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Intel's Barrett: PC market on the mend

CEO Craig Barrett kicks off the Intel Developer Forum with a speech somewhat similar in theme to the one he delivered last year, but showing an increase in optimism.

SAN FRANCISCO--Although the market for communications equipment continues to shrink, the PC market has begun to stabilize, said Intel CEO Craig Barrett during his keynote address at the Intel Developer Forum here.

"I can't tell you when the recession will end, but I can tell you that the computer market has stabilized, albeit at a lower level than last year," said Barrett at the four-day convention used to highlight the chipmaker's technological advances. "You might expect the computer sector to recover faster than the communications sector."

Barrett's speech was similar in theme to the one he delivered at last year's convention, but showed a slight increase in optimism. The world remains mired in a recession, Barrett noted, but companies that can deliver a compelling technological experience to consumers and businesses will succeed. In one demonstration, Barrett showed off how PCs could be used to stitch together a video-like presentation from digital still photographs.

The continuing growth of the Internet will also force businesses to upgrade their back-end systems, Barrett predicted.

"What our industry has in front of it is the build-out of the Internet and the convergence of communications and computing," Barrett said, adding that the main challenge facing the industry is "how do we give the end user more reason to use our technology?"

Overseas and emerging markets will also become crucial for the technology industry. In China and India, for example, there are, respectively, 12 and three PCs per 1,000 people. By contrast, in the United States and Germany there are 611 and 297 PCs per 1,000 people, he noted. Seventy percent of Intel's revenue derives from outside the United States, and that figure will likely grow, he added.

"Every country wants to participate in the next economy. There is a huge opportunity for us on the industrial level and at the consumer level," Barrett said. "The worldwide opportunity is important. The established markets will, I'm sure, show some continued growth out of the recession. But that percentage growth will be smaller than what you might see in China and Eastern Europe."

The company's approach to the market in the future will involve concentrating on making processors and other "building block components" for clients--for example, PCs and handhelds, networking and telecommunications equipment and servers.

Earlier on Monday, for instance, the company came out with its Prestonia processor for one- and two-processor servers. The company also confirmed it is working on Montecito, a version of the Itanium processor due in 2004. Montecito and its successor, code-named Chivano, will be influenced by Compaq Computer's Alpha chip, sources said.

To complement its chips, Intel is expanding its effort to build software and testing labs in different parts of the world so that application developers and hardware manufacturers can tune their equipment for Intel chips.

Despite the optimism, the industry will have to conquer some obstacles along the way. The adoption of broadband communications--a potential watershed moment for the convergence of the PC and entertainment--remains anemic in the United States. And security is a looming concern.

And the economy, of course, remains impossible to predict. "No one knows exactly what's happening," Barrett said. "They (the analysts) have all established their credentials of not knowing what the hell is going on."