Intel's multi-billion-dollar vote of confidence

Intel CEO Craig Barrett says it's possible for companies to come out of the current economic downturn stronger than they were when they went in. Barrett told an audience gathered at the Gartner Symposium/Itxpo in Orlando, Fla. that investing now in research and development is the key for companies who want to be in a strong position when the industry takes off.

ORLANDO, Fla. -- Downturn or not, technology keeps moving forward.

That's the philosophy of Intel CEO Craig Barrett, who answered analysts' questions at the Gartner Symposium/Itxpo here.

Barrett said the key for companies to come out of the economic downturn in a stronger position than when they went in is to invest in research and development (R&D).

And Barrett is putting Intel's money where his mouth is -- literally. He said the company, the king of the chip market and ruler of 80% of the PC microprocessor market, annually is investing $4 billion in R&D.

"The amount of investment [in R&D] in a down cycle is an incredible vote of confidence in the industry," Martin Reynolds, Gartner group vice president and research fellow, told searchNetworking.

"It shows [Barrett] is not backing off. All that investment means Intel will be ready when the industry takes off again."

Reynolds said Intel's multi-billion-dollar R&D investment can be seen as a challenge to the competition -- particularly the number-two microprocessor maker Advanced Micro Devices (AMD).

"You don't see AMD investing that kind of money in research, do you?" he said.

During the session, Barrett answered a broad range of analysts' questions about the company -- from the future of 64-bit Itanium processors, to the company's "macroprocessing" ad campaign, to the current competition for operating systems in the server space.

Barrett also spoke of Intel's decision, first made two years ago, to transform virtually every aspect of its business to the Net -- becoming a total e-business company. From an ordering standpoint, Barrett says Intel's ultimate goal is to achieve $1 billion in bookings over the Net. He said currently, between 90% and 95% of bookings are done electronically.

And, he said, Intel has returned between $500 million and $1 billion dollars to the balance sheet as a direct result of shortening the ordering process.

"The estimated half billion to $1 billion in savings is a big number," said Reynolds.

Barrett also spoke of what he called "massive changes" underway in the telecommunications industry, in particular in the way that industry views wireless. At the heart of those changes, he says, is the realization that wireless devices will never replace the PC as the primary computing device. Rather, he says, the industry will move toward compatibility between handhelds and PCs.

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