Intel seeks to become a major force in networking
By Clare Haney
InfoWorld Electric
Posted at 7:01 AM PT, Dec 15, 1997
HONG KONG -- Leading semiconductor vendor Intel is gradually moving further into the networking equipment arena with the ambition of growing into one of the top players in time, said a leading company executive here last week.
"We're on a march to becoming a mainstream networking equipment vendor," said Frank C. Gill, executive vice president responsible for Intel's small business and networking group (SBNG). Gill, one of three executive vice presidents at the U.S. chip vendor, was speaking at an event held here to outline Intel's networking strategy for next year.
Gill described the three main areas of focus for Intel's future as: maintaining the company's core microprocessor business; growing businesses that complement its chips effort -- namely in the areas of networking and graphics; and finally, what he termed, making the visual connected PC a reality.
"All PCs must be connected and 3-D graphics must become a standard, " he said.
Gill pointed out that the networking equipment market is currently growing twice as fast as the PC market.
"This year, Intel's major marketing thrust in networking has been to evangelize the migration to Fast Ethernet technology," Gill said, adding that he expects the technology to become pervasive in the desktop arena within the next three to five years.
Gill said that Intel has already achieved strong market penetration in the Asia-Pacific region for its Fast Ethernet hubs, citing figures for the first six months of this year from IT researcher Dell'Oro Group. The figures give Intel the edge over 3Com, which heads up the market elsewhere in the world. For example, in China Intel has a 51 percent market share for Fast Ethernet hubs, compared to 3Com's 26 percent, while in Malaysia Intel has a 35 percent market share to 3Com's 20 percent.
So, what's Intel's secret -- given that it's still something of a comparative newcomer to the networking business?
"I really wish I knew, so we could do it in other geographies around the world," Gill said
He believes that in Europe and the United States, Intel's fame as a chip vendor tends to blind would-be customers from thinking of the company as selling any other products, whereas in the Asia-Pacific region, it's normal for companies to have more than one line of business, so customers don't have the same perception problem.
"Today Intel is recognized as a player in networking market," Gill said. "In 1998, we'll be a more complete solution supplier."
To that end, the company is going after small businesses, which, Gill claims, are currently left unserved by networking hardware vendors.
"Next year, we will use technology to hide the complexity, and will introduce a complete line of networking equipment for the IT-less small businesses," he said.
While Gill wouldn't be drawn on product specifics, he said that Intel would draw heavily on the technology it gained earlier this year when it acquired privately held networking products vendor Dayna Communications, based in Salt Lake City.
He said that the Dayna products are currently being "Intel-ized" and will be reintroduced under Intel's own branding some time in the first quarter of next year.
"Our goal is to provide a complete product family that will enable small businesses to build a local area network and to have Internet access," he said. Gill added that the product family would be simple enough that everyone listening to his presentation would be able to use them.
As Intel advances its networking market plans, the company will need to make more acquisitions, Gill said, adding that the company already employs full-time staff to keep a watch on the market. He said any such purchases would most likely be technology-based, and stated that Intel is not, to his knowledge, in negotiations with any potential acquisition target at the moment.
Of late, Intel's acquisitions have tended to draw the interest of the U.S. Federal Trade Commission (FTC) in relation to antitrust regulations. The company's proposed $420 million purchase of graphics processor specialist Chips and Technologies, first announced in July of this year, is still pending FTC approval. (See "FTC investigates Intel purchase of Chips and Technologies.")
When questioned if he worried about the FTC review, Gill said, "That's going to be one of the barriers. Any time Intel does any acquisition, we're going to attract long and painful [U.S.] government scrutiny. It's something we're concerned about." |
