Intel keeps a level head

Now is certainly not the time anyone would willingly want to be the CEO of a NASDAQ corporation. Stock prices, the public barometer of success, are getting battered while sales are at the mercy of a fickle economy.

Craig Barrett, CEO of Santa Clara, Calif.-based Intel Corp., was introduced at a recent developer’s conference in San Jose, Calif., as a silicon cowboy. In this economic environment he might well have wished to be the Teflon cowboy, impervious to the brickbats of a falling stock market.

But regardless of the economic times (Intel recently announced it is going to cut 5,000 jobs) Barrett managed to be an upbeat, glass-is-half-full kind of guy.

“I’ve been in this industry for about 27 years , and we’ve been through a number of these cycles,” he said. “You always know that when you’re going up, you’re eventually going to come down,” he continued. “When you’re on the way down, you know that it’s going to go up eventually. What we really have to do is prepare for the next upswing.”

But this was a developer’s conference and with NASDAQ safely behind him, Barrett looked to the future.

“You never save your way out of a downturn,” he explained. “The only way you come out of a recession stronger than when you went into it is by creating great new technology, great new products.”

itanium vs. mckinley

Intel is planning on investing US$12 billion next year in manufacturing capital, and research and development for new products and technology, Barrett said. This segued into the remainder of his talk: the four architectures that will form the basic building blocks for Intel’s future success.

Arguably the most anticipated were the announcements surrounding Intel’s 64-bit Itanium processor and its successor, McKinley.

The company’s 64-bit offering has not had an easy time of it. Most of the competition has had a 64-bit product for quite some time, and acceptance may be a tougher road than envisioned, according to analysts.

“I thought that they didn’t do a very good job of balancing Itanium vs. McKinley (Itanium’s successor) and I thought they were actually pushing harder on McKinley than Itanium,” said John Enck, a research director at Gartner Group in Loveland, Colo. “I think they caused more confusion than they did clarity.

“Clearly they are disappointed at what is happening with Itanium, they are disappointed on multiple levels, not just their own internal production,” he added.

“They are late to the market, it is a new architecture so it doesn’t have much software, and it is an uphill climb for them and will be for the foreseeable future,” said Carl Howe, principal analyst with Forrester in Cambridge, Mass.

Enck agreed. “Let’s say that Itanium was out tomorrow – what are you going to run on it?

“Even if the hardware were on time, the software is so new that this really becomes a proving ground for the IA64 architecture and I just don’t expect to see much production deployment of Itanium; I don’t’ expect to see a lot of sales of it.”

Howe was equally direct. “We have been on record for a couple of years as saying this is the bet-your-company chip. They are going where they have never gone before successfully.

“Intel has only ever successfully introduced a new micro-architecture once -the 8080,” he added. “People forget all the other architectures that they have introduced that have been disasters…so their track record here is not exactly stellar,” Howe said.

But he added, “Intel’s model is not to lead in terms of technology …but their real goal here is to drive down the cost of 64-bit processors significantly below where Sun and Compaq are.”

Enck said his advice to customers is to wait for the second generation McKinley before committing to Intel’s 64-bit solution. “The whole thing about McKinley, in my mind, is any Itanium system you buy today, with very few exceptions, is not upgradeable to McKinley,” he explained.

But Enck did see some light at the end of the tunnel.

“There is certainly a clear groundswell around it…it is just the realization that this groundswell is not going to start until next year,” he explained.

the first three

The first architecture presented was Intel’s core business, which is the IA-32 building block for the personal computer, Barrett explained. “It’s exemplified today by the Pentium 4 processor [which was] specifically designed for the Internet, for rich information.”

But some analysts don’t quite see eye to eye with the need for the fire power offered by the Pentium 4.

“We are clearly in a place where the processing power is well in advance of the operating system requirements,” Enck said. He added that it is not proven there is a need for the likes of the P4.

Barrett considers the P4 to be central to what he calls the extended PC concept, a system with a variety of digital peripheral devices. “The PC is really the centre of the digital world as far as the consumer is concerned,” Barrett said. If this proves to be true then Intel is certainly well positioned for the future.

Next on the agenda was the personal Internet client architecture, defined as architectures in handheld devices and cell phones.

“It’s about a different microprocessor than the IA-32 family, something called IntelXscale micro-architecture, which is tremendously scaleable,” he explained.

“The beauty of this is really extending the PC with the handheld device.”

Number three on the presentation list was Internet exchange architecture, an area of considerable development at Intel over the past year. These are the building blocks for networking equipment.

“We plan to introduce more than 35 new products associated with this architecture family through the year, all the way from physical interface devices on up to variants of the network processor,” Barrett explained.