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Intel now at inflection point – Grove

Microprocessors just a part of its business

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Most observers thought that Andy Grove, Intel's chairman, gave a lacklustre performance for his keynote speech at last Tuesday's Developer Forum. But in contrast to that, when he spoke to European journalists the day before, Grove positively sparkled. Taking questions on a wide range of topics, Grove was particularly lucid about the future of Intel as a corporation, and agreed that the firm had reached a so-called "strategic inflection point" -- a term he coined in his book Only the Paranoid Survive to describe sea-changes in the direction of companies. He claimed that companies which were re-engineering their businesses did not wish to spend vast sums of money on IT infrastructure, which gave Intel an opportunity to remove that burden from them in the shape of both off-site servers, such as the up-and-coming Itanium servers and in services. That went some way towards explaining both its investments in other companies, its acquisitions and its intent to set up server farms to service other companies. "The reality is that for a number of companies, 80 per cent of their first two years of business is spent on computational infrastructure and the rest on re-engineering their business," he said. "It is clear to us that a large proportion of these companies would like to buy, as a utility, the computational infrastructure of their business. We will go 80 per cent of the way to simplify their life. All we are doing is selling silicon, and by selling it as a service, we exempt them from having to do it themselves." Despite predictions that silicon will reach the end of the road in 10 or 15 years time, Grove said he still foresaw a future for it. "Sooner or later, we'll reach the physical limits that engineering can't get round. What is likely to happen this is a matter of substantial debate," he said. "My opinion is that [growth will come] through extensions of the existing structures, something like skyscrapers building upwards. There's something fundamental about silicon and its oxide that is very stable and lasts, basically, forever. That is a personal opinion." He said that he projected similar growths on Moore's Law "at least until 2010". Intel's 64-bit Itanium, he said, has 25 million separate transistors. The cost of equipment would continue to grow rapidly. Currently, it cost $2.5 billion to build a fabrication plant and that figure was likely to rise. The growth in server sales would rise steeply because of the Internet, and would in some respects mirror past sales in the desktop PC market. He said that the function of the Intel Developer Forum and its strategy had shifted, and the focus of the conference had broadened. "We are not a venture capitalist but our aim is to replicate our investment profile correspondingly to our sales profile." Currently, the sales model stands at 50 per cent sales inside the US. Intel was "starting from zero" in its investments outside the US, but that would grow. Grove said that Intel is currently in the very middle of its next "inflection point". Moving from a microprocessor to a building block company were "very significant changes" and required Intel to respond to ever changing factors in the market itself. He said the changes in Intel which are happening now were very different from when it shifted its strategy from memory to microprocessors. At that time, he said, "we were bleeding". "The challenges are different and we are stretched," he said. "It is a big challenge for us and we are hoping to fare well. " ® Intel Developer Forum Q1 2000

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