NEWS

Intel: A Trusted Technology Provider for the last 18 Years

By VARINDIA - 2010-04-14

India is the key market for Intel as the country’s role in research and development for the chipmaker giant is very big. The booming technology and the telecom sector have put the country on the path of a fast-growing economy. As a result, India has emerged both as a supplier and consumer of chips, which augurs well for the world’s biggest semiconductor company. Reaffirming its commitment to fast-growing India, Intel’s Chairman, Craig Barrett, made his eighth visit to the country and put Baramati, a small town in the state of Maharashtra, on the map of the WiMax world.

Recently, Intel celebrated its 18 years of operations in India with a move that recognizes the country’s growing importance as a global competitor. While the company is holding talks with the authorities concerned about building a chip-manufacturing facility, it has also pledged to invest more than $1 billion in the country. This will be in additioalready pumped into India over the past decade in R&D facilities and funding for about 40 Indian firms. Among these are global computer education and services company NIIT; telecom software firm Sasken Communication Technologies; portal Rediff.com; Deccanet Designs, a communications design and software services company; FutureSoft, a telecommunications product and services company; India Infoline.com, an online portal; Nipuna Services, a business process outsourcing provider; and Tejas Networks, a telecom products company for the Indian market segment.

The company will expand its research and development centre in Bangalore. Opened in 1998, the 500,000-sq. ft. Bangalore centre has 2,800 employees or more than 3 per cent of its global staff of 85, 000.

“India has evolved into one of the world’s leading technology centres,” said Craig Barrett who was recently on his seventh trip to India. He added that the investments would create an environment that fosters innovation and entrepreneurship.

Intel’s India fund is just one of a series of recent overseas investments by the company. The company launched a $200 million fund in China earlier this year, on its 20th anniversary of operations in the world’s largest populated country.

As part of its World Ahead Program which was rolled out by Intel CEO Paul Otellini’s maiden visit to India a few months back, Santa Clara, California-based chipmaker is conducting a pilot program at the government hospital in Baramati. The hospital has been equipped with computers, telemedicine equipment and electronic medical records. The company has enlisted a local technical institute to help people in the nearby villages to access doctors.

Though India is most famously associated with the onward march of Information Technology, the widening digital divide has assumed ominous proportions in the country. Benefits from the booming economy, that are registering an annual growth of 8 per cent, have mostly accrued to the urban middle class. The digital divide is widening the gap between rural and urban India, between the uneducated and the educated.

Barrett sees a part of the remedy lying in WiMAX technology, a wireless capability that provides Internet connectivity without requiring a computer to be connected to a cable.

“The beauty of WiMAX is it is relatively inexpensive and relatively simple,” said Mr. Barrett. “It is ideal for a rural environment where there is limited infrastructure in place.”

“India has the opportunity to be a leading commercial implementer in WiMAX capabilities,” said Barrett who was travelling to Baramati to explore the possibility of empowering the unemployed youth and farmers by employing IT.

Barrett also met the government and business leaders in New Delhi. The company plans to invest US$1.1 billion over a five-year period ending in 2010 to expand its operations in India and invest in local technology companies. “India has evolved into one of the world’s leading technology centres,” said Barrett.

Intel’s India plan is a long-term strategy. “What we are laying out is a multiyear plan,” said Sri-ram Viswanathan, Vice-President of Intel Capital. Intel sees India as a vital new market for chips.

With a view to helping stimulate local technology innovation and growth, Intel’s investment arm set up a $250-million Intel India Technology Fund that would be used for venture capital investment in technology start-ups in India. The fund will also selectively invest in technology-oriented service companies that target overseas markets. “Intel Capital consistently invests ahead of the curve, and we feel that the timing to launch a fund in India could not be more ideal,” said Arvind Sodhani, President of Intel Capital.

“Intel Capital plays a critical role in Intel’s wide-ranging efforts to stimulate technological innovation and grow the IT industry in India. We anticipate that the establishment of the India Technology Fund will inspire even more innovative business models among Indian entrepreneurs, help accelerate technology adoption locally, and foster the development of innovative technologies with potential for global distribution.”

Since its inception, Intel Capital has invested more than $4 billion in more than 1,000 companies worldwide. In 2004, Intel Capital invested over $130 million, and about 40 per cent of its investments were in companies based outside the United States.

Apart from building up its Bangalore facility, the business operations money will also be used for education and community programmes.

“Investing in education and providing 21st-century skills for students are fundamental components to the nation’s continued growth and prosperity,” Mr. Barrett said.

Intel will also boost efforts over the next three years to train teachers to use technology through the Intel Teach to the Future program. By 2008, Intel plans to donate 10,000 full-function PCs to state governments and teacher training institutions, as well as train 1 million teachers on the application of technology to improve classroom learning.

