PB1, Re: "Does anyone know if Intel has any plans to do with Storage Area Networks??"
I don't know, except possibly as a customer of NTAP or EMC to use their storage/server/SAN boxes to be part of Intel's internet server farms, their newest announced venture. Intel did talk a lot about in process and upcoming new developments yesterday at the stockholders meeting. I tried their web summary site for that, but it didn't work once and, the next time all my Netscape screens blew up. So, I'll put my notes in here, which may or may not differ much from Intel's.
Quick summary: It was a whole bunch about the connected world and the internet, and Intel planning to support it with all the products they possibly can. There really was as much, or more, attention placed on the drive to have products for the internet, as there was on semiconductors themselves.
Andy started with a tribute to Arthur Rock, first Intel chairman and long time mentor of even Andy Grove. Gift a nice framed caricature of Arthur skiing, which Andy said he, Arthur, was expert at, and he, Andy, often saw just his back as he was trying to keep up with him.
BUSINESS REVIEW
'98 a tough year...inventories, etc., etc.
Showed a slide on revenues for 1998 vs. 1997 for the top 20 or so semiconductor companies. Intel was up about 4 1/2%, next six were all negative. All Japanese, or was TI in there?
4Q98 saw first good improvement. Profitability was down overall in '98, but R&D was up.
Currently, worldwide, North America is 45% in the pie chart. Latin America, Europe, including Eastern Europe, and Asia are growing the fastest.
Still planning on 6 billion combined expenditures in 1999 for R&D and capital, about $3B each. I've seen the $3B for cap several times now. Intel holds that number down by re-using a lot of the AMAT type of equipment for 0.18, that was put in place for 0.25. My ed.: Intel has mentioned this type of thing several times in their ongoing cost containment-cost reduction program.
Craig said Intel is in production with 0.18 micron line widths, said Intel is the first to be there. My ed.: IBM? Or, maybe he's just speaking of the more "pure" semiconductor companies. Either way, this is huge, right? Then, what did we expect, right?
0.18 will be the mainstay for the next 2 years, and, Craig said, we can expect 5 more generations that adhere to Moore's law. Gordon was there too (not on the stage).
Vision still is 1 billion connected computers, ultimately supporting trillions of $$$ in E-Commerce.
Talked a lot about doing practically everything in the company to support the internet. Next part "building blocks for the internet" is undoubtedly shown much better in the web summary:
1 Client Platforms
2 Servers
3 Network Infrastructure
4 Solutions and services
PLATFORMS are obviously PCs, performance and value, and also mentioned set top boxes,, with the implication that Intel will be there. Devices are obvious for the PCs. For appliances, mentioned Strongarm and SA-1110 SOAC (system on a chip) announced in March.
Paul, I tried to ferret the SA-1110 SOAC out of my notes to ask you about it at the lunch, but couldn't find it then. What is it? Timna???
SERVERS...Xeon based obviously, for now. UP-MP, up to 8 way (not quite yet on the 8 way). Workstations mentioned as important tool to generate digital information for the net, they use Xeon, PIII. Intel server market share to grow to 80% by 2002 (not sure of my notes on this one. 80%?). 64 bit Merced (EIGHT OS's booted on it so far), McKinley, Madison, Deerfield big factor in the growth as Intel to take on 64 bit market. Intel experience in MP, floating point, encryption, NT, Unix, Linux, Java all key in this buildup. My ed.: Throw RAS in there, what the hay!
NETWORK INFRASTRUCTURE, mentioned silicon building blocks for it.
LAN on motherboard. NICs, etc. Level 1 chips may also fit in here.
LAN-WAN and telephony - Level 1. Goal for Level 1 takeover to be finaled in June, Craig said.
Anypoint. Intel's new connect multiple PCs to one phone outlet. More later.
