Duke and INTC Investors - Q&A with Intel Networking VP and GM Mark Christensen
Can't provide a link, as this is a non-proprietary and non-confidentail Intel Employee Communication.
Mark Christensen outlines various Network and Communications Group objectives, acquisitions, Network Microprocessor, etc. Quite interesting, IMHO.
PB
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One-on-One with Mark Christensen
Where is Intel's Network Business Going?
Posted June 24, 1999; WW26
From Gary D. Fackler
Legal Information © 1999 Intel Corporation
* Other names and brands are property of their respective owners
A note to those who think Intel is only into microprocessors: the company is deadly serious about the networking business.
Aided by a series of high-profile acquisitions, starting in 1991 with the acquisition of LAN Systems and including the pending acquisition of Level One Communications, Intel has assembled the resources it needs and is developing a world-class set of network communications building blocks for business customers and consumers alike. The network communications group has leveraged its expertise to develop a host of products that are setting industry performance standards and blazing new market segment trails into small businesses and even into homes.
Yet despite Intel's top network rankings in such areas as 10/100-megabit Ethernet network connections, industry insiders, and even some Intel employees, are only now waking up to the fact that Intel has fast-growing businesses for more than just chips. The morphing of Intel into a network products provider has been a relatively quiet revolution. Says Network World in an article on April 12, 1999, Intel "has quietly established itself as one of the leading providers of network gear for small and mid-size businesses."
What are Intel's goals for the networking business? Is the development of network products only a strategy to stimulate processor sales? What are the obstacles to our achieving preeminence among the heavyweights in the network world? Circuit recently sat down with Mark Christensen, vice president and general manager, Network Communications Group (NCG), to find out. Here is what he had to say.
Q. How does Intel define the charter of NCG?
A. Andy (Grove, former chief executive officer at Intel and current chairman of the board) talks about how markets are won and lost in times of transition. Well, we're going through some very major, very rapid transitions right now. The transitions revolve around the advent of the Internet and with voice and data convergence. What we're trying to do is become a building block supplier for a new Internet-based economy. Craig (Barrett, Intel's current president and chief executive officer) laid out three goals for NCG: to grow two-to-three times as fast as our competition, to be number one or two in each market segment area we go after and to be profitable. Those are all very reasonable requests, but it will be a challenge to deliver on all of them.
Q. What sort of building blocks is NCG developing?
A. Things like corporate connectivity building blocks, "LAN on motherboard" (a silicon-based component that allows the PC or the server to connect to the network). That's one. We're also extending connectivity into the home with the introduction of our AnyPoint(TM) home network product line, offering any level of integration from silicon, to systems that you can purchase at local computer retail stores or from our web site. The third area is network systems (routers, switches and appliances) for small-to-mid-size business. These are products that allow smaller businesses to bring the Web experience inside their networks, helping them utilize the Internet as a competitive advantage. This was the reason behind our recent acquisition of XLNT in San Diego (see QuickLink below). We're rapidly building our capability to provide intelligent, high-performance switching products for Internet Service Providers (ISP) and Small to Medium Enterprise (SME) server data centers. We want to develop products that make it easy for them while being scalable to their needs--without requiring a large investment. And finally, the fourth area--one which we feel offers a lot of opportunity--is in the area of communications semiconductors. With Intel's core competencies in semiconductors, we should be a major player in this area.
Q. When you say "network semiconductors," what does that mean?
A. Communication semiconductors that allow data communication and traditional telecommunications companies to bring products to the market faster. Generally speaking, these are silicon communications building blocks that make it easier for companies like Cisco, Lucent, Ericsson, Nortel, and Nokia, to more rapidly develop systems by integrating the standard building blocks that we develop. Using our tools and products, they can be more competitive.
Q. Is the network processor an example of one of NCG's silicon building blocks?
A. Yes. That particular product was developed in Hudson, Mass., by the team that came to us through our Digital Semiconductor acquisition. I believe it has a huge amount of potential. In fact I think it can redefine the way datacom and telecom equipment is developed. The network processor has the ability to completely change the way network equipment is created--from being very hardware centric to being much more software centric. The processor will be doing many more of these functions and it will be doing them much more flexibly than a fixed function ASIC (Application Specific Integrated Circuit) can do.
Q. Why is Intel so committed to the network communications business? Is it to support the microprocessor interests or are we looking at it as a stand-alone business?
A. Both. We have a great microprocessor business, but we've always developed strategies to surround this core product with other related businesses. Like the chipset business, for instance. Or the flash memory business. Network and communication products are just a natural extension of our core competencies. In the future, virtually all PCs and all computing devices will be connected. We see that connectivity is impacting everything that we do. As we expand ourselves into new areas beyond microprocessors, communications is just a natural place for us to play a major role.
Q. What is standing in the way of Intel being more recognized as a network products company?
A. Well, we're so well known for one thing--microprocessors--that it's hard to break through that image and become known for something else. We're expending extra effort right now making sure people understand that we're into networking. When you say "networking" you think of companies like Cisco or 3Com--you DON'T necessarily think of Intel. The good news is that Intel's brand stands for leading edge technology and high standards of quality. Both of these attributes will help us be successful in communications as well.
Q. So does that mean we can expect to see more advertisements for Intel networking products?
A. You will see specific image advertisements in select publications as well as on the Web. You probably won't see a big ad campaign stating that Intel is now a networking company, but you WILL see specific advertisements addressing a targeted audience who are potential customers for specific products.
Q. Will our networking product portfolio continue to expand, or will we focus on refining our existing product line?
A. I think it will always be expanding. That's the nature of our business. We will continue to evolve the strategy for the four target areas I alluded to earlier. I also think you'll see us continue to step up our efforts in these areas through continued acquisitions, internal development and licensing. Then, as we continue to develop and refine our strategy, I'm sure we will branch into new areas.
Q. Where does Intel currently stand in the networking products business?
A. In corporate connectivity we're the leader in Fast Ethernet, and we're number one in Gigabit Ethernet. We want to continue to be successful in these areas and we want to expand the business. Our success in this area is fueling our investments in a lot of other areas as well.
In home networking we are an early entrant and the leader with our AnyPoint(TM) home network product line. Today that business is very small, but we expect it to grow rapidly in the next few years.
The area of small-to-medium business network systems is relatively new for us, and we're still working on acquisitions that will help scale up our capabilities for this market segment. This product area has a lot of synergy with the communication and Internet servers being developed in ESG. I expect that we will expand this focus to also include selling to ISPs (Internet Service Providers) in the coming year. This continues to be a major investment area for us, especially as the importance of e-commerce for small to mid sized businesses continues to grow.
That leaves semiconductors. With our core competency in this area, we ought to be a leader in this market segment. Because we started late in this area, we're playing catch-up. So this area is going to be a key focus for us. We're going to expend a lot of energy in the areas of acquisition, equity and licensing deals, to grow this business very rapidly.
Q. What are some of the major obstacles we need to overcome to be successful in network communications?
A. There are challenges specific to each of the areas we've discussed. But generally speaking, a lot of our challenge will boil down to the age-old challenge of superb execution … understanding our customers and delivering a better product than our competition. If we don't listen to our customers and deliver products that set us apart, someone else will. Also, we want to develop products that provide us with larger profit margins than our competition. Big challenges, to be sure, but we've been successful doing this over the last eight years, and I'm pretty optimistic that we can continue to deliver this kind of growth. |
