Intel scoffs at ‘post-PC' computing, but prepares: Chip maker ready to slip silicon into everything IT

Intel executives may dismiss the idea of a ‘post-PC era', but at a recent six-hour briefing with financial analysts, their focus was sharply trained on e-business growth areas far beyond the PC market.

Intel chairman Andy Grove repeated his latest corporate mantra that "the Internet runs on Silicon" and said Intel must "follow the bits" wherever they take the $US30 billion ($51.5 billion) semiconductor giant.

"We are in the midst of a fairly sizable strategic transformation," he said.

The trend toward Internet computing and increasing use of non-PC devices is driving Intel to figure out ways to slip its silicon into everything from mobile phone chip sets and Internet appliances, to networking and communications products, flash memory, wireless and mobile devices, handheld computers and its traditional range of PC and server platforms.

This year, for example, Intel will invest more than $100 million and dedicate 1000 employees in a range of electronic-business products and services aimed at dotcoms and other e-commerce businesses.

The company has so far opened two new data centres to offer application hosting and other e-commerce services and will have 10 running by year's end, Intel CEO Craig Barrett said. The company will also spend $6 billion this year on a wafer fabrication and assembly testing facility to try to resolve processor supply problems that have plagued it for the past year.

Investing in Internet economy companies is also a growing part of the Intel agenda. In the past several months, the company has spent $7.5 billion on acquisitions and invested $750 million in more than 125 start-up companies.

Other areas where Intel is now diversifying its resources and investments beyond its traditional stronghold in PCs and servers include:

* The e-business data centre hosting business, which is expected to grow to $14 billion worldwide by 2003.

* Converged voice and data networking, which Intel estimates will be a $12 billion market within three years.

* The mobile phone and wireless Internet market, which analysts predict will number one billion users by 2003, will need "a boat load of silicon" according to Barrett - enough to make it the second largest chip set consumer after PCs.

* The Web appliance business. Intel will launch its first volume product - a set-top box - in China later this year.

"The mix of business Intel execs talked about here is clearly where they want to go, but it's still less than 10 per cent of their revenues," said Joseph Osha, director of global securities research at Merrill Lynch.

However, he and other analysts were generally upbeat about Intel's e-strategies.

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