Paul, an interview with your old boss by Investors Business Daily, posted by Derek Cao over on AMAT. I guess Derek sold, or otherwise got tired of Intel.
"Intel Besieged? CEO Barrett Isn't Worrying
Date: 9/1/98
In his three months as chief executive of Intel Corp., Craig Barrett has
been socked with nonstop problems.
The chip industry is slumping. The growth of sub-$1,000 personal
computers is squeezing profits. Rivals such as Advanced Micro
Devices Inc. are showing renewed strength. And the Federal Trade
Commission says Intel is violating antitrust laws.
The honeymoon's long over for Barrett, a former Stanford University
professor who turned 59 over the weekend.
Late last month, Intel introduced a new version of its low-end Celeron
chip. Analysts say the processor - speedier than the coolly received
original Celeron - will strengthen Intel.
In an interview with IBD, Barrett talked about Intel's problems and his
strategies for solving them.
IBD:
What are the biggest challenges facing Intel?
Barrett:
Intel's biggest challenge right now is simple: growth. The financials
for the last year and a half have been flat. The real issue is to get back
on the growth path, both from a revenue and an earnings standpoint.
IBD:
How do you do that?
Barrett:
I see that coming from two areas. One is the classic area of finding
new users and new uses for PCs. That's the standard methodology of
our microprocessor business. We find new users and uses for our
ever-more-powerful microprocessors.
But the other area is the vision for the future, which is to have a billion
connected PCs with good visualization capabilities (able to display
sophisticated video and graphics). We look for business opportunities
associated with that. That could involve networking, electronic
commerce or digital imaging.
IBD:
Was Intel late to the low-end chip market?
Barrett:
We had been looking at the market for five years. There was always
talk about a sub-$1,000 PC in the marketplace, and it never
materialized (until now). We were probably a little too complacent
and off to the sidelines. We then had to respond quickly with the first
implementation of Celeron (in April). We followed that up very
quickly with a next-generation, higher-performance product. Yeah, we
were late and are scrambling. But we're back now with a very
competitive product offering in that introductory, basic PC space.
IBD:
Will the market for sub-$1,000 PCs continue to grow quickly?
Barrett:
It can't continue growing at the rate it has been. There would be
nothing left. But in the retail space, you'll see a strong lower-end
segment. It's not going to go away.
I think the interesting question is whether it's good for the PC market.
If the affordability really draws in more users, then that will be really
good for the PC market in the long term. It will get more users
involved and bring more opportunities to PC manufacturers, people
like Intel and people who write software.
If it does nothing more than cannibalize the whole PC market - if all
PCs turn into sub-$1,200 or sub-$1,000 machines - it will probably
strip a lot of the margin dollars out of the system and retard the
development of new technology.
IBD:
One explanation for the growth of the sub-$1,000 PC is that software
doesn't place as many demands on hardware as it once did. Is that the
case?
Barrett:
I hear that comment all the time. But then I go and talk to the next
generation of PC users. I have never met a 10- to 15-year-old who
said the highest-performance PC has way too much power.
It's only people who are middle-aged or in the press who say you don't
need high-performance PCs. It's only the case if you only do word
processing and use the PC as a typewriter replacement.
In the area of games, there's no such thing as a PC with too much
performance. If you're going to do digital imaging, voice recognition
or videoconferencing - anything that requires visual capability - you
can use the performance.
The bicycle is a pretty good mode of transportation if you only want to
go from A to B. But if you want to drive there in comfort and feel good
at the end, then maybe you want to get something with higher
performance.
A little after I joined Intel 25 years ago, I went to my first major
meeting. (Intel co-founder) Gordon Moore was speaking. Moore's
Law had been around since '66. (The law says that the number of
transistors on a chip doubles about every 18 months.) Gordon said, ''I
think Moore's Law will continue, but I haven't the faintest idea what
we'll use these transistors and this processing power for.''
I heard him give the same speech in 1975, '76, '77, '80, '85, '90, '95
and '98. Somehow the world keeps figuring out cool things to do with
these transistors.
IBD:
How do you plan for the long term in an industry that changes so fast?
Barrett:
To some degree, it's a game of chicken. We build factories today
before we have products to make in them. If the products aren't
accepted in the marketplace, you're dead. You have the $2 billion
invested in the factory, and you have several years and hundreds of
millions of dollars invested in the research and development. You do
all the rigorous planning you can with sophisticated planning
technology. But, in essence, you have to bet that the product will be a
success.
IBD:
Will the chip business always be cyclical?
Barrett:
Right now, we have a combination of the Asian financial crisis and a
bit of a slowdown because the Koreans tried to follow the Japanese
playbook and buy some market share (in DRAM memory chips). The
Taiwanese followed suit. In this industry, when you have one extra
DRAM, the marketplace goes from euphoria to disaster. Whoever has
that extra unit starts lowering the price to sell it.
There are signs of recovery, but it's anybody's guess what happens
next. But I don't think the industry is as cyclical as it once was. Back in
the '70s and '80s, you wouldn't see an order for six months. That was
scary.
IBD:
Intel's StrongARM processor, which you bought from Digital
Equipment Corp., is designed to run set-top TV boxes and hand- held
PCs. Is it hard for Intel, which develops most products internally, to
assimilate the technology of others?
Barrett:
You play the hand that was dealt to you from a historic standpoint, and
you look into the market and see if that hand serves your needs. We
saw that there was something happening with set-top boxes. We
looked at the price that these are being sold at and decided that we
wouldn't need the Intel architecture. The StrongARM product
happened to meet the requirements. I think we're capable of bringing
foreign protein into the system and having it be compatible with the
rest of the living organism.
Certainly the Intel architecture has a rich heritage. It has exceeded
everybody's expectations, most notably our competitors'. They
pronounced it dead seven times in my career at Intel.
The Ace Consortium was going to kill it. (In the early '90s, the
Advanced Computer Environment tried to forge competing standards.)
Sun Microsystems Inc. was going to kill it (with network computers
supplanting PCs). The PowerPC Consortium (of Apple Computer Inc.,
Motorola Inc. and IBM Corp.) was going to kill it. (Digital
Equipment's) Alpha (chip) was going to kill it. And now, some think
the idea that we don't need any more processing power is going to kill
it. But Intel has succeeded in overcoming all of these challenges.
--------------------------------------------------------------------------------
(C) Copyright 1998 Investors Business Daily, Inc. "
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