August 26, 1999 12:20 PM PDT

Intel CEO: Healing server rift a top priority

AUSTIN, Texas--Resolving a dispute over the design of future server computers is a top priority for Intel, which has been split from its biggest customers by the disagreement, Intel chief executive Craig Barrett said today.

The struggle has pitted the chipmaker and its allies, Sun Microsystems and Dell Computer, against another group led by IBM, HP, and Compaq Computer. The dispute has held up the design of coming generations of high-performance computers called servers.

"We're working as hard as we can to have a merged solution between the two camps," Barrett said today in the keynote address at a Dell Computer conference here.

Industry sources have said that after Sun called for a deadline in the merger talks, negotiators settled on a merger plan, which now is awaiting a vote.

The Intel camp favors a standard called Next-Generation Input/Output, or NGIO, whereas HP, IBM, and Compaq back Future I/O. The plan, when approved, will govern how equipment such as network cards or disk systems plug into the servers.

The division, as much a power struggle as a technical dispute, has meant uncertainty for companies that make the components that plug into servers. It's also raised the prospect of divergent standards that could undermine the benefits that come with uniformity of computers based on Intel technology.

"The best thing for the industry and for the customer base is to have a merged solution in I/O," Barrett said.

The Future I/O proponents argued that NGIO couldn't transfer data fast enough and therefore didn't merit the difficulties of a system design change. The NGIO camp said a faster "fat pipes" version of NGIO is in the works, and that Future I/O would arrive too late and cost too much.

Under the merger plan, the two specifications likely will converge at the data transfer rate of Future I/O, 2.5 gigabytes per second, sources said. Also included in the plan, the companies will choose a new name for the standard and arrange to have the technology ready in time for McKinley, the second in Intel's line of 64-bit chips. McKinley is due in late 2001.

Merger is key to ecommerce
Agreement on server architecture is important for the bottom line of all the manufacturers. The explosion of e-commerce is driving massive demand for servers, said Barrett.

"For years, the PC has been the driver of our industry, but looking forward five or ten years I think it is the Internet economy," he told the audience at DirectConnect. "There is a huge demand for servers that is going to occur over the next decade."

E-commerce will account for well over a trillion dollars in transactions by 2002, he said. To emphasize how the growth has surprised people, he noted that analytical firms doubled their 1997 predictions about the size of e-commerce over the next five years in just 1998. They will probably revise their predictions upward again in 1999, he added.

The electronic marketplace, of course, will have to depend upon vast warehouses of servers and storage devices. Extrapolating from the current number of installed servers and the expected growth of e-commerce, Barrett stated that only 5 percent of the systems needed for this future network are currently deployed.

Although most e-commerce today takes place between consumers and businesses, the future will likely be dominated by business-to-business commerce, as different suppliers hook into each others databases to exchange demand forecasts, the status of orders, and prospective inventory levels.

Along with e-commerce, Barrett predicted that the PC powers would invade the voice communications arena. Voice and data networks and currently converging. Computing companies, however, have an advantage given that data servers and networks from the computing field are cheaper.

"There is no need to have two networks. We will have a unified network built on standard building blocks," he said. "The communications equipment business is nearly as big as the computer business. The next decade is going to see as much expansion in this space as the computer space saw in this decade."

Michael Kanellos reported from Austin and Stephen Shankland from San Francisco.

 

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