"We aim to be a building-block supplier to the Net economy"

"Intel has restructured to become Net-centric"

Avtar Saini, director, south Asian operations, Intel

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.

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%.

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%
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% 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.

SHUBHENDU PARTH

in New Delhi