Turbulence will continue, Barrett says

Intel Corp. CEO Craig Barrett delivered a sobering message to SuperComm 2002 attendees on Tuesday: The information technology industry is in a period of turbulence and consolidation that will last another year.

Once that is over, the industry needs new services that people are willing to pay for, and that process could take three years, he says.

He offered hope by noting that all technological changes, from canals to trains to cars, have followed the same predictable path: introduction, acceptance, over-investment, turbulent readjustment and consolidation, and extended growth. “This turbulence will pan out,” he said.

Service providers have overbuilt their networks and now must figure out new services that can use that capacity and make money. “We have to find a way to get more out of the system with a modest investment,” Barrett said.

He noted that major networking companies must do this carefully. Nortel, Lucent, Ericsson, Marconi, Alcatel and Cisco have cut their corporate headcounts and research and development spending in half in the past year, he said.

These new services, some of which were demonstrated during his keynote address, require broadband customer access, and not the hundreds of kilobits offered by DSL service providers. “Three hundred to 400K [bit/sec] is not real broadband; 5 to 10M bit/sec is. Then the benefits of broadband become phenomenal,” Barrett said.

Barrett made a call for a federal policy on broadband that will lift regulatory obstacles to providers deploying it. “The U.S. needs to get its act together in this area. It needs to get regulatory issues resolved so the people who invest in this area can get a return,” he said.

Lawmakers also need to clear up copyright issues between artists and digital distribution companies such as Napster so artists rights are protected but customers can still get fair-use of the material they buy.

As processors in personal devices such as PDAs, phones and computers get more powerful, the percent of that power dedicated to communications will shrink. “Communication [support] will almost be free eventually,” he said.

He predicts that the next wave of laptops will feature wireless capabilities built in and handhelds will be computers with voice, data and wireless support.

Makers of these devices need to create open interfaces among them so users can connect device to device to share information, he said.

“It’s a bright future. Unfortunately, there’s a few clouds in the sky,” Barrett said, referring to the current global economic slump.

For more information on SUPERCOMM visit http://www.supercomm2002.com/

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