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Intel inside isn't just for PCs anymore

In its semiannual meeting with financial analysts in New York, the company's executive team unveils a broad-ranging product strategy underpinned by a subtle reorganization.

Intel inside isn't just for PCs anymore.

In its semiannual meeting with financial analysts yesterday in New York, the chipmaking giant's executive team reiterated a product strategy that calls for the company to manufacture components and provide services for as many crucial segments of the Internet as possible.

"The Internet runs on silicon, and you want to follow the bits," said CEO Craig Barrett. "Our intent is to have all those bits run on Intel products."

In other words, the company most responsible for raising consumer awareness of the PC's components aims to be part of the many "information appliances" and online services springing up to serve the fast-growing medium.

In penetrating new markets, one of the company's chief selling points will be chip integration, the combining of two or more chips into one to cut costs, several executives said. Rather than sell a processor designed strictly for cell phones, for example, Intel will push integrated packages that include a processor, flash memory and a digital signal processor.

In networking and communications, separate connection functions will be combined into the same chip. Intel also will promote blueprints that show how equipment makers can combine Intel networking chips and Pentium IIIs into switches and other devices to make "intelligent networks" and effectively allow Intel to use one product line to promote another.

"Integrate is the name of the game," said Mark Christensen, general manager of the Networking Communications Group.

Product integration has Closer look at Intel's divisionslong been part of the technology world, but Intel executives say the concept could be especially potent for the Santa Clara, Calif., company because it can leverage its different divisions.

"The more total building blocks a company has, the more they can integrate a total solution," said Ron Smith, vice president of the wireless communications computing group. "Our objective is to deliver a fully integrated silicon solution...We're in a position to do a very high level of integration."

Intel generally painted a bright view of its future despite recent manufacturing problems. PC demand is expected to grow about 20 percent this year, said Paul Otellini, general manager of the newly formed Intel Architecture Group, with server and notebook sales growing faster than that. The Intel Architecture Group combines the existing Intel Architecture Business Group with the Microprocessor Products Group and some other technology divisions.

Otellini also presented a processor road map for the remainder of the year, revealing few surprises. Willamette, the upcoming successor to the Pentium III, will begin to ship in volume this year at speeds of 1.4 GHz or faster. The Pentium III, meanwhile, will not advance much past 1 GHz.

"Systems from major manufacturers based on Willamette and Timna (a low-end version of Celeron with an integrated graphics chip) will be in the market in high volumes for the peak selling season for 2000," he said.

Some analysts had speculated that a volume push might not occur until next year.

Intel also plans to release a low-power, 600-MHz Pentium III for notebooks in the summer. The chip will consume less than one watt of power and appears to be targeted at the low-power Crusoe notebook chip coming from start-up Transmeta.

Meanwhile, Intel's Networking Communications Group is launching an aggressive program to recruit more software developers and computer consultants to its technology. "There are many new classes of customers that we have not called upon," said Mark Christensen, general manager of the group. "We will help them 'port' and tune their applications to run seamlessly on a variety of systems."

Due later this year, the second generation of the StrongArm processor will showcase the work of Intel's wireless and combined groups. A digital signal processor from Intel and Analog Devices also is on the way, said Smith.

The integration of communications chips and Pentiums will be another focus, executives said.

Turning to business computing, Intel has plans to build special-function server appliances that perform traffic management, as well as voice-data servers, general manager John Miner said.

International expansion will also play a significant role in the company's plans, especially for its investment group. "If the Internet is going to become a major worldwide phenomenon, it has to adapt to local culture," said Les Vadasz, president of Intel Capital, the company's investment arm.