Feeds

Intel rejects investor call to give up its hopes and dreams

'We don't plan for failure'

7 Elements of Radically Simple OS Migration

"Have you ever thought about being like Philip Morris?"

Now that's just rude.

Some Wall Street type wanted to prove that his Zinger 101 mail order kit was worth the $1,995 asking price. So, he nailed Intel CEO Paul Otellini with that very question during a meeting held yesterday in Santa Clara.

Intel brought its largest investors to the corporate headquarters, hoping to educate the financial wizards and provide them with plenty of access to the executive ranks. The analysts returned the favor by letting Intel know that $7bn in net income and $12bn in cash (2007) just don't impress like they used to. [You know, like when fiscal responsibility and the dollar meant something - Ed.]

The Philip Morris dig was the investor's way of asking Otellini, "Why don't you just give up on your expansion hopes and dreams and concentrate solely on making PC and server chips."

The investor suggested that Intel's decision to dig deeper into the mobile, embedded and low-cost PC markets could end up as yet another waste of time. Please refer to Itanium, XScale, Intel's web hosting business and any number of other underwhelming exercises for past examples of Fail.

Why not just sell your chips and grow revenue at a modest rate? If that keeps working out, you can eventually move into cigarettes and processed cheese.

"Our focus is on growth," Otellini said. "Planning for failure over growth is not something I spend an hour a year thinking about."

Thanks to more energy efficient chips, better manufacturing techniques and new microprocessor lines such as the Atom mobile parts, Intel once again thinks it can crack into tempting, large markets.

The company expects Intel processors to make their way into more embedded systems such as cars, ATM machines, gas pumps, storage boxes, refrigerators and hooker's shoes. In addition, Intel would like to bust into the market for less-functional but still capable PCs used mostly for surfing the web. Otellini expects these machines to make heavy use of open source software and to serve as primary computers for the less fortunate as well as internet access throwaways for the privileged. Last and you're damn right not least, Intel plans to confront ARM for a place in the ultra-mobile PC and mobile device markets, while also having a revitalized go at the consumer electronics space, sitting inside set-top-boxes and the like.

Each one of these businesses could translate into $10bn in revenue for Intel, according to Otellini.

"We think we can triple the market for our products," he said. And that proclamation "does not assume home-runs in each market."

Flashdance

While Otellini focused on long-term growth, the investors could not pull themselves away from more immediate concerns. Earlier this week, Intel lowered its first quarter gross margin forecast, citing plummeting prices for NAND memory as the culprit.

Intel is in the midst of spinning out its NAND and NOR memory operations as separate businesses, and Otellini made a "personal commitment" to turn these companies into profitable operations - or else.

"This (memory) business will not be a drag on the Intel corporation," he said.

That all sounds well and good, but the investors remained skeptical. After all, Otellini noted that Intel shipped twice as many NAND bits quarter-over-quarter, only to be pounded by the pricing. When doubling memory revenue hurts you, things have reached a critical stage.

During a question and answer session, the investors returned to the memory issues again and again even though memory sales make up a very small fraction of Intel's overall revenue.

"We entered the NAND business assuming we would make money," Otellini countered. "I intend to get that business into that position."

Otellini then tried his best to make the investors, er, forget the memory issues by pointing them towards an All Intel world.

Build a business case: developing custom apps

More from The Register

next story
Nice computers don’t need to go to the toilet, says Barclays
Bad computers might ask if you are Sarah Connor
4K video on terrestrial TV? Not if the WRC shares frequencies to mobiles
Have your say with Ofcom now, before Freeview becomes Feeview
YES, iPhones ARE getting slower with each new release of iOS
Old hardware doesn't get any faster with new software
PEAK LANDFILL: Why tablet gloom is good news for Windows users
Sinofsky's hybrid strategy looks dafter than ever
You didn't get the MeMO? Asus Pad 7 Android tab is ... not bad
Really, er, stands out among cheapie 7-inchers
Apple winks at parents: C'mon, get your kid a tweaked Macbook Pro
Cheapest models given new processors, more RAM
VMware builds product executables on 50 Mac Minis
And goes to the Genius Bar for support
Leaked Windows Phone 8.1 Update specs tease details of Nokia's next mobes
New screen sizes, dual SIMs, voice over LTE, and more
Microsoft stands on shore as tablet-laden boat sails away
Brit buyers still not falling for Windows' charms
prev story

Whitepapers

7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?