Intel Makes Net Infrastructure Play

SAN MATEO (02/14/2000) - Every piece of infrastructure associated with the emerging digital economy is now a target market for Intel. From the chips that power systems to the networks that tie systems together and data centers running e-business applications, Intel Corp. plans to be a major supplier. In an interview with InfoWorld Editor in Chief Michael Vizard and Editor at Large Ephraim Schwartz, Intel CEO Craig Barrett talks about the breadth of Intel's ambitions in the new economy.

InfoWorld: What are the big agenda items for Intel in the coming year?

Barrett: We've got a ton of things to accomplish. A lot of new 32-bit processors are coming out. There will also be a 64-bit launch midyear with the IE [Internet Exchange] 64 processors. There's a lot of networking activity going on. We're really excited about the Internet Exchange and network processors in that whole space. In the communication space, we're excited about the DSP [digital signal processor] Communication acquisition and looking forward to building that business up. The Flash memory business is fairly strong right now, and we're looking at several more hosting facilities coming [on] stream in Japan, the U.K., and Virginia.

InfoWorld: In your mind, what ties these business segments together?

Barrett: We've recognized very simply that the last decade was pretty much the decade of the personal computer. It was the driving force of computing and the driving force for what we did. This is shaping up to be the decade for the Internet. Whatever it is, the Internet seems to be at the center of the action.

Our goal is to be at the center of the action.

InfoWorld: Does that mean the PC era is over?

Barrett: My favorite phrase is the post-PC era. The world's probably going to sell 18 or 20 percent more PCs this year than they sold last year. Last year they sold 18 percent more than the year before. Now we sell more PCs than television sets. But somehow, it's now the post-PC era. Our core business is still a very important part of the world, and we want to be successful at that.

But we also want to move with the center of gravity.

InfoWorld: How will new Internet segments manifest themselves?

Barrett: There are a number of pre-eminent building blocks that come in various forms. A great deal of our expertise happens to be building blocks in terms of integrated circuits -- I mean, they're processors in PCs, they're processors in handheld devices, and network processors in the networking and communication infrastructure. We're going to adopt the same model that we had in the PC space, which is [to] provide the building blocks to a bunch of OEMs. If there's a void or vacancy there, we may go in and try to build an end product in that space, just to move the technology forward. But by and large, we don't want to go out and compete with our customers in a space that they have established as their region of operation.

InfoWorld: How does Intel's efforts to become a hosting center for applications fit into that model?

Barrett: That's one of the opportunities to be at the center of the action. As the world migrates to the Internet to conduct business, not everybody in the world is going to put their own server farms up and want to worry about that.

This is an opportunity for Intel to be involved in a new business endeavor that is consistent with the world's goal.

InfoWorld: Building processors is one thing; running a data center is another.

Why does Intel have a core competency in this space?

Barrett: We can make logical arguments that, first of all, we're a big player on the Internet ourselves. We've run our own server farms, so we know how to do that. We also know the architecture, we know how to combine the applications for the architecture with the hardware and with the bandwidth. Now you can go to a company like Exodus if you want to co-locate your servers there and manage all this stuff yourself. But if you want a fully managed solution, which we think will be required for enterprise-critical applications such as e-commerce, then we've got the solution, the answer.

InfoWorld: But isn't it really an entirely different business?

Barrett: Well, I don't think it's anything that's rocket science. You have to go out and listen to your customers, and then you have to provide them with service and values that bring them in. Is doing something like the Intel Online Services different from making the Pentium II microprocessors? Hell yes. [But] does that mean we're incapable of walking and chewing gum?

InfoWorld: Is Intel doing anything to drive the emerging application service provider model?

Barrett: The simplest way to make it behave like one big platform is to have common architecture, common applications, and interoperability between them.

We're obviously a big proponent of common architecture. We work with a variety of software vendors to try and provide those interoperable services and communication capabilities.

InfoWorld: In terms of providing the infrastructure for the digital economy, Sun has established a considerable presence. How will you compete in this space?

Barrett: There are two messages that the world is just starting to absorb, and one is the price-performance capability of freedom of choice and the innovation that goes with the openness of the platform. All the stuff that made the PC what it is today. But sometimes it takes a bit for that to get translated to the next stage, which is the back-room servers that are important for Internet infrastructure. Price-performance, freedom of choice, and the rate of innovation are the things I think will ultimately drive the marketplace. Those are the things we stand for, those are the things we believe in, and those are the things that are core to our market model.

InfoWorld: How important is the 64-bit Itanium platform in that equation?

Barrett: I think it's very significant. All you need to do is look at the trends, such as the size of databases and the number [of] users that are actually using them. It means that you need some really big hulking server capability in the back office.

InfoWorld: What kind of impact is the Internet going to have on the devices we use to access it?

Barrett: I think what has made the PalmPilot so successful is that it's an extension. It doesn't detract from selling laptops or desktops. What it does is it makes them more useful to the end-user. It's the same thing with cell phones. It's the wave of the future and everybody's going to access the Internet off their cell phones. But I still have yet to figure out how much information I'm going to get off that small screen on the phone. But I think these devices will interact very nicely with the Internet and with the PC. It's not going to replace anything; it's going to be supplemental.

InfoWorld: As an Internet play, does Intel get the financial respect it may deserve from Wall Street?

Barrett: I think when the Internet bubble bursts, companies who make things and sell things and make profits off the Internet will be the ones who will be well-positioned. I have this gut feeling that eventually the current valuations will start to be depleted by the old-fashioned metrics of revenue and profit.

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