Ask Sean Maloney about Intel's biggest challenges and biggest opportunities for growth and he'll mention the same thing: WiMax, the company's chosen broadband technology.
Maloney, an executive vice president of Intel and the chipmaker's chief sales and marketing officer, has seen waves of technology come and go since joining the company back in 1982. Recently, he got the additional responsibility of coordinating company strategy, which he said has "a good deal to do with the rapid pace of our global development."
I had the chance to talk with him last week. Maloney initially touched on how the consumer notebook market is tracking the cell phone market. Just as cell phones are now driven heavily by consumer demand, so will notebooks be primarily driven by consumer demand in the years to come, according to Maloney.
Maloney also discussed how the shift in global notebook sales is transforming Intel into a consumer product company, and how Intel will respond to competitors in China and elsewhere.
Q: What are the biggest challenges for Intel going forward?
Maloney: If you look at the notebook market it's growing very rapidly. The notebook has gone through the same pattern as the cell phone went through in '97, '98. The notebook is becoming heavily driven by the consumer market. The computer industry has largely been dominated by business computing since the 1940s. Consumer is now dominating computing.
The percentage of our business that's in the U.S. has shrunk radically in the last 10 years and shrunk radically in Europe. The emerging markets are now the dominant markets.
We're about 10 years behind the cell phone in that pattern. Where the cell phone is now, it is very much matured in terms of growth in most markets. Even in countries like Angola and Mozambique, there is heavy penetration. The computer industry and the notebook industry is a decade behind that.
Q: In the consumer segment, netbooks (typically ultra-small notebooks priced below $600) are catching on in a big way, what do you see as the reason for that?
Maloney: Previously, someone in an emerging market, just went to a cybercafe. Now they can afford to get online themselves. In the mature markets, (it's people) who can't afford a notebook, like 8-year-olds to 12-year-olds. Or someone who wants to take something out in the evening but doesn't want to drag along a 16-inch notebook. The underlying driver is Web access. People spend much, much more time on the Web every day than they do on their cell phones. And yet you don't have that portability, so that pushes (consumers) in that direction.
Q: How does Intel respond to a chip like the Chinese Godson processor that has government backing?
Maloney: There's a long history of this in Japan, of state-sponsored computer research. And Europe, the same thing. It's not surprising (in this case) because many people see the microprocessor as the essential building block of IT. That's not surprising that governments want to put money in there.
It's potentially a threat. But we're fairly relaxed about it. We don't expect to be the only supplier. On the other hand, we've announced very large manufacturing facilities inside of China. We are a big player in the Chinese market ourselves.
Q: Intel has repeatedly touted WiMax as critical to Intel's mobile future, if not its future overall. So, how important is WiMax to Intel?
Maloney: It's very important to the computer industry, period. Because, if you look at the projections for the industry in the next 10 years, they are heavily predicated upon mobile computing and broadband in emerging markets. And even in the U.S., you still have sizable percentages of the population who still don't have broadband. In countries that are going to generate growth in the industry in the next decade, you don't have copper, you don't have fiber. So, you've got to have a way to get low-cost broadband. That was the design goal of the program. It was to be a low-cost, high-speed broadband network.
If broadband doesn't happen...industry growth will eventually slow down. If it does happen, growth will continue and new services will come along. It's an old story. Back in the '80s, we spent a decade trying to get Ethernet established. (As a result) we got client-server computing. We did the same thing with Wi-Fi, 1999 through 2002. There's been a long history of the computer industry needing standardized, high-speed communications. It's been a big piece of the computer industry's history.
Q: Intel said that WiMax has to deliver from 5 to 10 times the performance over existing products in the market to be successful, but mobile WiMax doesn't necessarily do this.
Maloney: The performance--I disagree about this. And you'll get to find out about that very soon because the network is going to start to roll out very soon. And you're going to see extremely good performance. And I'm certainly confident we're going to hit the design goals on performance. So, the argument on that one is going to get resolved real soon.
On the time it's taken...Actually, 16e (802.16e)--the global standard for mobile WiMax--was finalized at the end of 2005. We're now in 2008. So, it's a relatively quick period of time for this revision. 16d, which is the previous standard, is an older, slower technology, which didn't have as broad support. 16e has very broad international support. Subsequent to the standard being finalized, it's actually moved along pretty quickly.
We have over 200 networks in trial or being deployed. And we're very comfortable with the progress.
(Regarding) LTE (Long-Term Evolution, a competitor to WiMax). LTE is pretty similar technology (to WiMax) in many, many ways. It's some way off. We'll see what happens with that. As far as EV-DO is concerned, it's not a technology that's available in Europe or Africa or pretty much anywhere in South America and very little in Asia. Wideband CDMA is generally available but much slower.
All these technologies are useful. If I can't get a signal, I love EV-DO, I use EV-DO, I use all these things. But we're comfortable that WiMax is going to augment these things by being a lot quicker. We still feel comfortable it was the right program and we're making progress on it.
Q: Intel has been successful at integrating key technologies, such as Wi-Fi and graphics into its chipsets. What's the next big step in integration?
Maloney: More shorter term, the industry's concerned about multicore and integrating more of the conventional I/O and graphics capabilities. I think people are going to tend to keep the radio (Wi-Fi or other wireless communications technologies, including WiMax) discrete (as separate silicon) for a little while longer. But I think it's more of a business decision not a technology decision.
On the (current) 3G services, the attach rate on notebooks is very low. Actually, low single digits. The computer industry has a history of only integrating things when you get up to 50 percent or 60 percent or 70 percent of people wanting the feature. We are there with Wi-Fi now. (Editors' note: As to why Wi-Fi is still discrete, Maloney repeated that it's a business decision, not a technology decision.)
I don't see one technology replacing another. You're going to want to use whatever technology is available. Certainly, we're confident that there's going to be a big build-out of WiMax over the next three years. But people are going to carry on using the 3G infrastructure where it is. Or 2G infrastructure. Nobody rips these communications (infrastructures) and throws them out. They carry on being used.
The traffic growth is very, very high. We're still looking at 50 percent per year traffic growth. Those are really big numbers and we're going to need a lot of bandwidth and a lot of technology to supply that."