defined as a big industry-wide change that individual companies must adapt to or face extinction. One past "strategic inflection point" that Grove and Intel took pride in riding out was the chip-market turmoil of the mid-1980s, when the company chose to abandon its original memory-chip market and light out for the processor-only territory that has since made it rich.

According to Singh, Grove and his team faced a similar "strategic inflection point" at the arrival of the low-end PC market -- and missed it. They tried to "wish these cheaper PCs away" instead of facing up to this change with the hard-headed, face-the-facts determination Grove has always espoused. Singh admits that "it might seem unthinkable" to view this mistake as "Intel's Achilles heel," but suggests that it "could logically be one reason" behind Grove's decision to step down.

Intel is far too tightly sealed a company for journalists outside to be able to confirm such speculation. And only the continuously surprising evolution of the computer market over the next couple years will tell whether Intel made a colossal blunder or just stumbled a bit.

But the coverage of the Grove story does offer one valuable sidelight on the technology-press landscape. News.com was hardest on Intel -- yet, as the site so often reminds readers when it refers to the corporation, Intel is an investor in News.com's parent company, CNET.

This, of course, is a sign that News.com has built a solid ethos of healthy journalistic independence. More broadly, it stands as a retort to those smug old-line media critics who have spread the word that online journalism is inherently inferior to the established worlds of print and broadcast reporting. The truth, of course, is that the value of any journalistic enterprise -- whatever the medium -- depends on the quality of its writers and editors and the newsroom culture they build.

News Web sites need to be wary of the impositions of investors and advertisers and sponsors -- just as newspapers do. (Ever wonder why big-city dailies never run articles about problems at department stores?) But the mere fact of publishing on the Web doesn't automatically make a news operation craven and submissive. The Grove story shows that a lot of print publications could take a lesson or two in sheer toughness from News.com.

Scott Rosenberg

Salon co-founder Scott Rosenberg is director of MediaBugs.org. He is the author of "Say Everything" and Dreaming in Code and blogs at Wordyard.com.

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