By Mark Ward
BBC News Online technology correspondent in San Jose
Better times are ahead for technology firms, predicted Intel boss Craig Barrett.
Barrett: The only way is up
During the opening speech at the Intel Developers Forum in San Jose, Mr Barrett said technology firms had several reasons to expect business to improve over the next 12 months.
His prediction was bolstered by a report by analyst group Dataquest, which forecast that worldwide PC sales could grow by up to 7.9% over the next 12 months.
But he warned that the recovery was likely to be fragile and could easily be overturned by the outbreak of war in Iraq.
"By most accounts we are at the bottom and when you are at the bottom the only way is up," he said during his speech which opened Intel's four-day forum for developers in San Jose, California.
Old for new computers
Mr Barrett said technology firms that serve the desktop computer market had good
reason to think that companies and consumers will start spending significant
amounts again this year.
One of the main reasons for expecting an upturn is the fact that there are
about 180 million PCs still in use around the world that are running old
operating systems such as Windows 98 and 95.
Microsoft is ending support for these operating systems by the end of 2003
which, Mr Barrett said, could spur many companies to upgrade.
But the Intel boss said it was not enough just to hope customers are happy to
swap older computers for faster ones.
"It is not enough that we have an ageing base in the marketplace," he said,
"new capabilities and solutions have to come forward."
Moore's law should continue to help make desktop machines capable of more, said Mr Barrett as he expected it to hold good for another four to five
generations. This meant, said he said, that computers would continue to
double in power every 18-24 months for the next decade.
Intel is pushing itself and its partners to make desktop, laptop and
handheld computers much more versatile devices.
At its forum Intel revealed that it is starting to tune the chips in desktop
and mobile computers to fit what people do with different types of machines.
"We will see them distancing a bit more than the days when we used to
cascade from one size to fit all," said Mr Barrett.
The chips that Intel produces for laptop machines will be tuned to use as
little battery power as possible and be tightly integrated with wireless
The first of these specialist mobile chips called the Pentium-M, formerly
Banias, will be launched in mid-March.
Alongside this goes an Intel chipset that puts almost everything needed to
link up to wireless, or wi-fi, networks in one small package.
In releasing this chipset Intel hopes to grab some of the market share from
companies such as Atheros which specialise in wi-fi chipsets.
Intel's dominance in the desktop and home PC market means that to maintain
its growth it must constantly search for new markets to exploit.
By integrating the basic networking technology on the motherboard of a PC
Intel will also have a better chance of making others follow its lead.
Life without wires
Mr Barrett said wi-fi was contributing to a global sense of excitement about
technology and the novel ways that it lets people communicate and amuse
He also talked about Intel's efforts to establish itself in the market for
chips that go into mobile phones.
Currently Intel only makes money out of mobile phones by supplying memory
modules, but its Manitoba chips combine many cellphone functions into one
It remains to be seen whether Intel can win the 10% share that Mr Barrett
said he eventually wanted of the global market for phone chips.
Success could be a long time coming because third-generation networks are
already beginning to be rolled out and many telephone operators have already
placed orders with established handset makers.