That's bigger than the revenues of most high-technology companies, but it's only about 10 percent of total revenue--and it's a percentage Intel is keen on increasing. That task falls to Sean Maloney, the executive vice president and general manager of Intel's communications business.
Under Maloney, the chipmaker moved into the high end of the network processor market with the introduction of chips that run at 10gbps (gigabits per second). But Intel isin this competitive market. Rivals, such as Applied Micro Circuits, have beat Intel to the punch by churning out versions of their own high-speed network processors earlier.
But Intel remains apresence, owing to its size and experience in the chip field.
In addition to the billions of dollars spent on research and development, Intel has spent heavily to acquire networking and communicationssince 1999.
The company has also invested in many telecom start-ups through its venture capital arm. Its optical portfolio now includes 36 companies, includingand . Intel has also invested in companies such as , Tornado Development, SmartPipes and Tejas Networks.
CNET News.com recently spoke with Maloney to get his take on upcoming technologies in the telecommunications and network chip market.
Q: Do you have a rough idea of when the telecom market might start to pick up again?
A: No, the "com" recession is not over yet. There's also no slowdown in Internet traffic growth, so you have the continual paradox of a slow market and a continually growing traffic base. And neither of those factors have changed. It's a bit like water rising behind a dam. At some point, there's going to be a big wave of purchases, but as ever, it's not happened yet.
Can the kind of telecom gear that's being produced now handle the future growth of Internet traffic?
I'm not sure that the equipment going in now will be able to cope. If you go back to 1992, Internet traffic has pretty much doubled every year since then, and it's carried on doubling, even though we've gone through a recession. Given the demographics, it's reasonable to assume that the current rate will be sustained just through simple arithmetic. Internet traffic is going to catch up on everybody, and I think the (telecom) industry as a whole needs to bear that in mind. It's a profound change.
So from the gear makers' standpoint, what do they have to do? It's hard to sell gear to carriers in a recession, so do they focus on getting the next generation of advanced gear ready?
The telecommunications industry has not had many recessions. The computer industry has had multiple recessions, and the computer industry knows that you get out of a recession on tomorrow's technology, not today's. You always go to the next generation, and that's what pulls you out of these recessions. We think that there are four or five post-recessionary technologies; wireless
"We think that there are four or five post-recessionary technologies; wireless Ethernet is one of them, 10-gigabit Ethernet is another."
What are the applications for that technology?
Currently, most of the networks that are going into metropolitan areas operate at 2.5gbps and below. Those networks are likely to fill up, given the growth in traffic.
When do you think that will happen?
You can't generalize because it's so different metro by metro and country by country. But given that you have this doubling every year, it's important to put in technology that has head room. The post-recessionary technology--the next sweet spot--is 10 gigabit, a combination of 10-gigabit Ethernet and OC-192. That's the goal the industry needs to move towards. So component and equipment manufacturers have to deliver breakthrough price and performance. That's what we're concentrating on in our optical division--driving the cost right down.
Wouldn't you see 10-gigabit speeds in long-haul networks that run between cities rather than within the metro?
The desktop is going to move very quickly to requiring 1-gigabit capacity. So imagine a building where you've got hundreds of PCs all generating 1 gig in traffic. What you do is aggregate them with a 10-gig link (to an Internet connection). And so, 10 gig is going to become a big issue in the enterprise in the next two years. You'll see it in the enterprise and the metro space, and the combination of both those traffic levels going up means that people are going to have to switch on more (dark) fibers in the long haul.
That's assuming that they are going to fill all the excess capacity in the long haul. But to use 1 gigabit of traffic wouldn't you need to have audio over the Internet and video conferencing as a fact of life? I think it's safe to say that that hasn't arrived yet.
That hasn't arrived, and it's not likely to arrive. But you don't need it. What you need in order to need 1 gig are fat e-mail files as well as remote database access. The reality for all of us is that our e-mail attachments are getting bigger and bigger. You might have to wait a couple of minutes for your e-mail to come in over the network.
"The desktop is going to move very quickly to requiring 1-gigabit capacity."
To get to some Intel-specific questions, which of your network processor competitors are you watching the most right now?
The market had somewhere between 20 to 30 vendors, and right now it appears that there are only four or five who seem to be in it for anything like the long-term. I think that in the network processing space, serious players have their own fabs. The ability to provide microprocessors over a 10 to 15 year period reliably to customers without your own factories has proven over and over again to be a flawed strategy, because you end up with capacity shortages (and) then you can't supply. So to us, the serious players are going to be the ones who will put the money on the table to build their own factories.
Intel started making chips for the lower end of the market--or the slower speeds--and the company's recent 10-gig chip announcement signifies that it's going after the high end of the market. Would you say that Intel is going after the incumbents in that market?
The higher-end market is very much up for grabs, because so far (equipment makers) have used ASICs (chips) in that market. They haven't used network processors, (which are more suited to the job.) It's really only been in the last six months that the people who make these high-end systems are taking a very serious look at network processors. The decisions are likely to all get made inside the next 12 months, (so) it's really crunch time for the high end of the network processor market.