Intel's Craig Barrett on e-business and the wireless trend

Leading chipmaker looking to diversify and make strategic partners in Asia Pacific region.

Intel president Dr. Craig Barrett gave a keynote presentation at a recent conference in Hong Kong, titled The Digital Economy, where he outlined Intel's vision of the future of e-business. After the presentation there was a joint announcement on a partnership deal between Intel and Cable & Wireless Hong Kong Telecom (C&W HKT). The partnership will see the two companies collaborating in the areas of new data centres for web and application servers as well as the roll out of broadband services for SMEs and individuals.

Dr. Barrett took some time out after the announcement to answer the following questions:

Q: You predicted in the summary of your keynote speech that somewhere in Asia would become the central hub for e-commerce. Does this partnership with Hong Kong Telecom indicate Intel's putting its money on Hong Kong becoming that hub?

A: I really think that the two leading contenders for a hub are obviously Hong Kong and Singapore. I'm not sure that I'm putting all of my marbles on either one of those. But we think Hong Kong will be a very vital player in that space and Hong Kong Telecom is certainly a leading player here, so we're very happy with the relationship.

Q: A few weeks ago Intel released a strategy regarding non-PC products. Can you elaborate on how that strategy might play out in Asia and whether you're planning to set up partnerships with non-PC products manufacturers such as cell phone companies?

A: I think there are going to be a variety of ways to access the Internet. PCs are the main vehicle today, but cell phones, set-top boxes and handheld devices will be valid ways to access the internet going forward. We already have relationships here in Asia. We have one with PCCW for intelligent set-top boxes for satellite delivery of digital content. We're very excited about that, and we intend to roll those applications out in the second half of this year. As far as the cell phone area, we are involved in flash memory and chipset logic.

I'm personally very excited about cell phones accessing the internet for the following very simple reason: The more people that access the internet, the better for the internet, and I think the better for the building block suppliers of the internet, whether it's services or components. If you look at the area of the world that's the leading provider of internet access via the phone, ie Japan & we find that cell phone access to the internet does nothing more than stimulate activity on the internet and stimulate PC sales associated with the internet. This will be healthy for us and healthy for all of the infrastructure providers.

Q: Why do you think the US is lagging behind in the uptake of wireless technology?

A: It's actually kind of interesting that the US is a third world country when it comes to wireless capability. Perhaps it's because we elected to go with our own standard in contrast to the rest of the world and didn't harmonize or consolidate in that area. There's also been obviously a lot of infrastructure put in place. One of the reasons Japan is going to be leader in third generation is that they ran out of bandwidth and have to go to the next generation of technology to continue to provide service that is acceptable to customers.

I think Japan will lead the area in that direction. It has the chance to capture significant market share. The US has just been fractionated with different standards and has not followed GSM [Global System for Mobile Communications]. Perhaps it's a combination of Motorola being slow to move into the digital arena and our Federal Communications Commission not standardizing with the rest of the world's technology use, but we are clearly a third world player in wireless communication.

It's perhaps worth stating, if you look at what's going on with e-commerce in the US where we're the first mover, there's an opportunity for the rest of the world to leap frog ahead with winning technology as opposed to experimenting with various technologies as is going on in the US today.

Q: With the deal you've just announced for the data centres in partnership with HKT, will Intel be the sole supplier of server equipment and such, or will there be other suppliers as well?

A: Use of Intel architecture comes largely from buying equipment from OEMs [Original Equipment Manufacturers] that we supply to. Hong Kong Telecom can obviously buy from a wide variety of suppliers. Some of the management hardware, the server appliances and net structure appliances will be Intel appliances, but the bulk of the hardware purchases will be from standard computer manufacturers.

Q: What's your take on the recent devaluation, or correction, in stocks?

A: There's clearly a consolidation going on, there are probably too many companies in all of the different categories. We're going to see some winners and losers, and the marketplace is starting to look for fundamental financial characteristics in dot.coms, just as they do in telecoms or semi-conductor companies. They look for revenue, they look for products, and they look for profitability. We're going to see valuations adjusted on the basis of those fundamentals, not just on how innovative the business plan is.

Q: Intel is going to be one of seven companies having a dual listing in Hong Kong this month, what value do you hope this will bring to your company?

A: I think being listed in Hong Kong merely means that not only is commerce being internationalized, but financial markets are too. For Intel, and we now do over 60% of our business outside the US and have many shareholders outside the US, being listed on the Hong Kong market is just the first step towards a full international listing of Intel securities. It will make our stock available for trading anytime, anyplace, and anywhere in the world. Hopefully this will provide greater interest and investor enthusiasm in our stock.