Pat I agree that the techs are marking time because of EPS worries. There is a lot of competition being unleashed out there from cheaper PCs to burgeoning software firms. Intel in Investors Business Daily today mentions that it will get into networking at the chip level so as to just connect to a giant network of millions of PCs; right off the shelf, sort of plug and play , no phone calls for tech support. So ultimately the plan is to connect millions of PCs and phones into a giant video-voice-data network.
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Chip King Intel Wants To Rule Network Space
Date: 3/23/98
Author: Michele Hostetler
The world's largest chipmaker is speeding its push into computer networking this year with a spate of products, such as switches, and a new division targeting home users.
But Intel Corp. faces competition from Silicon Valley neighbors Cisco Systems Inc., 3Com Corp. and Bay Networks Inc.
Mark Christensen, who heads Intel's networking division, recently spoke with IBD about Intel's plans.
IBD:
How critical is networking to Intel?
Christensen:
Networking is absolutely critical to Intel's future. Today all PCs are being connected. It doesn't matter what segment of the marketplace they're in. We have this vision of one billion connected PCs in the next decade. So to get there, networking is the key technology, as is network management, as is client-server. Where we're unique in the industry is that we're trying to bring all those things together. We're not a networking-only company. We don't just focus on the network. We're focused on networking, manageability and the cost of system) ownership.
IBD:
The latest networking buzz is Layer 3 switching, a technology that combines the speed of switches with the power of routers. Does Layer 3 fit into Intel's plans?
Christensen:
Yes. Silicon is able to drive performance. What you've seen in Layer 3 switching is the ability to take the function that used to be on a router and move it into high- performance silicon (chips) and do the routing right within the switch.
IBD:
Will Layer 3 switches represent Intel's chance to increase its push into networking?
Christensen:
No, I think Layer 3 switching is just another new technology. I think there's one thing that we've all learned: Technologies over time commoditize. They flow more and more into hardware, into silicon. The silicon allows the products to . . . become lower cost and higher performance so that more customers can use the technology.
Layer 3 is at the beginning of that curve. What you're going to see is that Layer 3 is a feature. It's a great feature. But it gets behind the concept that hardware is commoditizing and silicon is a requirement (to commoditize). We believe our core competencies of silicon, manufacturing and technology really play into this idea.
IBD:
Why did Intel form a home-networking division this year?
Christensen:
It's part of our whole vision of a connected PC. Today in the U.S., there are about 14 million homes that have more than one PC. Often a second PC is purchased, and the first one goes into the kids' room so they can do homework. What you're seeing here is more PCs are being deployed in the home and that there's an opportunity to connect those 14 million PCs. Within two years, it will be 30 million homes in the U.S. having more than one PC.
We're looking at technology that can make (networks) super-easy to install and easy to use. We hide all of the complexity to the end user. They've got to be able to go down to their local retail store, buy the (networking) product, take it home, install it, and it works. No phone calls, no tech support - it's got to just work.
IBD:
When will products appear on retail shelves?
Christensen:
We're not announcing our timetable, just that we have formed the group and we have people working real hard at it.
IBD:
How will Intel compete against Cisco, 3Com and Bay, which all have or plan to have home-networking divisions?
Christensen:
I think the Intel brand has won. I think the Intel brand is one of the top 10 brands in the world to consumers. But what it comes down to is ales) channels, and it comes down to great products that are super-easy to use. I think those are enterprise companies competing on Intel's home turf. I think you're going to see us do quite well in this area.
IBD:
Does Intel have plans for the integration of voice, video and data networks?
Christensen:
I believe that in specific areas within the network, the integration of voice and data is going to happen. I'm very excited about the concept of . . . using the Internet to do voice communications.
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So the big question I think is who will run this network and how will it be managed :.Telcos? v. ISPs? or a breed of both? The business data flow alone will be giant. Because of the massive voice-video-data flow that will need to be managed, I think established telcos, with large cash positions will have an advantage such as in the DT article :
www3.techstocks.com
In turn these telcos will tend to prefer a telco network hardware-software/ATM/management provider such as NN has been for years, even before CSCO and LU ever developed an ATM; we don't want to happen what you described in your article:
newsalert.com.
<<A few hours earlier, the fair's organisers were embarrassed by the crash of a key communications network which put on hold the work of thousands of reporters, business executives and assembly workers. "These are complicated networks and these things happen," said Peter Mihatsch, board member for telecommunications at German industry group Mannesmann, whose firm installed the network. He blamed the problem on the failure of a fiber-optic cable. >>
NNs focused leadership of 40% share of worldwide ATM
hardware/software/management is the proof of this thinking.
I think that the CSCO plan to be everything to all people is sort of like the general practitioner concept of treating everything; we know that doesn't work since there are 142 medical specialties ( repeat, 142 ).You cannot replace a specialist, and NN is an ATM specialist. I think CSCO, LU, INTC, IBM etc etc, and all the other networkers will fight off the rest of the pie with the ever changing technologies that are becoming available every day.
Overall however the issue here is potential decrease in EPS in techs. With the forthcoming network explosion, and with cash rich telcos buying ATM, I seriously doubt NN will have an EPS problem in 99 and 2000. I agree with you that NN is at the beginning of a new up cycle.
Just my opinion,
TA |
