Part 6, Barrett unplugged: 'Technology doesn't recognize recessions'

"110"="" hspace="3" vspace="1"> Deep-pocketed Intel isn't waiting for the tech turnaround--it's making investments now to make sure that it is competitively positioned when the economy lifts. "Moore's Law isn't going to stop for a recession," CEO Craig Barrett says in the final installment of his interview with Tech Update. Also: Barrett knocks the state of broadband deployment in the United States and criticizes the government for its lack of a broadband policy.

Tech Update: Given the popularity and usefulness of mobile devices like the BlackBerry, how much more life does the desktop PC have in it?

Barrett: Do you have any attachments that you need to see?

Tech Update: Yes, and I can view them now. There are services that provide that.

Barrett: And that screen is sufficient to view the attachments?

Tech Update: Depends on the attachment. So far, for me and what I do, it has been sufficient for viewing and light editing of documents.

Barrett: How many times have we proclaimed the PC dead?

Tech Update: I don't think it was that many times. I wrote a column that said everybody should ditch desktops and take a notebook instead.

Barrett: Notebooks have bifurcated into two categories. The thin-and-light ones are for road warriors. They want to carry them with them and don't want to lug 6 or 7 pounds. Then there are luggables, but they're really desktop replacements. The distinction between desktops and these two categories is blurring. On one hand, you have your desktop machines with their flat-panel displays. On the other, there's your new Sony VAIO with a 16-inch screen on it, but it costs a lot. I've got one over in my office now. What's the difference between that and my desktop machine? Hardly anything except I can close the lid on it.

Tech Update: But is there a place where we stop needing both desktop and notebook systems?

Barrett: Would you even consider writing a column on your BlackBerry?

Tech Update: When I was at Comdex last fall I attempted to manage my entire experience at the show with a Pocket PC and one of those fold-out keyboards. Aside from a problem with the Pocket PC itself, the combination worked out well. If I had a similar keyboard for the BlackBerry, I could see myself giving it a try for writing columns.

Barrett: Well, it's bifurcation. But, basically, what you put together is a poor man's imitation of a laptop, right?

Tech Update: There was a long time when laptops were a poor man's imitation of a desktop, but now we're beyond that point.

Barrett: The issue is what are you going to use it for? I challenge you to take your BlackBerry and use it for rich data. Then you respond, OK, it's not my BlackBerry, it's my iPod, and I'm going to upscale it a little bit. Fine. You're going to go with whatever form factor satisfies your user interface and richness of data needs. But so far, the PC continues to be that form factor. It survived the interactive TV stuff and it survived the network computer. The next challenge wasn't supposed to be your BlackBerry. It was going to be the cell phone that was going to replace the PC. That was the myth put forth by Nokia and Ericsson, and the PC survived that.

Tech Update: Speaking of cell phones, is there an Intel chipset for cell phones and what sort of market share does it have?

Barrett: Very little. We bought an Israel-based company a couple of years ago and their business has primarily been in Korea and Japan. We're waiting for the 2.5G and 3G markets--the markets where we have intregrated baseband chipsets--to pick up. But, the adoption rate has been slow.

Tech Update: Are you seeing any signs of recovery in the economy?

Barrett: Well, you can't look at the telecom industry and say it is not a recession. You can't look at the semiconductor industry, down 35 percent year upon year, and say it is not in a recession. But it's all about corporate profits, and the ability for corporate issues to go back and reinvest. Despite Argentina or Latin America, business in emerging markets is growing. Quarter upon quarter, Eastern Europe is growing. Asia, driven mostly by China and India, is growing too. It is the lack of investment on behalf of Europeans, Japanese, and U.S. businesses that has led to an IT slowdown and recession. That's all about corporate profits. You won't see those investments come back until companies make some money.

Tech Update: Well, Intel is obviously making those investments. For example, the revitalization of the fab in Ireland.

Barrett: We're confident about the future. You can't travel around the world and not be confident the Internet is going to continue to drive a growing buildout of the infrastructure. Just go to China, India, Eastern Europe. This is confidence in the long term. When we decide to build a plant, we do it on a two-year time frame. It takes us two years from green fields to get the plant up and running. So you say, "OK, we're going to start that plant No. 24 in Ireland and finish it off in 2004." I think we will need that capacity by then, but it doesn't say anything about the economy in the next quarter. Intel has been making bets like this its entire life and we'll continue to make them. I'm comfortable about the future. I'm going to make investments.

Tech Update: Well, there's some luck involved too.

Barrett: It's not luck. We know how to build them. We know that that factory is going to come out in the next generation of process technology--the 90 nanometer stuff--and we are fond of saying that technology doesn't recognize recessions. Moore's Law isn't going to stop for a recession. It's going faster, not slower. So you know the next generation of technology's going to come, and, if you're not there, then you are just going to lose out to your competitors that invest. So we make those bets. We've been making fairly successful bets over the last 20 or 30 years and we'll continue to make them. Fortunately, we can afford to make them.

Tech Update: On the heels of the dot-com burst, are there any milestones that you are looking for besides a stock market comeback or something that will signal the beginning of a new and successful phase for this industry?

Barrett: A real broadband buildout. Not the sort of low-end piecemeal stuff we are seeing right now, like cable or DSL. At best that's 300K. But when cable gets loaded down and you drop down to 250K, that's not really broadband--that is kind of an incremental step off of 56K dial-up access. Real broadband starts in the 5- to 10-megabit range and goes up from there. So, sadly, we in the U.S. are still debating where to put 300K connectivity--the wrong kind of broadband.

I have become convinced that real broadband action is out of the U.S. in countries like Japan. I mean, here's this country in the throes of a 10-year recession, and for whatever reason, NTT DoCoMo has decided to put fiber to the home everywhere at the same time. Since Japan is so condensed, everybody lives within a mile of the central office, so DSL there is not what we think of it as here. There, it's 5 to 8 megabits because everybody's within 5,000 feet of the CO. So even their DSL buildout is a quantum leap ahead of the DSL buildout in the US. Even so, the NTT DoCoMos of the world are running fiber everywhere. [Editor's note: Fiber is expected to produce bandwidth that is orders of magnitude greater than current DSL buildouts on copper.]

If you go to Korea or Scandinavia, you'll see the same kind of thing going on. Every one of the G7 countries, I think, other than the U.S., has a broadband policy. Admittedly, Washington, D.C.'s been sidetracked by terrorism. Meanwhile, you have the FCC talking about digital TVs. Who cares?

You need a national mandate, regardless of whether it is going to get financed or not. The government has to lead the way in terms of putting this capability in place because it is important to the competitiveness of the United States. No one in Washington is going to stand up and say that yet. Instead, we are arguing about whether the RBOCs should be able to get back into the long-distance service business or not. Nobody's arguing, "Hey, fundamentally we need a new capability."