Intel’s Grove: you ain’t seen nothing

Despite all the hype and billions of dollars spent on the Internet in the last few years, the industry is only 10 per cent of the way toward where it will be in 5 years’ time, according to Andy Grove, chairman of Intel Corp., speaking recently in an interview at Stanford University’s Business School.

“I think the impact of the Internet in the next five years in practical terms, not in stock market terms, is going to be bigger than it was in the previous five years,” he said during a public interview at the business school chaired by Wired magazine’s John Heilemann. Grove writes in and appears on the cover of the magazine’s June issue.

Grove, who had earlier spoken of his admiration for the customer service management employed by Inc., added he holds this view because the number of companies that are still truly benefiting from the Internet in the way they interact with customers is small. “It is going to be bigger simply because right now, I couldn’t think of the second candidate to extol after Amazon in terms of customer relationship management (CRM), and I couldn’t even think of the first candidate who is really the epiphany of supply chain management (SCM) that I could hold up in an Amazonic role and fashion,” he added.

“The impact of this thing is precisely proportional to the portion of the economy that participates in the benefits of these two factors (CRM and SCM), so we are less than 10 per cent of the way there,” he said. This backlog is not for a lack of money. The billions of dollars ploughed into the industry over the past few years, most of it raised in the stock market, has laid the ground for coming improvements, he said. “Roughly 25 per cent of the necessary investment has been made, and we’ve got 5 per cent of the benefits so far.”

In fact, the money that arrived in the industry, and particularly Silicon Valley, solved one of the largest problems facing the first inhabitants of the Internet economy: Who is going to pay for all of the infrastructure needed?

“In the early Nineties, if you think back to the time people were thinking of the information superhighway, the question everyone wanted answered was, who is going to pay for the deployment of the information superhighway? Is the government going to pay, are companies going to pay? The whole thing didn’t make any sense, and then all of a sudden investors rushed to pay for it and put it in place,” he said.

“The boom was a healthy thing because the infrastructure that is needed for (CRM and SCM) depends on hundreds of billions of dollars of infrastructure investment that ordinarily would not have been available. What bank would lend, in a short period of time, money to companies to invest in a business model like Amazon or the European telcos buying up digital spectrum licences? The answer is none. Those things wouldn’t have happened or would have happened at an infinitely slower speed,” he said.

“The money may be gone, but the infrastructure is there, and the infrastructure was put there in record time.”

-IDG News Service