Asia is Where It’s Happening in Service, Device Advances, Intel Executive Says

Operating in the region provides an “amazing advantage” because it’s where the manufacturing, advanced services and consumer use adaptations are all happening, he said. “A Samsung or a wannabe Samsung has an advantage being over there,” Maloney said. The cycle from cellphone introduction to obsolescence there, for example, has collapsed to 5 months -- 1/3 the design cycle, he said: “Imagine what that does to the mentality of your engineering team in terms of speed.”

IBM’s agreement to sell its PC business to China’s Lenova Group is just the start of a wave of international acquisitions by Chinese companies the next 4-5 years, spurred by currency valuations, Maloney said. He said the buyers would continue snapping up Western brands, suggesting that would be their preferred route for building global brands.

A flood of Chinese-born technologists returning from the U.S. just the past several months is combining with a large pool of start-up capital in China, Maloney said. Intel expects both sales opportunities and new competition to emerge, he said. But the company is prepared for the market, he said: Due to TV advertising since the early 1990s, Intel brand recognition is higher in Beijing than N.Y., Maloney said.

Intel’s communications business focuses heavily on wireless technologies, Maloney said. Wireless offers high growth, but making it profitable is tricky, he said: “I would expect… the individual knowledge worker to be heavily wired in about 3 years,” he said, using “wired” figuratively. GPRS use with Blackberries and other devices makes owners heavier consumers of networked data, as do Wi-Fi and broadband use, Maloney said; he expects the same pattern with 2.5G cellular and WiMax.

But “there’s no profit in putting IEEE standards into silicon,” Malone added. “It’s very, very difficult to make money” in wireless data, Maloney said. “Any reasonable idea in the space is being funded” and someone will always come along to undercut a given company’s prices. So Intel’s strategy is to add complex software, as in the Centrino chip, or get into the “cool things you can do in the radio space” with technology down to 65 or even 35 nanometers, which the company has only partly exploited, he said.

The big thing in wireless technology the next 10 years is slashing power consumption, Maloney said. Cellphone battery life has set high expectations for all mobile devices, he said, so the issue “is a really, really big deal in everything.”

In Wi-Fi and WiMax, “coverage is king,” Maloney said. Replaying the pattern of the early cellular business, “maintaining a signal” through reach and handoff trumps access speed as a priority, he said. WiMax trials will start 2005’s first half and will be going in 30-40 countries by mid-year, Maloney predicted. “The Asian countries are in the lead, as you'd expect,” he said. Samsung, “a very good customer of ours,” and competitors are emphasizing the technology heavily, he said. “The U.S. is the market that tends to trail.” Intel has, however, invested in Craig McCaw’s U.S. WiMax business, Clearwire.

WiMax will fill in for DSL even in urban areas, he said, because many homes close enough to central offices to get the service can’t get access speeds above 500 kbps, Maloney said. Most operators are aiming for about 2 Mbps with WiMax, though 7-9 would be needed for high-quality video and the technology’s standard is flexible enough to go up to 17, he said.