Hi Ibexx and ALL, Article...Intel Seeks Larger Share of Networking Market...
By JOHN SHINAL
c.1998 Bloomberg News
Intel Corp. is expected this month to unveil new networking products and cut prices on existing ones as it seeks a larger share of the market for equipment that links computers to the Internet.
The world's largest computer-chip maker has been developing its own networking technology since 1991 and also has been investing in startup companies and forming partnerships with networking industry giants such as Cisco Systems Inc.
Intel's push into networking is driven by its belief that PC sales might be slowing at the same time that the market for networking equipment sold to small and mid-size businesses is expected to explode, analysts said.
''These (networking sales) encourage more PC sales down the road, but this is also a hot market right now'' said Brendan Hannigan, an analyst with Forrester Research in Cambridge, Mass.
Only a third of businesses with fewer than 100 employees have their computers wired together in networks, according to a study released this week by Access Media International in New York. That number is expected to grow as more small companies look to internal networks to speed data flow and to the Internet for access to more customers.
While networking sales account for less than 5 percent of Intel's total revenue, those products contributed about $700 million to the company in 1997.
Access Media predicts that spending by small companies on networking hardware and software will grow to about $12 billion in 1998 from $9 billion in 1997.
That figure includes the market for networking gear such as hubs, routers and switches; computer servers like those made by Compaq Computer Corp. and Hewlett-Packard Co.; and networking software such as Microsoft Corp.'s Windows NT.
3Com Corp., the No. 2 networking company, has by far the largest market share for low-cost routers, hubs and switches, according to the latest figures from the market research firm Dell'Oro Group. 3Com also controls more than 50 percent of the market for network interface cards, or NICs, which contributed $1.4 billion, or about 24 percent of the company's revenue, in calendar 1997.
Last month, 3Com cut the price of its NICs to around $80, and Intel plans to do the same later this month. The cards, which can transfer data at speeds up to 100 megabits per second, are installed in computers and workstations to connect them to office networks and, through those networks, to the Internet.
Intel's experience in making chips and selling them through other vendors will help it sell inexpensive networking products to small businesses, analysts say, because those customers are cost-conscious and tend to buy from retailers like Comp USA rather than directly from manufacturers.
''These buyers care less about features than they do about price,'' said Tom Nolle, an industry analyst with CIMI Corp. in Voorhees, New Jersey.
Still, Intel faces an entrenched competitor in 3Com, which also has built a strong sales distribution system to the small-business market, Nolle said.
In addition to cutting prices on its low-end networking gear, Intel also is expected to introduce its first high-performance switching products capable of transferring data at so-called gigabit Ethernet speeds, 10 times faster than today's switches.
All of the major networking companies, including Cisco, 3Com, Bay Networks Inc. and Cabletron Systems Inc., have begun shipping gigabit Ethernet products, which are expected to generate $1 billion in sales by 2000.
Most of those sales will be to large corporations, a market niche where Intel does not expect to be able to make much headway against Cisco and its largest competitors.
''We will remain focused on getting small and mid-sized companies connected to the Internet,'' said Frank Gill, executive vice president of Intel's small business and networking group.
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Where the Internet takes them, Intel will lead and follow...
Michael
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