About 600,000 Indian teachers have already been trained during the first phase of the Intel Teach Training program since 2000. The company will also work to strengthen community-based health care in the nation through the use of technology.

“Education is vital in developing a skilled workforce,” said Barrett, who also chairs the United Nations Global Alliance for Information and Communication Technologies (ICT) and Development. “Technology, and teachers trained in the effective use of it, will play a critical role in preparing India’s youth for success in the knowledge-based global economy.”

Staying on the leading edge is not cheap. In 2003, Intel spent $4.4 billion on research and development, a figure that is expected to reach $2.5 billion this year. When once asked about the feasibility of spending so much on research when one could produce chips on an R&D budget a fraction the size of Intel’s, Barrett prompt reply was “About 85 per cent market share.’’

Intel Labs, the R&D arm of Intel, are comprised of more than 7,000 researchers and scientists in the labs around the world.

“As a leading technology market with a fast increasing number of highly trained researchers and technologists, India has compelling combinations of R&D talents and market potential.”

In a short span of 6 years, the IIDC has become a significant international design and development centre in Intel’s world for software and hardware. Already earning a spot in the list of top ten employers of choice in India, the IIDC has grown to a new state-of-the-art technology centre sprawling over forty-three acres in the heart of Bangalore’s Information Technology corridor.

As Intel’s largest non-manufacturing site outside of the United States, the Intel India Development Centre (IIDC) focusses on creating innovative products that advance the next generation of technology.

In addition to its efforts on the education front, Intel will also seek to improve the quality of and access to healthcare services. The company announced it would collaborate with the Ministry of Health and Family Welfare to develop a technology infrastructure to strengthen community health centres.

As part of this effort to improve access to quality healthcare, Intel is conducting a pilot program at the government hospital in Baramati, equipping it with computers, telemedicine equipment and electronic medical records. Working with Baramati’s ICT College, the Vidya Pratishthan Institute of Information Technology, the digital health technology is enabling remote care through real-time, video interaction and sophisticated heart and vision testing of villagers and farmers.

“The standard use of technology will increase quality of care, while lowering healthcare costs for Baramati Tehsil hospital patients,” said Barrett. “Through Intel’s World Ahead Program, we remain focussed on expanding access to technology, improving education and increasing Internet connectivity to benefit India’s citizens.”

Last year, Intel earned revenue of $34 billion. That compares with its nearest rival’s $5 billion. But it is not to say that the company’s path to success was always so rosy. In the mid-1980s, Intel has a harrowing experience that changed it forever. During this period, the company was known for its main business of memory chips. Facing stiff competition from the Japanese manufacturers who resorted to undercutting pricing, the company had to take a retreat from the market and cut its workforce by 30 per cent in 1984.

As Intel had the experience of developing successful microprocessor, it decided to focus all its attention on microprocessors – the chips that power PCs. It was a high-risk move into a nascent and untested market, which is being monopolized by the company to this day.

After committing itself to PC chips, Intel proceeded to scale new heights and venture into uncharted territories. Each new chip became the benchmark for the industry and there was no looking back for the chip giant.

Apart from the technology, Intel also takes recourse to pricing to control the market. As it is well known, Intel is usually the first to introduce new chips, while the competitors introduce comparable chips after several months. As it launches faster chips, the company cuts prices on older ones at regular intervals. As a result, this forces competitors to cut their prices, which severely makes a dent in their profit margins.

This year, Intel celebrated the 10-year anniversary of its reseller channel program, a worldwide network of distributors, resellers, dealers, local integrators and sales teams that has helped drive a dramatic increase in the availability of Intel-based solutions. Collectively, sales from this organization now account for approximately one-third of all Intel’s processor sales.

The 10-year anniversary coincides with the formation of The Channel Products Group to expand on Intel’s success in the global markets.

Through the Reseller Channel Organization, Intel develops and distributes Intel technology solutions to meet the unique requirements of local markets. The success of the channel program can be gauged from the fact that the company has 1,60,000 channel members and a network of 100 distributors across 1,000 locations worldwide.

Today, Intel has expanded its offerings beyond that one product to include building blocks for the desktop, server, mobile and communication segments. Intel’s main focus for the channel in India is helping resellers, integrators and distributors develop and sell Intel-based mobile, enterprise and digital home products. The company offers several programs for the benefits of its resellers. These programs include training sessions for channels on effective marketing and technology upgradtion. Intel conducts channel conference (ICC) twice a year for training its partners. To help its channels increase new business and stay informed to maintain the edge, the company provides both face-to-face and online training to its channels.

No Intel’s channel initiatives are complete without mentioning its much-vaunted Genuine Intel Dealer (GID) program. Specific to Asia, the program is the classic example of a success story. Every reseller, dealer or small assembler wants to be a part of it. n to $700 million that Intel has