Intel looks for a new direction amid a changing IT

The chip giant is reshaping itself for new challenges, but do its leaders have the vision to avoid past mistakes?

Intel has long been one of the most influential companies in the IT industry, credited with producing the first commercially available microprocessor chip and helping to drive numerous other advances, such as the PC and widespread adoption of WiFi networking.

In recent years, the PC market from which Intel has traditionally drawn a large chunk of its revenue has either stagnated, or at least has not seen the kind of growth it once used to, something that has caused many leading IT firms to reassess their business plans and seek a new direction in the pursuit of profitability.

Intel is clearly just such a company; it has made a number of changes to its corporate structure of late, making new acquisitions and creating new business units while spinning off its Security Group into a separate company that revives the McAfee brand name. And what are we to make of Intel’s recent decision to ditch its Intel Developer Forum (IDF), until now one of the major events in the IT industry calendar, where Intel traditionally showed off new products and technologies?


Data driven

Intel is perhaps more fortunate than many firms seeking a new direction in that it already has a stake in several growth areas, the chief one being the data centre, where Intel has upwards of a 90 percent share of the market for server processor chips.

But these are also interesting times for the IT industry, with technologies such as virtual reality (VR), artificial intelligence (AI) and autonomous vehicles starting to show promise, and all of which are ripe areas for a firm like Intel, which has a history of betting on emerging technology areas.

The importance of the data centre to Intel can perhaps be gauged by the appointment of Aicha Evans to the position of chief strategy officer at the end of March. Her stated role will be to “drive Intel’s long-term strategy to transform from a PC-centric company to a data-centric company”, Intel said in a statement regarding the appointment.

This pivot to focus on data and the data centre is already well under way, according to Peter Gleissner, Vice President for Intel’s Sales and Marketing Group (SMG) and Director for the European Union region.

“I would say that Intel has completed a transformation to a new state as a data company, a company that’s enabling data processing and data experiences around many areas from the data centre, to the client to accelerator technologies that continue to improve the outcomes that both business customers and consumer customers want,” Gleissner says.

“Part of that evolution obviously was a couple of years ago when the PC business stopped growing, we looked at where Moore’s law will continue to provide an improved experience, and what we saw is that Moore’s law is very much alive in the data centre side of the house, the explosive growth of cloud computing is one example, as well as performance-hungry aspects of the PC, whether that’s gaming or virtual reality or other technologies, and we’ve spent the last couple of years, investing significantly into technology and capabilities to shape that strategy,” he adds.

This strategy has itself been shaped by what has been happening in the data centre market. Overall server shipments have fallen recently, with IDC figures showing a decrease of 3.5 percent to 2.55 million units in the fourth quarter of 2016. Part of the reason for this is that enterprises are procuring fewer servers as they make greater use of cloud services, while the giant cloud companies have been adopting specialised accelerators such as GPUs and FPGAs (field programmable gate arrays) that can boost performance without the need for as many servers.

In response to this, Intel has made acquisitions such as that of programmable logic specialist Altera in 2015, forming it into a new business unit called the Programmable Solutions Group (PSG). This not only brought Intel FPGA market share, but also expertise to help the firm integrate the technology with its Xeon processors.


The importance of AI

FPGAs also play a part in another key technology area for Intel – AI – where they can accelerate the neural network processing used in deep learning applications. In fact, Intel takes AI so seriously that it recently announced the formation of another new business unit, the Artificial Intelligence Products Group (AIPG), to oversee all of its AI efforts. AIPG is being headed up by Naveen Rao, former chief executive of Nervana, a firm specialising in hardware and software for deep learning applications, which Intel acquired last year.

And if you want to gauge Intel’s strategic priorities, the company’s business units provide a pretty good overall picture. As well as the PSG and AIPG just mentioned, there is the Data Center Group overseeing servers; the Client Computing Group; Internet of Things Group; and the Non-Volatile Memory Solutions Group.

Intel thus sees its business branching out into new areas like the Internet of Things, where the firm has key strengths in not just compute, but also in the communications and networking required to make connected devices function, and this also crosses over into autonomous vehicles.

“We have lots of opportunities to help customers to develop and enable new experiences. In IoTG for example, with autonomous driving, which is an aspect of compute in the car, communication between the car and the data centre, and then data centre technologies around machine learning and all the rest of it to make sure the car is aware of its environment and can operate with utmost safety,” Gleissner says.

Intel has also begun another acquisition in this area, that of Mobileye, an Israeli firm specialising in computer vision and machine learning, data analysis and mapping for driver assistance and autonomous driving.

Meanwhile, Intel is also reviving its efforts in an area of technology that it has long neglected: memory. Many years ago, the firm derived much of its profits from DRAM and SRAM chips, but switched its focus to processors in the face of fierce competition from Japanese chipmakers.

However, Intel never entirely stopped making memory components, and sees NAND flash technology as a key component of enterprise computing. Along with its manufacturing partner Micron, Intel has also been working to bring to market a new non-volatile memory, 3D XPoint. When first detailed back in 2015, this was claimed to be 1,000 times faster than NAND flash while offering a storage density up to 10 times that of DRAM.

While the first products announced in March under the Optane brand did not appear to live up to the original hype, the technology is likely to improve with continued development, and even the first generation shows potential as a new tier in the memory hierarchy between main memory and storage, which could provide a real boost to some data centre workloads.

This brings us back to the data centre, as do many of Intel’s current areas of focus, such as 5G networks. While Intel has an interest in the device side of things with its 5G wireless chipset, the firm sees more of an opportunity in the overhaul of network infrastructure that will be needed to deliver 5G services, which could see cell base stations becoming more like miniature data centres crammed with processing power.


Old chip rivals return

But Intel is not the only firm with its eyes on this prize – it will soon face renewed competition in the server market from AMD, which previously saw great success with its Opteron chips, while an ecosystem built around ARM-based servers continues to evolve, with large cloud operators like Google and Microsoft operating pilot deployments.

Intel claims to be sanguine about this situation, even welcoming the competition, but you can bet the firm is keeping a close eye on developments, ready to step up its own efforts if rivals begin to take significant market share.

So the chief focus is now on data and the data centre, but that doesn’t mean that Intel is giving up on the PC market, as Gleissner makes clear.

“That’s not to say that the PC won’t continue to be a strong pillar of our business – it is a significant portion of intel’s business today, and there is lots of innovation in the PC business; if you followed MWC, there are new brands entering the market such as Porsche Design coming out with a 2-in-1 that will launch not only in EMEA but in 15 countries world-wide,” he claims.

A cynic might say that all of this sounds pretty much like the same old Intel, and that while the firm is keeping a close eye on new developments like AI, IoT and autonomous vehicles, it has repeatedly lost opportunities to secure a significant share of the lucrative smartphone market through poor management decisions. A lot may depend on the company not making such strategic mistakes in future, but whether its current leadership and corporate culture can steer it in the right direction is debatable.

Gleissner, however, feels that Intel has already reshaped itself enough to face future challenges.

“To the question ‘is Intel searching for a new destiny?’, I think Intel has found its new destiny, and that is as ‘Intel 3.0 the data company’ that focuses Moore’s law on experiences around data centre and cloud technologies as well as client technologies, and then surrounds that with innovations and capabilities, accelerate those experiences and connect them,” Gleissner says.


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