Intel boss urges world+dog to buy more Intel kit
Build those networks now!
Telcos are struggling, the networking equipment vendors have taken a bath. Why? One reason is because they've over-invested, big time. But Intel CEO Craig Barrett wants them to carry on spending.
To be more precise, he wants the communications industry to flash the cash "to continue significant levels of investment in the technologies required to build next generation networks".
Making the keynote speech today at Network Interop in Las Vegas, Barrett said that fast voice/data networks would propel higher growth for the comms industry.
And Intel certainly has no intention of cutting back its comms spending, he said. The current environment is an "opportunity to strengthen (Intel's) position as a leading supplier of communications silicon and solutions", he said.
And in a fine rhetorical flourish, he urged "others to join with us in investing to help build the next generation of networks. Together, the digital world is ours to build."
But what will the likes of Cisco or Lucent make of such an invitation? At the low end, card makers such as 3Com have already felt the warm embrace of Intel's interest in networking. Gigabit Ethernet vendors have much to fear too.
Intel reckons the digital networks of the future will be built on silicon. And as the biggest silicon builder it stands to benefit morer than most from current trends in networking.
These trends: are standardisation, productisation and commoditisation.
Intel has mastered all of these skills in its core PC business. But in this traditional power base Intel is constantly fighting a (now mostly losing) battle to maintain market share. This is inevitable; at its market share peak, Intel accounted nearly 90 per cent of all sales.
No, Intel is not ex-growth, despite the hiccup of last quarter when it reported a year on year sales fall. The long-term trend is market share attrition against a backdrop of still-rising sales.
Today, it has a rather serious contender in AMD which will sometime next year, take Intel head-on in all CPU market segments. Also it has in VIA and Transmeta two vigorous, if much smaller competitors, snapping at its heels in budget and mobile segments.
However the PC market will grow more slowly than the market for networking equipment (as soon as telcos and suppliers work through their finance and inventory issues). And it is inevitable that Intel will grow its networking market even faster.
The ultimate prize is the soft underbelly of Cisco, the maker of good products for fat prices (as a company which is forced to pay an annual maintenance charge equivalent to more than 20 per cent of the purchase price of our Cisco router just in case we feel qualified to talk about this).
But on the way to reaching that goal, there are plenty of weaker networking equipment players to pick off. ®