Intel repeating its PC strategy in communications

Intel Corp. is planning a re-run of its PC strategy in its communications business.

In line with its strategy to provide the building blocks for the Internet, the company will deliver its communications technologies at different levels of integration, starting from silicon, through boards, full systems and software, according to John Miner, the company’s vice president and general manager of its communications products group. Some of these products are being introduced through New Jersey-based Dialogic Corp., an Intel acquisition that manufactures telecommunications and computer telephony components.

“In our Dialogic products, we have software interfaces, we have middleware interfaces that are built on industry standards, and then we have building-blocks technology that includes software and cards for enterprise and carrier applications. In the data center, for example, we have products at multiple levels of integration as well,” Miner told IDG News Service. Intel is, for instance, introducing building blocks at both the board and the system level for gateway vendors to build systems around its technology.

“An interesting example of this (systems strategy) is our voice portal application,” added Miner. “This is a complete system that has the voice processing, the media processing card — which can terminate, in this case, 96 ports — as well as the software, and then each country can pick the right speech recognition software for a given language. There are many other areas where that kind of technology and strategy will be a key part of our plans, including for carrier networks.”

Intel is also investing in “soft switch” platforms for networks, which will enable the implementation of value-added services.

However, Intel is unlikely to compete at this point directly with the established telecommunications equipment makers, and will instead view them as customers for its chips, according to Will Strauss, president of Forward Concepts Co., a Tempe, Arizona-based market research firm focused on DSPs (digital signal processors) and new technology markets.

“Just as Intel is a major supplier of PC boards bearing their MPUs (microprocessor units), buried in selected PCs from Micron and Gateway, for example, I think they will also opt for moving to board-level products in the communications space, starting through their Dialogic division, which is already in CTI (computer telephony integration) boards for PC-based PBX-related (private branch exchange) systems and is moving more heavily into the VoIP (voice over Internet Protocol) board business,” Strauss said.

Intel’s acquisitions have helped bolster the company’s systems expertise in the communications market.

“Over the past few years, we have acquired over 35 companies in the telecommunications and data communications industries, and these companies have brought to us a new set of competencies and expertise,” said Miner.

Intel is also forming partnerships with companies to deliver communications technologies. Dialogic, for instance, has an agreement with Fremont, California-based VxTel Inc., a supplier of silicon solutions for next-generation carrier networks, to supply the key building blocks to equipment providers for enhanced media gateways and media servers.

In August this year, Intel announced it was acquiring San Luis Obispo, California-based Ziatech Corp., which makes CompactPCI systems for carrier-grade applications. Intel has also teamed up with Norwood, Massachusetts-based semiconductor maker Analog Devices Inc. for the development of a DSP.

This DSP and Intel’s own XScale architecture are expected to be the key elements of Intel’s play in the handheld and mobile computing devices market.

“There are three components that go in most wireless mobile computing devices,” said Miner. “There is a simple processor for things like application software, directory, and database, and there the XScale architecture will play. In the baseband processor, digital signal processing will play a key role, and there our acquisition of DSP Communications, and a venture we are doing with Analog Devices, will give us the technology to provide baseband processing solutions to customers. The third ingredient is memory, primarily flash memory, and today we are the world’s leading supplier of flash memory to mobile devices, including cell phones.”

Intel’s prospects in the communications products market are good because of its strong presence in computing platforms, according to Avinash Jayaprabhu, vice president of hosting services at Chennai, India-based Internet service provider Satyam Infoway Ltd.

“In a data center, for example, of the 10,000 or so elements, about 10 will be switches and routers. The rest are computing platforms,” Jayaprabhu said. “So, if I have Intel computing elements, my purchase decision will be driven by how well the communications elements integrate with the computing platforms in my environment, and that gives Intel a clear advantage.”

Although Satyam competes with Intel in India in data center services — another component of Intel’s business in the communications space — Jayaprabhu said he has an assurance from Intel that its products and services businesses are distinct.

Even as Intel positions itself as the building-block supplier to the Internet economy, it may be until 2003 before revenues from communications chips, other than flash memories, account for more than 10 percent of Intel’s chip revenues, according to Strauss, who also does not expect Intel’s entry in to the communications business to bring down prices of communications equipment. “They have never been known as the low-price solution,” Strauss said.

Intel’s Communications Product Group, in Beaverton, Oregon, can be reached at