Intel wants to be the ISP's ISP

In September, the processor maker plans to deploy the first of what will become many worldwide centres built to provide data centre services to ISPs (Internet service providers), VARs (value added resellers), large enterprises and other companies offering Web-based services, according to Intel officials speaking here Thursday at the company's semiannual analysts meeting.

The centres will range in size from small $50m (£30.4m) facilities housing fewer than 2,000 servers to facilities costing $100m to build and averaging 5,500 servers. Intel expects the first customer to deliver a service from its first data centre, to be located near Intel headquarters in Santa Clara, California, sometime in the third quarter. That service grew out of a deal with Excite Inc. for the Excite Shopping Service, announced last week.

Intel plans to have the second data centre online somewhere in Europe before the end of the year. In the first half of 2000, Intel expects to have built "tens" of centres, according to Mike Aymar, vice president and general manager, Intel Data Services (IDS), the new division in charge of the data centre business. The centres will be connected via a VPN (virtual private network).

The move does not indicate a strategic shift at Intel away from chips and other hardware to services-oriented businesses, as has been the case with some of the large OEMs Intel counts as customers, according to the company. "IDS is the only service business we're doing," said Paul Otellini, executive vice president and general manager of Intel's Architecture Business Group. "I can't see Intel not being a product company."

Intel will be competing with IBM, Electronic Data Systems Corp. and other already established service providers. But such data centres for Web services will be a multibillion dollar business, according to Gerry Parker, executive vice president and general manager of the New Business Group, an Intel entity that oversees a fund to invest in internal projects. The group has a $50m budget this year and so far has invested half that to a half-dozen projects, including IDS, said Parker. "There will be a number of players," said Parker. "I expect we'll have customers, competitors and suppliers, all with the same name."

Company officials declined to comment on what Intel has to offer that other, entrenched players don't. But Parker likened the business to running a worldwide semiconductor manufacturing operation. "We know how to a keep factories running 24 hours a days, seven days a week, 365 days a year," he said. Separately, Intel is also targeting ISPs with an Internet Service Provider Program to be launched next week at the ISPCon tradeshow in the US. Primarily a sales program, it will enable Intel to work with partners to fine-tune its hardware to meet the particular needs of ISPs, said Otellini.

For example, through its resellers Intel will deliver ruggedised and smaller form-factor motherboards for the servers ISPs require. Intel will also make sure software, such as Linux and the Apache Web server, is optimised for Intel's chips, said Otellini.

Intel discussed a broad range of other topics at the analysts meeting, including its processor road map for the first half of 2000. At that time Intel is scheduled to deliver Pentium III Xeons for servers/workstations and Pentium IIIs for mainstream PC desktops and mobile PCs, all at or above 700MHz clock speeds. That means notebook PCs and desktops will be at performance parity. Otellini said the company does see more large customers that are starting to buy their workers only notebook PCs rather than desktop systems.

Craig Barrett, Intel's president and CEO, in his introductory presentation, said the company next month will make an announcement concerning StrongARM, its embedded processor. Otellini said half of the company's research and development money is devoted to servers and workstations, including 10 CPU projects, 10 chip set programs and more than 20 board/system projects. He also said Intel in the first quarter regained all the market share it lost last year in the so-called value PC market, where Intel sells its Celeron chip.

Intel plans to move the SIMD (single-instruction, multiple-data) instruction set found on the Pentium III to the Celeron, but not this year.

Why not? "Any reason?"

"Sure, we want to sell Pentium IIIs, Otellini said"