Special Focus: Intel makes inroads in the LAN
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By Jodi Daniels
10/27/97
Intel Corp. is in the process of changing its image of being mainly a
processor maker.
The chip king this year has made a serious push in the network market
by sinking more than $125 million into acquisitions and investments as well
as partnering with fellow titans such as Cisco Systems, Inc. and Compaq
Computer Corp. Intel's goal is for customers to think of the company not
just when it comes to chips, but also when it comes to hubs, switches and
network interface cards (NIC).
'Intel probably sees networking as the No. 1 way to build business
outside of its core processor business,' says Greg Lang, business unit
manager for network infrastructure operation in Intel's network product
division. 'Intel's network products division started up in 1990, but it
wasn't until recently that this area became strategic for us.'
Some industry observers say they initially did not take Intel
seriously in the network arena.
'When Intel started dropping prices [on NICs and hubs], people thought
the company would just spark the industry and then back out of the
market,' says Diane Myers, senior analyst at In-Stat, Inc., a consulting
firm in Scottsdale, Ariz. 'But you can tell from their acquisition strategy
that Intel is in this [network infrastructure market] to stay.'
Just ask Intel's competitors in the LAN workgroup market.
'Clearly, anything Intel does relative to desktops is important,'
said John Hart, 3Com Corp. senior vice president and chief technical
officer, in a recent interview. 'So we're certainly watching them.'
Intel invasion
Suddenly, Intel has become a thorn in the side of 3Com and Bay
Networks, Inc., both of which are going hard after the workgroup market.
'If you talk to anyone from 3Com or Bay, they are very cognizant of
what's going on with Intel,' Myers says. 'They probably would rather not
worry about Intel, especially when [3Com and Bay] are also trying to focus
on the high end of the market.'
But Intel's network products division - which reported revenue of $500
million last year - already has its sights set solely on the workgroup
market and has made some significant inroads.
For example, Intel was second only to 3Com in Fast Ethernet NIC market
share for the second quarter, with 3Com garnering 42.7% and Intel capturing
33.6%, according to In-Stat. This compares with Intel's 29.3% share and
3Com's 50% share in the previous quarter.
But Intel has been less successful on the hub and switch front, one
analyst says.
'Intel's presence in the networking space is all pretty much on the
NIC side at this point in terms of significant market share,' says
Esmerelda Silva, an analyst at International Data Corp., a market research
firm in Framingham, Mass. 'Within the hub and switch areas, they are
obviously plugging along as a second-tier vendor.' |
