Nice to see that NAS and SAN see the big pic and aren't fighting each other.......
INTC plans for '00....should be interesting.....
techweb.com
Intel Aims High In Server And Services Markets
Paul McDougall
Intel has ambitious plans for the coming year: The company is intent on establishing a larger presence in the market for processors that power high-end servers while becoming a key player in E-business hardware and services. "We're evolving from being a building-block supplier to the computer industry to being a building-block supplier for the Internet economy," says VP and GM of Intel's Communications Product Group John Miner.
Intel has little choice but to find new growth markets. Its net earnings of $1.5 billion, or 42 cents per share, for the most recent third quarter were below Wall Street expectations and down 6% from the previous year. Particularly troubling was the fact that year-over-year earnings fell despite an overall increase in revenue. What that revealed, according to analysts, was that Intel is still the dominant player in the low-margin consumer- and business-desktop markets, but has failed to make significant headway as a supplier to the high-end server market.
Intel executives say that will soon change. "Recognizing that a large portion of E-business is going to be in servers, in the last couple of years, we have shifted over half our R&D to server-related microprocessors, chipsets, and platforms," Intel chairman Andy Grove recently told analysts.
Those efforts bore fruit this year when the company introduced high-end technologies such as its Xeon processor and the Profusion chipset for eight-way servers. On the strength of these and upcoming high-end offerings, Intel expects to make big strides in the server market. According to internal company estimates, Intel's share of the market for processors embedded in servers that sell for $50,000 or more is presently about 20%. By 2003, however, the company expects that to grow to 69%. Fueling the push into the high end, according to Intel executives, will be the company's 64-bit processors, starting with the Itanium chip that is slated to enter mass production by the middle of next year. Itanium will "effectively extend Intel's reach in the server E-business environment and into higher application segments," says Miner.
In the months ahead, Intel wants its E-business presence to extend far beyond beige boxes. In September, the company introduced a network processor for routers and switches, while a flurry of recent acquisitions has left it well-positioned to become a key player in the market for the networking and communications products that underpin the Internet. For instance, Intel's $1.6 billion buyout of mobile chip maker DSP Communications last month was intended to give the company a bigger foothold in the rapidly growing networking and wireless market. "Intel is bringing in some heavy-duty technology in terms of a massive increase in our wide area networking capabilities," Intel senior VP and director of sales and marketing Sean Maloney said recently.
Indeed, 1999 will be known as the year in which Intel embraced an aggressive acquisitions strategy. On Intel's takeover list this year were other key players in networking software, components, and peripherals, including XLNT, Level One Communications, Ipivot, Dialogic, and Softcom. For the first time in its history, the company's acquisition costs-roughly $6 billion on nine major deals-will exceed capital spending within a 12-month period.
"You can expect more acquisitions that support our networking silicon business, and acquisitions that support our Internet online services," says Miner. As with many hardware vendors, the services market appears to be the next frontier in Intel's diversification strategy. In late September, it opened the doors to an 85,000 square foot data center in Santa Clara, Calif., that will support the company's move into the application hosting business. Intel plans to equip the site with 10,000 servers over the next two years, while opening similar venues in other strategic locations.
Intel hasn't forgotten about its core business. Company officials insist that, despite some reports to the contrary, the introduction of Intel's .18 micron Pentium III-dubbed Coppermine-is continuing apace. Intel is hoping that the .18 manufacturing process, which yields more chips per silicon wafer than previous methods, will help address a problem that was revealed in its third-quarter numbers.
"It will lower our production costs by about 50%," says Miner.
That kind of efficiency, combined with its broad diversification strategy, should ensure the company's position as a key technology supplier well into the next century. Says Kelly Spang, an analyst with Technology Business Research, "They can be successful if they pick the right partners and don't spread themselves too thin." |
