“Our Networking Focus Would Be In Basic Building Blocks”

Dr Craig R Barrett

Dr Craig R Barrett has taken over as the president and CEO of Intel from the legendary
Andy Grove. The challenge before Barrett is manifold, not the least of all, establishing
Intel as a true technology company, rather than just the leading manufacturer of one
product category.

And that means building a slightly different identity
for the company and getting that message across. One of the important strategies that
Barrett is out to implement is establishing Intel as a strong force in the networking
business, where it has upset many established players in the low-end LAN segment.

Barrett explains how he plans to go further ahead in
an exclusive interview with
Shyam Malhotra and Sivakumar V. Excerpts:

 

You have taken over as the CEO of Intel after a long
innings by Andy Grove. What is your vision and what are the differences in your outlook as
far as Intel is concerned?

I do not see any significant differences
with Andy (Grove). First of all, Andy is not out. He is still our chairman and is very
active. And having worked very closely with him for the last 10 years, I think our
thoughts are quite similar. The biggest challenge I currently face is one of growth. In
the last 10 years, we grew very rapidly, with average growth rates of over 30 percent. It
is very difficult to continue registering large growth rates when you are a big company.
And fortunately in the last quarter, we have been able to grow very well after a year and
a half, which was 1997 and most of 1998. Getting back on the growth track, both from the
revenue and the earnings standpoint, is the biggest challenge that the company faces
today.

Recently, Intel has been putting a lot more focus on
networking. What is Intel’s roadmap in this area?

If you look at our overall vision of the
market-place, which is billions of connected computers, then the business opportunity we
have associated with that vision is components and building blocks that go into computers,
building blocks that go into networking, and the applications which will run on those
connected computers.

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You are going to have this clash of
data versus voice, backbone infrastructure. Clearly data is going to win. And it is a
matter of who are those companies who are going to merge at the top.

From the networking standpoint, our
particular focus would be on basic building blocks in networking like NICs on LAN and
motherboards. And all the basic things that other networking companies provide, everything
from network built on Intel processors. Thus, we will provide solutions to the home, small
office, and Small and Medium Enterprise (SME). Now, wide area in networking is something
we are not particularly interested in. There the Ciscos, the Nortels, and the Lucents
compete. You are going to have this clash of data versus voice, backbone infrastructure.
Clearly data is going to win. And it is a matter of who are those companies who are going
to merge at the top.

With Intel, it is a huge market for small,
medium-sized business, and the home for networking. And that is where all of our energy is
going. And the acquisition that we announced few weeks earlier, Shiva, which is basically
a connectivity, modem bank kind of capability. And the ability to use Internet as a
virtual private network, and software and hardware that go with that. And associated with
that, small medium, VPN types of networking. So our focus is going to be basic components,
building blocks, and then complete system solutions for SME business. I would be a
supplier of building blocks to the Ciscos and Lucents for their solutions. So, sometimes
we will compete with them, sometimes we will be a supplier to them. But that is the way
the computer industry works anyway.

So is the route that you will be taking based on
acquisitions of the kind that you have done?

That is one of the ways of acquiring
capability. Some capability we would build it ourselves inside the company.

Which is the next company you are planning to acquire?
3Com …

I could never figure out where those
rumors came from. Whether somebody from 3Com to hike their stock or not. First of all
Intel and 3Com compete very strongly in products like NICs. The Federal Trade Commission
would not let one company buy another without divesting itself of the capability. And as
for the rumour, Intel does not speculate on speculation.

How does the focus on networking impact the microprocessor
business?

The businesses are complementary, if you
look at the big picture of billion connected computers. All our business processes are
associated with that image in mind. Processors, graphic chips, etc. go into the computer,
while the networking goes into building connected computers. Issues like electronic
commerce and digital imaging will play on the network. Those are the areas that are
complementary in the sense that they are consistent with the image. And they necessarily
compete with each other.

What about Intel or the Intel Inside brand in the case?
How do they gel in with the three areas?

Intel Inside is only associated with the
processor and every thing else comes under the Intel brand name. Intel is a strong enough
brand in the computer market-place to be associated with all the areas.

With Internet becoming very important, do you see the PC
losing importance to networking? What would be your strategy then?

The PC is losing importance because the
media wants something different. But yes, Internet is very important. So, any application
on Internet is very important. We are already participating in those spaces. If you look
at Internet transactions, the backbone behind those transactions, you will find huge
server installations. High performance servers everywhere. That is a big business
opportunity for Intel. Most of our focus has been on the client in the past. But as the
number of connected computers increases and all the transactions occur between them, there
is huge server construction that has to be created. It is a big business opportunity for
us. And that is why you see us push very heavily into that space. And the applications
that run on top of this connected array of clients and servers are another aspect.

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