Question: Is it a sign of desperation or outside-the-box thinking when Brian Krzanich, CEO of Intel, appears onstage at a semiconductor developer’s conference with Mark Burnett, the world’s greatest reality-television impresario?
To be generous, let’s go with the latter. Krzanich invited Burnett to the gathering of technologists who build products that use Intel’s chips to promote a new Intel-sponsored TV show about so-called makers. These are tinkerers who are using new, low-cost technologies like 3D printing to make all sorts of things that used to be the exclusive domain of industrial-grade manufacturers. The maker movement is both a personal passion for Krzanich, still relatively new in the job, as well as an opportunity for his company. Intel (INTC) needs to find new markets for its chips, seeing as the industry it dominates—PCs—is dwindling and because Intel so badly missed the last big market, smartphones. (Jonathan Vanian provides an astute overview of the event, “Five crazy devices showcased at Intel’s developer conference.”)
Here’s what Intel has in its favor: a fortress balance sheet, world-class manufacturing, and, as Stacey Higginbotham cuttingly observes, savvy marketing. Perhaps Intel’s biggest problem is that it’s a victim of its own success. Microprocessors for PCs are a high-ticket item, and Intel got so good at making and marketing them that it reaped high margins for years. Chips for connected devices, including those that are embedded in so-called wearables like fitness trackers and smart watches, tend to fetch lower prices. Worse, these markets are nascent and therefore highly fragmented. They are an opportunity for Intel, but by definition, also for the oodles of competitors too.
The reality is that Intel needs a massive hit in a new market for chips. A hit reality TV show won’t be good enough.