Out of the Box
Forbes Magazine
Elizabeth Corcoran, 04.15.02
Intel and IBM fight for the post-PC future.
Grove's message: Get ready for the electronic future--and get scared that Intel won't play a central role in shaping it. The next chip revolution will take place far beyond the beige computing box under your desk, in a plethora of new and strange devices with an entirely different set of needs. The collision of three tech trends--vanishingly small but powerful chips, the Internet and wireless data communications--is creating a new era of engineering, with great potential to reshuffle business models, spheres of influence and profits.
That means Intel will have to earn its top spot all over again, and it is making a huge bet on something called XScale, a dramatic departure from the design that made the company rich. It will show up in handheld organizers this summer, as well as in network storage and communication devices. The most lethal threat to Intel's future, surprisingly, will come from IBM. Bad blood between them goes back 20 years, when IBM unwittingly ceded control of the PC industry to Intel and its software ally, Microsoft. IBM engineers in Austin, Tex. have been working on a top-secret design--code-named Cell--with partners Sony and Toshiba, aiming to plant their breakthrough technology in the bedrock of tomorrow's products. Available in two years, Cell is expected to run Sony's next PlayStation and grow from there.
The next chip war looms despite the current downturn, the most brutal slump chipmakers have ever known. Last year it deleted $70 billion--or 30% of industry revenues. PCs will remain the single biggest category for chip revenue for some time, but the days of double-digit growth are over. The new growth will come from cell phones, networking boxes, game machines and new devices.
Other titans have a shot at prevailing, such as Motorola, Texas Instruments, AMD and National Semiconductor. Chip-design houses, such as Britain's ARM Holdings, have intriguing designs or tools, as do Silicon Valley upstarts like Tensilica. But it appears that the Intel-IBM clash is the one to watch.
"The PC has really driven the industry over the last decade or so. But it is not the driver now. This is going to be a much different world," says John Kelly III, the senior vice president who oversees IBM's $10 billion (revenue) technology group, which includes chips and storage products. Adds Richard Doherty, research director at the Envisioneering Group, a consultancy in Seaford, N.Y.: "The next 36 months will be the most exciting time in the chip industry in the past decade."
For years, the industry's driver was speed, speed and more speed: The latest Pentium 4 crunches data at 2.2 billion cycles a second. Move chips out of PCs and the rules change. Speed and raw power are no longer paramount; chips now need to guzzle less energy. Designs must be more flexible, too. Intel cranks out millions of copies of a single design. Cell phones, network gear and new gadgets will need specially tuned chips. And they must be cheap. A top Pentium 4 costs $500; a typical processor in a cell phone is closer to $15.
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Intel supports hundreds of independent developers, and some XScale versions will rely on Microsoft coders. At IBM, Kelly says Cell will use the freely available Linux operating system in its core. That way, IBM can capitalize on the tools and expertise of the thousands of engineers who work on Linux. IBM also says it will publish details of the Cell design and license the technology broadly.
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It's too soon to call which side will prevail. But both remember the lesson of the PC: Today's toy can run tomorrow's world.
LINUX ... today's toy running tomorrow's world. |
