Intel V/S RoW

(column by Devdeep Singh)

David vs. Goliath is passé, now it’s Intel vs AMD! And in this real world scenario, David’s innovative attacking skills have been of no avail! Even after two long decades; the competition is nowhere near Intel’s territory. B&E takes an insider look at the Intel India R&D centre, and the undying thrust on innovation that keeps the chip maker right up there above the rest...

The first anomaly that struck us on our visit to the Intel India Development Centre (IIDC) at Bangalore was the buzz out there. What about it, you may ask? Well, there was hardly any! So enamoured were we by the casual & unassuming environment, that we were compelled to ask one Intel official, much to his amusement, whether it was an off day. “Negative”, he replied. It’s always like this out here.

Scratch the surface and you will see a different picture, of how the employees at this facility of Intel, it’s largest non-manufacturing site outside the US, are relentlessly engaged in high end R&D for the parent company. It’s a typical high pressure environment, where scope for error is extremely low, and the stakes extremely high. After all, the microprocessor chip market is one where technological advancements take place at a breakneck pace, and even Intel, with its virtual dominance of the sector, cannot afford to let any other chip maker take the lead in developing a new technology and taking the next big leap in the sector. Complacency would be criminal, especially at this juncture, when Intel’s only competitor of some repute, AMD, is finding it hard to sustain. It almost seems as if the internecine battle between the two has come full circle. After all the world was never enough for the two of them.

Only One Survives
“I hate AMD”. Though the sentence sums up the implicit desire of all the Intel employees, it came all-out in public when it flashed at a huge screen (in one of Intel’s technical show) as the password of Pat Gelsinger, Senior VP of Intel. While many just laughed at the incident, the more intellectual ones were compelled to wonder whether it is really necessary for a giant like Intel to give any consideration at all to the pint-sized AMD? A company which hopes to match Intel’s prowess in the PC arena with a miniscule 14% market share compared to the latter’s 80%? In this twenty odd years old David Vs Goliath battle, Intel has dominated the chip industry like a strict general who exactly knows how to master his sepoys. And in the process, it never paid any heed to the ruthless pains it gave to AMD, humbling it from plan to plan, chip to chip and quarter to quarter. Right from the introduction of Pentium processor, which was followed by AMD’s K6 chip, to the advanced versions like Pentium II, III, IV, followed by Pentium D processor and the latest core 2 duo processors (closely followed by AMD’s Athlon processors), Intel made sure that it would never allow AMD to get rid of its dreaded tag of being a laggard. It’s been Intel all the way in the high-end & mediumend range of processors; and only the low end processor market has been left open for AMD. Both have engaged in brutal price wars over this territory, but ultimately it’s AMD that’s paying the price! While AMD is reeling under its third straight quarterly loss for the quarter ending June 2007 (net loss of $600 million), Intel is grinning from ear to ear with a net income of $1.3 billion for the same quarter. Paul Otellini, the CEO of Intel exclaimed on the results, “Our operational execution continued to strengthen, resulting in an outstanding product roadmap & solid year-over-year revenue growth.”

While the dominance of Intel continues in the global market, AMD is once again trying to pose a challenge with its hyped quad-core code-named Barcelona. However, even this time, Intel did not allow AMD to make any impact as it has already introduced two more quad-core Xeon processors, the X5365 and L5335. A hapless AMD has also gone for legal recourse oft en, alleging that Intel has used unfair monopoly practices.

Similar is the aura around Craig Barrett, the Chairman of Intel, who has been associated with the company since1974, and has earned tremendous respect among employees for his authoritative & decisive leadership style. Also notable is his firm belief that Intel still has a long way to go as he admits, “We are like a brick manufacturer at the start of the construction of the Great Wall Of China. Intel delivers the basic building blocks that will be used in a massive worldwide infrastructure construction project for years to come.”

Indeed, despite it’s dominant position, Intel needs to devote maximum resources towards continuous innovation. And it has leveraged talent from all parts of the world, including India.

The place does matter!!!
While every IT major is now turning to India for expansion, Intel was perhaps one of the first companies to reach the Indian shores in 1989. At that time, Intel only had its sales and marketing operations in India. When asked about the tipping point, John McClure, Director Marekting Intel South Asia divulged to B&E, “Th e tipping point for Intel India was to set up the Intel India Development Centre (IIDC) in Bangalore in 1998.” Craig Barrett has already outlined the importance of India in Intel’s global plans. As a part of his plans to make India the hub of R&D for Intel, Barrett announced massive investment of $1 billion into the Indian market across various verticals. “The $1 billion investment demonstrates Intel’s long-term commitment and builds on the foundation we have created during our 10 years of operations in India. We will grow our local operations, boost venture capital investments and work closely with the government, industry & educators” said Barrett. Well, one could easily unearth that the kind of confidence Barrett has for Intel India would have made the executives here more responsible and nervous at the same time. Though we could not sense the frenzy about the very famous Intel vs. AMD fiasco at the IIDC Bangalore, the executives definitely looked completely committed to the cause of Intel globally.

