'Intel has restructured to become Net-centric'

From semiconductors to microprocessors and then to a full-fledged IT company,

Intel has been re-inventing itself almost every 10 years. It is now shaping up

as a company that will provide building blocks to the Internet economy. Two of

the company’s key officials–Christian Morales, vice president, sales and

marketing group, and GM, Asia-Pacific operations, and Avtar Saini, director,

south Asian operations–talk about Intel’s strategy to take on the challenges

of the e-economy, in a conversation with DATAQUEST. Excerpts:

Today, many companies are re-positioning themselves as e-enterprises.

While the IT industry has been going overboard with the concept, what are Intel’s

initiatives?



Well, back in 1993 when it was predicted that IT would be the largest industry
in this world by the turn of the century, few people believed it while many

others questioned it. Our mission at that time was to be a building block

supplier to the computing industry, which was operating as a vertical industry

with 5-6 manufacturers across the world supplying thousands of computers. Today,

however, we are in a horizontal industry, where you no longer have a couple of

computer manufacturers who have their own operating systems, their CPUs, their

applications and also channels. It is now an open industry where we have the OS

developers, the CPU manufacturers, application developers, different

distribution channels–whether through the Internet or dealers and resellers.

It’s now a market for service players. Also, this industry has moved from

handling a couple of server-end computers to handling millions of computers.

We see today two major phenomena in the world. One, the wireless and the

computing industry are kind of merging. Two, we see the emergence of two major

devices–the extremely thin PCs (laptops) and mobile phones with browsing

capabilities–that would be used for accessing the Internet. While today we

have around 300 million laptops and around 200 million-plus mobile phones, I

expect these numbers to grow exponentially in 3-5 years’ time.

Keeping in view these changes, two years ago we announced Internet exchange

architecture (IXA) with the objective of providing building blocks to the

networking manufacturers in the world, including Intel. It was also an attempt

to standardize the industry along open standards.

Coming back to the example of the computer industry, if we standardize the

e-business implementation, in ten years it will become a $10 trillion industry–10

times the volume of business today. But it’s going to take some major steps,

like planning standards along the software building blocks so that it becomes

much easier to implement e-business solutions.

Also, once you have open standards, then there are a lot of companies who

just have to write to that standard. They don’t have to work for another

company’s proprietary. What this does, is help promote innovation.

How much of the positioning that is happening worldwide is fundamental,

practical change and how much of it is marcom?



Three years ago, when Craig Barrett became the CEO of Intel, he changed the
mission of the company: to convert it into a building block supplier of Internet

economy. Accordingly, he restructured the company. We are focusing on four major

building blocks of the new economy, which are published and open. First is the

client focus that allows us to look into the devices. Then is the technology for

building blocks for the server. The third one is networking and communication.

And the fourth building block is services like datawarehousing, Web hosting,

application hosting and also data centers.

We have also been acquiring some companies working towards the convergence of

voice and data over the Net. We are firm believers that the telecom industry is

also going to move from a vertical to a horizontal model.

When you are a company like Intel, you do a few things: you consider your

environment, you consider your strategies, and you deploy your resources

accordingly. Yes, you are right. In the starting phase it is basically marcom.

It is repositioning of the company in the Internet era. But then after you have

taken this first step, the whole thing changes. We are not looking at the world

from the computing industry point of view; we are looking at it from the

Internet perspective. Naturally, then the whole thing changes–from the kind of

product you plan to develop to the type of services you want to provide. All of

these become Internet-centric. Accordingly, we have re-deployed our resources.

The restructuring is along the client-server platform, networking and

communication, and services. Has the company divided its resources into

different groups associated with each of these blocks?



Yes, different business units are totally independent and have their own
objectives and resources.

Continued...

What are these units called?



