To: Paul Otellini, CEO, Intel

From: Mark Anderson, CEO, Strategic News Service

Dear Paul,

As the first non-engineering guy to run Intel, I know the spotlight has been just a little brighter on you (internally) than it might have been for someone else. And I won't say I envy this scrutiny, or the job behind it, which has seemed to become much tougher lately.

Most real outsiders probably think you have a cakewalk here: Running an essential monopoly, defending the realm, working with one of the world's top brands -- how hard can it be? Of course, you're facing just the opposite: Every new day is full of tigers and pitfalls, as many internal as await outside.

As you know, I was among the first to pick you for CEO at Intel, awarding you a "Brass Ring" award years before you became COO. At the time, it looked like you had turned lemons into lemonade by switching the marketing from ever-increasing horsepower numbers for microprocessors to branding and marketing whole chipsets (the "Centrino"). This let Intel lock in extra chips per sale, further locking out competitors from being able to match the offering, and taking the heat off (pun intended) the engineers while you were being told that heat would limit how fast new clock speeds could grow. (See "The Next Intel").

But that was then.

AMD came along, shipping the first 64-bit chips (wow, that never should have happened!), putting caching more intimately into the microprocessor design, and generally beating you on the engineering side. Then, to add insult to injury, they released the first true multicore microprocessors.

For awhile, their chips were better on all metrics: Power use, pricing, speed, technology. Where, exactly, was Intel during that year or two? Did the whole company take a yearlong cruise studying the value of medicinal marijuana?

For me, this situation underlined the risk of putting an MBA in charge, vs. an engineer; it was exactly the kind of scenario one would predict. To your credit, the company has since come around in typical Intel fashion, and you've replied to each of these technical challenges with stronger products (who, other than the FCC, says competition isn't good?).

So, while I think you've done a good job of recovering in your core market, there are some other issues that are worrying.

First is Intel's culture. It is one of those key CEO issues that are almost never addressed, but which are the greatest contributors to successful company outcomes. As Bill Gates proved so well in the past: There is paranoid, and then there is Illegal Paranoid -- the attitude that gets you into court. And, as George Hubman, co-founder of WRQ, once told me, "There is no such thing as corporate culture. All there is, is the personality of the CEO."

Intel's job, your job, is to out-compete others in your business. While doing this can make you a winner, how you do it can make you a loser at the same time. In the last few years, Intel has faced (or is still facing) antitrust charges brought by the EU, New York State, Japan, South Korea, and AMD. The Japanese have raided your offices in Tokyo, the EU has raided your offices in Munich, and it looks like the EU may be preparing additional complaints.