Intel CEO Outlines Strategies for Digital Entertainment, Asian Market Conquest
BERKELEY, Cal. -- Entertainment firms now “embrace” putting premium programming online, but Intel endured a 4- year struggle after getting “thrown out of Hollywood” for promoting that, CEO Paul Otellini said. Speaking Wed. at the U. of Cal.-Berkeley business school, Otellini focused on digital entertainment and emerging nations more than on Intel’s tough competition with AMD in its core microprocessor business.
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CES in Jan. demonstrated that the “dam has burst, and premium content is going to come over the Internet” -- to large-screen TV sets, iPods and increasingly via DVB-H technology to cellphones, Otellini said: “The entertainment industry is going to be revolutionized.”
“Technologists would say ‘of course'” letting Apple iTunes offer downloads of Desperate Housewives episodes would boost the show’s ratings, as has occurred, Otellini said. But that was a revelation to the entertainment industry; until now “Hollywood has been resistant to [such] change time after time,” notably in fighting the VCR, he said.
Disney’s buy of Pixar marked a watershed, Otellini said. “Pixar is the leader in applying technology to animation, and Disney also gets “a very, very savvy board member in the form of [Pixar CEO] Steve Jobs, who I think will likely move Disney even faster.”
Intel’s goal for new home-products brand ViiV is to see it within a couple years “almost be turned into a verb, the way TiVo has turned into a verb,” Otellini said. The digital home is one of 5 “platforms” to which Intel has shifted its strategy, away from an “inward” focus on microprocessors since the 1980s. Also getting intense attention: mobility, digital enterprise, digital health and channel platforms, which deal with geographic “emerging markets.” Each will get its own branding, he said.
Otellini said an inexpensive notebook computer likely to debut in March will be Intel’s answer to a $100 laptop the MIT Media Lab has heralded as a means of linking poor populations to the Internet. Intel’s “full PC -- not this crank-driven spec or whatever they have” will have capabilities that make it much more useful, he said.
Google’s bow to Chinese censorship demands may have been justified as an entree to other information, Otellini said: “Not everything is censored in China, I can assure you.”
Broadband and PC penetration could double by 2001, which in combination with wireless technology stands to have a profound impact on remote parts of China and India, Otellini said. Towns will share computing resources, often at kiosks, he said. Counterintuitively, Intel is finding that growth in emerging markets boosts profit margins, he said. Globally, pervasive broadband, including on the go, could spur the firm to move from “'Intel inside’ to ‘Intel everywhere'” -- seeking a place in gear across all networks and devices, he said.
Intel will de-emphasize big deals, favoring “organic” growth and more, smaller takeovers, Otellini said. In 2005, the firm made 32 acquisitions, all in the $25-250 million range, he said. Intel is also “open to the large megazillion” dollar deal -- at the right price and mindful of such mergers’ “abysmal” track record, Otellini said.
Queried on Intel production in China and that nation’s weak intellectual property protection, Otellini said Intel concluded that any country wanting to spy on Intel could do so at least as easily in the U.S. as in China. The firm takes no special precautions there, though the nature of its business helps: Knocking off its microprocessors would require “$2 billion factories and some pretty sophisticated stuff,” said Otellini: “It’s not like fake Louis Vuitton purses.” There are “unlicensed Intel processors” in China, but only at the level of the early 1980s-vintage 286 microprocessor, he said. Counterfeiters will catch up, but “we're comfortable by the time they get there the government will afford a reasonable amount of protection for us.”