Intel sets sight on consumer electronics with foray into mobile space

Here's an article from USA Today Q&A: Intel CEO sets sights on consumer electronics

SANTA CLARA, Calif. — Chip giant Intel has a new industry to conquer: consumer electronics. CEO Paul Otellini is expected to lay out the No. 1 chipmaker's plans to push further into everything from cellphones to digital video recorders during a speech Monday at the giant Consumer Electronics Show in Las Vegas.
Intel (INTC) dominates the computer industry, with about 80% of the market for PC processing chips, but is a relative underdog in electronics. Otellini spoke with USA TODAY (GCI) reporter Michelle Kessler about why his company is bothering to start at the bottom of a new industry — and what impact Intel might have on that market.


CES SHOW PREVIEW: Electronics industry gets less traditional
Q: Intel has begun aggressively selling chips for consumer electronics. What makes you think you know anything about that market?

A: Everything in this space will be connected to the Internet. And the Internet is built around (Intel-style) chips. A lot of the early (digital video recorder) work was done by Intel — a lot of the (underlying software). It's not as far afield as you think. We're not trying to rerun the PC movie, (but electronics are becoming more like computers).

Q: Computerlike electronic devices sound frightening. Will future cellphones crash or get viruses?

A: You have to (design products) with protection. We have to produce something that doesn't crash, that's always on.

(Some of the first will be) mobile Internet devices. Think of the iPhone (AAPL) on steroids — thin and in your pocket. Some will work on voice. They'll have the full Internet at reasonable speed with no compromises.

Q: One of Intel's biggest pushes is in cellphone chips, an area where the company has struggled before. Why return to that ultracompetitive market?

A: Voice is free. If it's not free today, it will be. Everybody in the business is looking for a (data) services-based revenue stream. You make up the (lost voice revenue) through a zillion data service transmissions, (which plays to Intel's strengths as a computer-chip maker).

It's a lot easier to bring voice to a small computer than it is to bring the whole Internet to a phone. We're going to advocate for standards, like we did in the early days of the PC. We joined Android (Google's cellphone software coalition).

Q: Intel is pushing a new type of wireless data service for cellphones and other devices called WiMax. Sprint is embracing WiMax, but most other cellphone carriers are advocating different technologies. Wi-Fi, another wireless technology pushed by Intel, was a much bigger and quicker success. What's wrong?

A: People have been talking about 3G (cellphone networks based on different technologies) for 15 years. We've been talking about WiMax for five. With Wi-Fi, you have 50 million individual hot spots.

(With WiMax, which is operated by cellphone carriers), you have to deal with telephone companies and governments (that regulate the airwaves). It's more expensive, and it has to be ultrareliable. … We still think that by the end of 2010, 250 million people will be covered.

Q: After struggling in the past few years, Intel's fortunes have suddenly surged. Earnings and market share are up. What happened?

A: Tech goes in cycles. We have been lucky enough, for the bulk of the cycles, to come out OK. We've buckled down, refocused and done significant downsizing. We focused a large portion of (research and development) on where we wanted to go.

We have the financial resources. Even in bad times, we make a few billion a year.