Edamo: Looks like Intel's Grove is joining Gerstner with negative comments on the Inuts...
Regards,
John
DJ Intel's Grove Charts Course For
Internet Data Svcs
By ANTHONY PALAZZO
Dow Jones Newswires
This story originally was published Sunday
LOS ANGELES -- At an investment conference, Intel Corp. (INTC)
Founder and Chairman Andrew Grove reiterated the logic behind
the chip maker's recent decision to expand into data services.
Intel, of Santa Clara, Calif., recently announced it will pour more than
$1 billion into a new Internet data services unit.
The company expects Internet markets to align themselves
horizontally, the way competition evolved in the PC market at the
processor, computer hardware, operating system and application
software levels, Grove said in a speech at the L.A. Times Investment
Strategies conference.
Companies of all sizes are are rushing to adapt their
customer-service, supply-chain and other business operations to
changes brought on by the Internet, Grove said. Five years from
now, companies that aren't wired will disappear, he said.
Intel's data services will allow small- and medium-size companies to
cheaply rent, or outsource, the technology they need to compete in
the new Internet-driven economy, Grove said.
The unit will manage computer centers on behalf of Internet service
providers, Intel has said.
Grove's talk covered the histories of the personal computer and the
Internet, and the way these technologies are changing the economy -
and Intel's business.
The data-services strategy, is being seen as an extension of Intel's
long-held efforts to expand the market for its processors.
In the past few years, Intel expanded into networking equipment,
mainly network adapter cards and home-networking products, as a
way to build demand for more-powerful microprocessors. If the
pipes that feed data to computers are fattened, the logic goes,
customers will have a use for faster computers.
In a similar effort, Intel has seeded numerous companies developing
processing-intensive software.
The Internet, Grove said, is driving a rapid expansion of databases
just at the time that Intel is extending to chips with a 64-bit
architecture -- the ability to process twice as much data at one time
than 32-bit chips can.
The need for stronger databases is giving rise to "bit factories,"
which will allow people to buy powerful data services without huge
infrastructure investments, Grove said.
"A lot of small and medium size companies ... we think they will want
to use this capacity and service, rather than build it themselves," he
said.
Intel officials have said Intel will even provide servers built by rival
Sun Microsystems Inc. (SUNW), if that's what customers want.
Microsoft Corp. (MSFT) is now testing a powerful operating system,
called Windows 2000, which will be paired with Intel's 64-bit
processor and aimed at a bigger chunk of this growing market.
GROVE SEES LOTS OF LOSERS ON INTERNET, FEWER
WINNERS
In his speech, Grove also expressed caution about the high stock
valuations of Internet companies.
While productivity gains generated by technology are powerfully
reshaping the economy -- allowing U.S. growth of 3% a year without
inflation, rather than the historic 2% limit -- they haven't changed the
basic equation for the long-term success of a company, he said.
The Internet is now attracting a lot of investment capital, Grove said,
and that's good because it allows people to bring forth new ideas.
But it's also bad, because with so much money available,
companies aren't developing the same discipline they would if they
had to rely on profits they generate themselves, he said.
Grove drew an analogy to the 1970s, when governments poured
money into semiconductor companies in their own countries.
"We competed with companies with the infinitely deep pockets of
their governments, and every one of those companies vanished over
time," he said.
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