SOLUTIONS AND SERVICES. Build host centers for internet data service content. These are the server farms. Intel wants to become the leader in hosting, storing and delivering web content. Craig said the first one would be in Santa Clara, and roll out world wide next year. My ed. May sound no brainer, but good move building the first one close to home. Customer service has to be the key in this venture, easier to manage in your own backyard first.
NEW TOPIC..Education at Intel. Yawn part. BUT IT'S IMPORTANT, I KNOW!
Andy then talked about the internet (some more) as being where everything is at for the foreseeable. Some data, just roll it out, Intel 0% sales on internet in '97, 21% in '98, 42% projected in '99. Run rate right now is 12 billion. He gave a tribute to Japanese manufacturing (without calling it one) saying that the internet is to commerce as Japan was to manufacturing in the 80s.
Continuing about the internet and Intel's infrastructure plans, he said Intel wants "to be at all levels of the internet." Slide on backbone, Intel wants to be involved with hardware in it...packet switching protocols and chips to handle it, broadband, broadband, broadband (obviously). Intel hubs, routers and switches (hello Cisco?) The Intel express. NGIO (Next Generation I/O, Intel's favored one to replace PCI), was mentioned here also.
Did they mention the internet enough?
QUESTIONS
Q1. Of the four business units, where are the good investment opportunities?
Les Vadasz picked this one up (new products SR VP?). The transport level. Under-road, wired, wireless.
Q2. Where does Level 1 fit in?
Les. Between the PC and telephone line or modem or LAN, also LAN to WAN & Telephony. Intel working on the complete package.
Q3. WRT internet ventures, who are the customers, and who is the competition?
Craig. Customers: Cisco, Lucent, Nortel for Intel's building blocks. Competition: 3COM, after some more thought, Broadcom.
Q4. Y2K? Craig, 2 parts, in house, Intel feels they have done a good job internally to ensure their operations don't freeze up due to Y2K. WRT customer sales, he said it's kind of unknown still. No impact seen yet by anyone in industry he knows about. My ed.: IBM and EMC have come out that Y2K is looking like a yawner to them (business as usual).
Q5, Anypoint. Questioner said he was a happy camper stockholder, but he had trouble installing it (admitted non-tech guy). Craig said get your teenager to install it (laughter). He then said he'd take it back to Intel. Someone mentioned at the lunch he did not have much trouble at all installing it himself (but he's got a PHD from MIT!).
Q6. When will mobile computers get as fast as desktops. Craig: With Geyserville (this fall?) go to 600 MHz mobile when you plug it into a power source (not sure what that looks like. Help!). Without that power source, you go back to 400 MHz to save battery.
Q7. Use of computers in medical technology, when will it catch up? Didn't get much of this one (needed a break?).
Q8. How are low end sales? Very healthy. 466 MHz Celeron giving it another shot.
Q9. Intel's involvement in cable or DSL? Intel on a committee setting standards, including for set top box. Andy mentioned broadband again...anything it takes.
Q10. How's PIII ramp going. Paul Otellini: Intel very happy with the ramp, which is Intel's fastest ever.
Q11. What are Intel's criteria for investing in smaller companies?
Les: Invest in companies that help Intel sell its products, whether the company has hardware or software; or help Intel develop products or new markets.
Q12. Microsoft trial, any comments on it by Intel?
Andy: hands off that one.
Q13. Where will Level 1 chips be made. Level 1 is fabless, so they could bring it into Intel, or use existing foundry space out there. Being that they do some mixed signal, A to D and digital, have to decide best place.
Q14. What about AT&T and cable, any effect on Intel? Can't hurt as it should improve broadband availability, which can only help PC and server sales.
Q15. Intel interested in chips for hearing aids? (from hearing challenged man). I don't think so, no volume (no pun intended).
Q16. What about National getting out of the PC chip biz, any effect on Intel?
No, companies move in and out of competition with Intel over the years. Someone else will try.
Q17. What about Rise Technology? Intel will compete with them. My ed.: Oh.
Next stop on the NorCal stockholders tour: Cisco. When is that?
The end.
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