Exclusive: Intel Reorganizes A Major Business


Chipmaker Intel had quite a year in 2011. Its revenue went up 24%, and its PC sales increased by 17% thanks to growth of the entire PC segment in China. It would have been hard to match that kind of year, and indeed, the company couldn't: its $11 billion in 2012 profit represents a 15% drop (though only a one-slot fall on this list). CEO Paul Otellini has attributed the down year to an overall crimp on the PC market; more people are using tablets instead of laptops, and more than half of Intel's profits normally come from PC chips. --D.R.
Photo: Justin Sullivan/Getty Images

Wind River’s status as a wholly-owned-but-sort-of-independent subsidiary of Intel will end next year when it will be fully integrated into the parent company. The news was not announced, but an Intel spokeswoman confirmed that a statement outlining the plan was sent to Wind River employees earlier this week.

Intel (INTC) bought Wind River, which focuses on embedded operating systems for small devices and other non-PC gadgets, for $884 million in 2009. These small, fast operating systems are critical for the Internet of things, an emerging market built on billions of connected devices from tiny wearables for monitoring fitness to massive industrial machines that collect huge troves of data.

Last week, Fortune reported exclusively that Wind River president Barry Mainz had quietly left Intel. Late Wednesday, Mainz was introduced as the new chief executive of MobileIron

The Intel spokeswoman said the incorporation of Wind River into the broader company is the next step in a logical process. The only other Intel acquisition that remained a subsidiary this long was McAfee, the computer security company that Intel bought for $6.59 billion in 2011, she noted.

MORE: Intel completes $16.7 billion acquisition of Altera.

The idea is to align Wind River, which will retain its branding and continue to support non-Intel processors, with other Intel groups to assure better collaboration, the spokeswoman maintained.

SIGN UP: Get Data Sheet, Fortune’s daily newsletter about the business of technology. And for more from Barb, follow her on Twitter @gigabarb; read her Fortune coverage at fortune.com/barb-darrow or subscribe via RSS feed.

But sources close to Wind River worry about layoffs and other ripple effects from this move. They tend to see it as a consolidation of efforts by Intel chief executive Brian Krzanich as he continues to push the company to be as big a force in the post-PC era as it has been in the past. That is a formidable task, and Intel’s success is not assured.

WATCH: Renee James is out as Intel president:

And, Intel’s track record of wringing the most out of past acquisitions has been spotty, something even the company’s top M&A executive, Wendell Brooks recently acknowledged to OregonLive. Brooks, who is corporate vice president of mergers and acquisitions, vowed that this will change with Intel’s latest (and biggest) purchase to date: Its just-completed $16.7 billion deal for Altera and its field programmable gate array expertise.

But meanwhile people will be watching what Intel does with Wind River as well.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

Read More

Artificial IntelligenceCryptocurrencyMetaverseCybersecurityTech Forward