In an exclusive conversation with B&E, Rahul Bedi, Director Corporate affairs, Intel South Asia and India Business Operations Manager Intel India maps out the contribution & importance of Intel India, “I cannot name the exact products being developed here in IIDC, but these are products that are going to be extremely critical for Intel. IIDC will have a significant impact on the bottom-line of the company.”

When quizzed about the contribution of IIDC to Intel’s global strategy, John McClure, further outlines, “IIDC has been steadily contributing to the global development of Intel’s products. Part of the work involved in getting quad core chips ready for the global market was undertaken here. No other company in India undertakes testing of this level of complexity. IIDC is also involved in the complete line up of Intel’s quad core chips.”

Well, for the uninitiated, the contribution of IIDC is not restricted to Intel’s quad core chip sets. The company’s Bangalore centre has slowly emerged as its global hub for R&D. Similarly, IIDC also played a key role in the launch of the Intel’s new mobile platform Intel Centrino Duo and Intel Centrino Pro processor technology for both consumer and business computing. IIDC also planned and executed key design and validation activities on the Intel® 965 chipset (codenamed Crestline), which forms part of the new Intel Centrino Processor technology platform. Finally, IIDC also provided critical hardware and soft ware applications engineering support to Intel OEMs and ODMs in Asia Pacific and Japan to ensure readiness to launch their platforms along with Intel. The different divisions of IIDC have contributed to Intel’s global growth like its Mobility Group contributed to the Centrino Duo platform, Digital Enterprise Groups’ (DEG) contributed to development of quad core processor and the Corporate Technology Groups’ (CTG) contributed to the world’s first programmable processor to deliver teraflops performance. The Bangalore team is also becoming the primary competency centre for IT related supply chain applications.

Tick-Tock, Tick-Tock
Intel India has successfully deployed its tick-tock model and the results have been outstanding. As Rahul shares, “You have the next generation micro architecture and then you have the next generation processor. Th at is what challenges Intel as it changes the paradigm every year. So, it is an inward challenge that Intel has & for us that’s one of the critical things keeping us ahead of technology.”

Further elaborates Praveen Vishakantaiah, Director, Digital Enterprise Group (DEG), Intel India, “The ‘TICK’ piece is to make sure that we’re able to take a mature architecture and then benefit from process technology advancements. The ‘Tock’ is to take a mature architecture and to move it into an advanced architecture mode. So innovations have to come up not only on the process side but also on the architecture side, once every year. The challenge is to ensure that each of these ticks and tocks keep going in step with each other.”

All the different divisions of Intel, be it the Mobility Group, have their separate individual goals and targets, though the common Intel philosophy persists. Take DEG for instance, as Praveen elaborates, “DEG plays a strategic role on how clients will go forward in the market between the servers & mobility space. We’re primarily focusing on the Xeon platform, clearly one area where Intel globally is doing very well. Intel India DEG is strategic in nature at this point...”

Together we compete!
Though executives at Intel India were very buoyant about the technologies adopted by them and their future prospects, all the departments have an underlined theme of internal competition. The basic idea is which department will be the one to give the next big blockbuster contribution to Intel’s global portfolio with a revolutionary technology.

As Sandeep Shah, Director of Mobility Group reveals to B&E, “There are such mission critical products out here, we want to continue the stuff we’re giving out to Intel global as it takes just one bad product to spoil it all.” Rahul Bedi puts up India’s case, arguing that few companies today have each of their business units at one location, which makes Intel India a microcosm of Intel global. He states, “We’re the largest technology company in the world, which works on extremely complex technologies, and a very large part of the complex base is developed from India. And one thing that Intel believes in is scale. Anything we do, we do it if it scales.”

Intel India has also engaged deeply into CSR. “Our primary focus of the program has and continues to be the next billion users and what we realised is that the next billion users are quite different from the first billion users,” says Rahul. Intel had launched its World Ahead Program to facilitate education initiatives all around the world. Barrett says, “Through the World Ahead Program, we remain focused on accelerating access to technology, improving education & increasing Internet connectivity.” The company also launched its rugged Classmate PC for emerging markets to promote education amongst children. Asked about Intel India’s goal for the next five years and Rahul expertly clubs the social initiatives to the corporate goals, “We have to make more and more technologically innovative products through R&D. Also, do all these things in a socially relevant manner. In the long haul, the socially relevant products derisk the business… We don’t write cheques (only). We give help in a sustainable way.” To this Sandeep adds, “We see double digit growth in India, that’s where we see the need for our presence here and make products specifically for this market.” Another common belief that runs across Intel India is that it’s not the number, but the quality of people which ultimately build a great organisation.

Then there is the larger battle between the different Intel country units. Praveen elaborates how the India team has to give Intel a new innovation, just like the team at Israel gave them the dual core technology after 25 odd years. While the Indian market will be firmly on Intel’s radar no matter what, the Intel India centre faces this stiff challenge of providing a new technology on its own to the parent company, which, officials say, would be possible in another 3-4 years. Surely this ‘microcosm’ of Intel global would not want to be missing out on that target set by the parent company, which could give you an inkling of the hidden chaos that would exist behind the uneasy calm we had come across when we first entered the Intel India office that morning. It’s survival of the fittest as always, and the India team would always want to keep that in mind.

