Barrett talks about politics, AMD and life after Intel
Published: 29 Oct 2004 16:39 BST
When Craig Barrett bows out as Intel's CEO next May, a piece of Silicon Valley history will go with him.
The San Francisco native helped perfect Intel's microprocessor manufacturing and has since navigated the company into new categories, with the launch of chips for digital home devices and the creation of new wireless technology.
Lately, Barrett has been better known as one of the most vocal technology executives on the subject of education and American competitiveness, two issues he'll continue to follow after his retirement from Intel.
Barrett has experienced his own peaks and valleys since joining Intel in 1974, from price wars with Japanese rivals to the extravagant dot-com-fuelled profits of the late 1990s. The Intel that current President Paul Otellini will lead will still dominate the PC processor business. But the market is changing. Intel faces lower margins as well as increased competition from long-time foe Advanced Micro Devices and new challengers from China and elsewhere.
ZDNet UK sister site CNET News.com editors recently spoke with Barrett.
Q: Roughly 70 percent of Intel's revenues are coming from emerging markets overseas. The cost of goods in emerging countries is being lowered. Do you see margins getting slimmer as you sell more products into emerging countries?
A: The hardware costs have been kind of under constant pressure forever in those markets, although interestingly, some of the emerging markets are very fast adopters of technology. The trivia question I like to play with people is, when we went from Pentium III to Pentium 4, which market toggled the fastest to 50 percent Pentium 4? What country made the fastest transition? The answer is China -- faster than the US. Their business is growing faster percentagewise than the US. But conventional wisdom would have said there is more pressure on Chinese markets from a price standpoint than the US, therefore China would buy down and the US would buy up. But it doesn't work that way. They are brand conscious, and they buy up in China.
The convergence of computing and communications has been driving business decisions within Intel. If you look out five years, what position will Intel have in this converged environment?
I don't expect our position would parallel our microprocessor position in computing. Nor do I think you will see the equivalent of an "Intel inside" brand in much of that space. The reason is economics. The guts of a volume cell phone have maybe $40 worth of silicon in it. The real issue is that $40 worth of silicon is not sufficient (dollarwise) to let you run a branding campaign similar to Intel inside.
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