First, the Intel architecture group that takes care of desktops on the one hand
and servers on the other. These are the CPUs, chipsets, motherboards and other

such products. Then the networking group that takes care of communications and

networking. Next Intel’s online services, which is about data hosting and

application hosting services. And there is a group called wireless and

communication component. This group works on technology needed for wireless

systems. In networking, we have two business groups. One is the component part

of it where we provide the critical component to companies like Cisco. The other

group provides solutions at the systems level like switches and cache appliances

for the Internet. So there are five groups, some of which existed before the

restructuring while most of them were formed after it.

Intel started in 1968 and it has since been re-inventing itself every ten

years. It started as a company in memory chips. Ten years into its life, it

became a microprocessor company. Ten years later, it converted itself into a

computer company, and now it is shaping up as a company that will provide

building blocks to the Internet economy. This is how we view ourselves, every

ten years we expand our focus to look at the next big growth. Traditionally,

Intel as a company has been growing at 20—25 per cent.

The client area is huge for desktops, mobile devices and notebooks. Apart

from desktops, Intel has been traditionally weak in the other areas. How are you

addressing this?



We have different teams working in each of the different segments. Again, these
teams are further categorized to work on the value PC, the performance PC and

the workstation. We also have teams working on different categories of mobile

devices.

Battery life is such a major issue with mobile devices but it seems Intel

has not been able to provide alternatives for mobile computing devices that need

to be sufficiently low-powered. Why?



Contrary to belief, Intel was the first company to take initiatives towards

reducing power consumption in such devices almost eight years ago. Only

recently, we launched a chipset for such devices where you don’t have to

compromise on the power, speed or the battery life. We are also working on a

project to develop chips that will consume much less power than today. Also, if

you take a look at today’s market, there are P3-based mobile devices with

battery life of more than five hours.

From the technology point-of-view, the CPU consumes only 10 per cent of the

power in a mobile device. The rest of the power is consumed by other components–the

drives and other plug-ins. Also, a lot depends on the efficiency of the battery.

So, we at Intel are not only working towards developing more power-efficient

CPUs, we are also taking initiatives in other areas just to ensure that the

battery lasts longer.

If the CPU takes up only 10 per cent of the power, one way to make the

battery last longer is to integrate a lot more components in the CPU. Intel was

exploring this possibility aggressively under Vinod Dham. Why was the project

shelved?



As far as the integration project is concerned, it had some major issues. When
you integrate products or applications, you are adding a step to innovation; you

have all the best pieces and you try integrating them. What this means is that

all these pieces of the computer got to be going lock-stock. But this doesn’t

happen in today’s world. So by default, an integrated product–the CPU in

this case–would always remain a generation behind the latest technology. From

the market point of view, this is not the ideal situation. We did spend millions

on the project but decided to shelve it because we realized that PC on a chip

couldn’t become a reality.

The other reason why it cannot be a reality is that the process involves

taking certain low value components and integrating them with a very high value

and complex device. While such integration would make the new device more

complex, it also does not make much of an economic sense.

The trade-off is always the compromise on performance, modularity and

scalability. Also, if you look at the corporate environment, they want platforms

that are stable and the highest possible speed. This is the priority for them

and in order to be able to cope with these demands, one needs to compromise

somewhere else.

So, how would you describe the processor of the future in terms of its

architecture, the complex tasks it would be able to handle, the size and the

cost?



As technology becomes superior, we are sure to be able to provide better

performance at similar costs. That aside, we have been steadily growing as per

Moore’s Law and in the foreseeable future we don’t see much deviation from

this pattern. From the functionality perspective, we keep on adding new features

to be able to run new applications that are constantly being introduced. When it

comes to the bandwidth of the processors, we are coming in with the Itanium

processors. From the flat form perspective, improvement in the IO and LAN

connections would be made.

For the next one or two decades, Moore’s Law will continue to be

applicable. We also see the present day segmentation continuing. In the desktop

arena, we will continue to have the performance and the value desktops. While in

the notebooks, it will be the full-size, the ultra-light and the slim-size, at

the server end it would be the front-end, the back-end and the industrial

servers. 

Shubendhu Parth in New Delhi