Intel hits reset button, tips growth drivers

TechOnline India - July 29, 2009

Bruised by a setback or two, Intel Corp. is hitting what some observers believe is the ''reset button.''

SAN FRANCISCO -- Bruised by a setback or two, Intel Corp. is hitting what some observers believe is the ''reset button.''

At a press event here, Intel moved to regroup by reiterating its strategy for growth. Besides PC processors, the company sees system-on-a-chip (SoC), embedded, health and mobility as its key future engines of growth.

During the event, it also appeared that Intel hit the ''reset button'' --or regrouped--after a recent slowdown and a setback in Europe. Recently, Intel barreled past analysts' revenue estimate in the second quarter on strong demand for its microprocessors and better-than-expected gross profit margins as conditions improved in the PC sector after a sharp drop off in sales during the prior quarter.

But the company posted a loss for the quarter, though, hurt by a $1.5 billion fine imposed by the European Commission, which had ruled against Intel in an anti-competitive investigation.

Intel is still smarting from the decision, but nonetheless, it is moving full speed ahead and seeking new growth markets. For years, it has been trying to expand beyond its x86-based processor business. But over the years, Intel has stumbled in various non-processor endeavors. It has failed in ASICs, cell-phone chips, communications, network processors and other segments.

So what is Intel trying next? At the press event, Intel talked about four growth engines, most of which have already been announced. Some efforts will succeed. Others won't.

Besides processors for PC, here are Intel's future growth drivers: {pagebreak}1) System-on-a-chip (SoC)

The company is making gradual progress, laying the foundations to build competitive SoCs for cellphones, TVs, videogame consoles and communications gear. In the third quarter, the company is expecting first silicon on a general SoC device based on its 32-nm process, said Sunit Rikhi, vice president of the Technology and Manufacturing Group at Intel.

2) Embedded

For years, Intel has been selling processors into the embedded market. The company now appears to be accelerating its efforts in the arena. Its new Atom processor is another piece of the puzzle. And in another example, Intel recently acquired Wind River, an embedded software vendor.

In embedded, Intel is looking to expand into four areas: Internet connectively, management/security, performance and energy harvesting, said Doug Davis, vice president of the Digital Enterprise Group and general manager of the Embedded and Communications Group at Intel.

3. Heath care

Health care is a growth driver for information technology (IT). Intel has a product in the arena. The product, dubbed the Intel Health Guide, connects patients and their teams for personalized care management. ''The product is shipping,'' said Louis Burns, vice president and general manager of the Digital Health Group at Intel.

4. Mobility

Intel is moving full speed ahead with devices for the mobile markets. At the event, the company dismissed the notion that netbooks are taking away business from traditional notebook markets. Intel sells the Atom for netbooks and traditional x86-based processors for notebooks. Wall Street is somewhat critical of the Atom processor, which has lower margins than its other x86 processors.

The netbook and notebook are two different markets, said Mooly Eden, corporate vice president and general manager of the Mobile Platform Group at Group. ''The majority of netbooks are secondary devices,'' he said.

He also claimed that the next-generation Atom platform, dubbed PineTrail, is not late. ''PineTrail is on schedule,'' he said.

Others are not so sure about the impact of Atom. There is ''some cannibalization'' between the netbook and notebook, said Nathan Brookwood, principal of market watcher Insight64.

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