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Tuesday, September 21, 1999 Published at 14:59 GMT 15:59 UK


Build for a Net future, urges Intel boss

Andy Grove: Things are improving

By Internet Correspondent Chris Nuttall

The chairman of the chip giant Intel has told the Confederation of British Industry (CBI) that businesses will have to be made of clicks and mortar rather than bricks and mortar in future if they are to avoid being marginalised in an Internet economy.

Andy Grove, on a European tour meeting business and political leaders, explained in a speech in London that Internet-based or "clicks" companies and traditional ones were converging in their business practices.

Mature "clicks" such as were having to invest in their internal operations, including the building of huge warehouses such as the one million square feet of space being constructed for Amazon just outside London.

Companies not exploiting the Net had to go through a three-stage process, he said, building infrastructure, modifying their business processes and then taking advantage of the data and feedback they garnered from online customers.

New climate

He pointed out how the computer maker Dell used customer order patterns to anticipate the materials they needed and order them efficiently to keep inventories low.

Business over the Net was attractive to both the customer and vendor: "For buyers, the pricing of goods and services becomes as efficient as stock markets," he said. "And for sellers, new efficiencies in all business processes are bringing cost savings that accrue directly and completely to companies' bottom lines."

Intel itself had been rethinking its purpose, he added. "We have done very well supplying the innards of that implement [the Personal Computer]. We had to rethink our own gestalt and our desire is to be the building block supplier of the Internet economy."

The company is investing in "data centres" - server farms that will provide the muscle and brain power of the Internet, driving databases, powering 3-D visualisation and strong encryption of data.

'No finger wagging'

Its 64-bit processor is at the centre of the strategy and will be in production by mid 2000. Predicting demand, Mr Grove said 96% of the server capacity that should be needed in 2005 had yet to be deployed.

Answering questions at a subsequent press conference, Mr Grove said he was not in Europe to issue a wake-up call this time about the challenge of the Internet: "You had some fantastic advice from the UK prime minister last week," he said.

"A couple of years ago I did issue warnings like this, but today I was able to illustrate progress, that this is a phenomenon that is happening here, perhaps two years behind the US, but I'm not wagging any fingers this time."

Mr Grove, 63, was one of the founders of Intel in 1968 and has become a leading commentator on the hi-tech industry. His phrase "only the paranoid survive" became the title of a book he wrote in 1996. He was named Time Magazine's Man of the Year in 1997.

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