(End of Devdeep Singh column)

IIDC steadily contributes to the global development of intel

What is the importance of Intel India Development Centre (IIDC) in the company’s global plans?
IIDC is Intel’s largest non-manufacturing site outside of the US. IIDC in Bangalore has been steadily contributing to the global development of Intel’s products. Part of the work involved in getting quad core chips ready for the global market was undertaken here. Similarly IIDC played a key role in the launch of the company’s new mobile platform Intel Centrino Duo and Intel Centrino Pro processor technology for both consumer and business computing.

First it was Pentium D, then came the Core Duo, later came the Core 2 Duo and now the Quad Core. Please throw some light on Intel’s technological advancements in India?
In july ‘06 we launched the core micro architecture. Since that point in time Intel products based on the core architecture have been winning all awards in the areas of performance benchmarks and performance per watt. We were first to introduce quad core on desktop and server and will be introducing our second generation quad core product this year. Recently we crossed the one million quad core milestone worldwide.

What has been the strategy of Intel as far as its channel partners are concerned?
Channel has really taken the advantage of latest technology and done well in offering systems and solutions based on Core 2 Duo platforms. 40% performance improvement and 40% energy efficiency message has worked well for channels. We will continue to build on to the momentum with channels on Core architecture based platforms further. In the last two quarters our focus was on dual core technology and we and now it is Quad core technology based products. Our message to the channel is: focus on selling leading edge technology, make use of tech transitions, offer value added services and improve post sales support to customers.

Do you think India is ready for the mobile revolution?
Definitely, mobile revolution is ought to happen in India. At the Intel Developer Forum at Beijing in April this year, Intel introduced the Intel Ultra Mobile platform 2007 (codenamed “McCaslin”) for Mobile Internet Devices (MIDs) and Ultra-Mobile PCs (UMPCs), with systems available over the summer from Aigo, Asus, Fujitsu, Haier, HTC and Samsung, all based on Windows Vista and the Origami Experience.

“Numbers are not our value drivers”

Please throw some light on Intel’s journey in India.
I think that the journey has been as exciting as in the world, as you can see from outside. We started R&D in 1999 but even then the focus was how you move jobs from US to India as we had to reduce the cost. However, since then we have moved to a point where Intel India is no longer a place only for cost factor, but more importantly it is now a place for technological developments for Intel.

What investment have been made by Intel in the Indian market?
We have announced a total investment of $ 1.7 billion over a period and we have done close to about $1 billion so far on the overall basis.

What, according to you, is the biggest threat to Intel’s existence in the India market?
One of the major threats that a lot of other companies are also facing is attrition. We are on the lower end of the industry but actually in the business we are in, we cannot afford to loose even a single person. We have the big band CPU designers, we cannot afford to loose them. They are one of their kind in the world. Well, the industry is experiencing an attrition rate of 15-20%, we are below it. However, still attrition remains one area of concern.

AMD has already set up its fabrication plant in India, why is Intel not keen on establishing a chip fabrication plant in India?
Yes, we are we’re saying no to starting the new assembly test unit in India. Actually, we had earlier made an announcement about our need of the factory production capacity for the next three years. We are always looking at our capacity requirements and what we need and we feel that we have enough capacity and so we say let’s hold on.

Intel is undoubtedly the leader of the global chip industry. How do think the market share changing from now on?
I really can’t say anything on the market share and I do not want to say anything about it. We will see the market as it comes along.

Where do you see Intel India 5-10 years from now?
Our value drivers are not numbers, it is how much value we are putting to a critical product. So, if today we own certain part of a particular product line, our aim would be to own the entire line few years down the line. Basically, we want to move up the value chain.

“ There are very high expectations from us”

How important is the Digital Enterprise Group (DEG) for Intel India?
DEG plays a strategic role on how clients are going to go forward in the market between the servers and mobility space. Very likely, there would be new areas. We’re primarily focusing on the Xeon platform development, clearly one of the areas where Intel globally is doing very well. Though we are not directly involved with the market, our focus is on server platforms.

How important is the SMB market for Intel India?
Small and Medium Business is a fantastic opportunity for DEG India; as we’re trying to see how to help them in a more effective manner. One is a usage model opportunity. While the other is multiple core product; they might not be able to afford them. So maybe give them a pay-per-feature product. And then we could turn on more features

How does DEG India contribute to Intel?
We are working on cutting edge technology, cutting edge design and delivering back. There are very high expectations from us. We are figuring out how we can align to the market products & what can we do to grow Intel’s business.

What is the biggest challenge for your Group?
The biggest challenge for the DEG group is to move from where we are to a mature organization much faster than any other organization. Intel’s Israel facility came up with Centrino product in a long span of 25 years. In India, we’re trying to do it very fast.