Battling for pole position

Intel is confident its far-reaching restructuring review, Core 2 Duo technology and vPro platform will help it reclaim lost ground against rival AMD and win back Dell.

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By  Dylan Bowman Published  September 24, 2006

|~|80Intel-sofa.jpg|~|A sofa on wheels being driven around the centre of Amsterdam in Holland was the unconventional way that Intel chose to publicise its Intel Core Duo 2 processor in August.|~|When Her Majesty Queen Elizabeth II, the UK’s monarch, wanted to convey her feelings over a range of mishaps that had befallen the Royal Family in 1992, she popularised a new phrase. That year, she told television viewers had been her “annus horribilis” meaning it had been a horrible year. Paul Otellini, CEO of Intel, is not generally noted for his readiness to quote Latin. However, so far this year he could be forgiven for thinking that 2006 has not been a good one: a five-month review process that he announced back in April of this year was capped this month with the decision to axe 10,500 jobs worldwide. Those jobs cuts included employees transferred in the sale of its communications processor business to telecom chip firm Marvell Technology for US$600million and 1,000 managers fired quietly earlier this year. At the time Otellini said that the job cuts and other activities “while difficult, are essential to Intel becoming a more agile and efficient company, not just this year or the next, but for years to come”. By improving efficiency and reducing payroll costs, Intel expects to knock US$2 billion off its annual costs. At the heart of Intel’s problems is increased competition from rivals, most notably AMD. Intel has seen AMD steadily erode its market share, especially in the desktop and server spaces, and — perhaps worse — capture mind share in the industry for being seen to offer better technology. Its Athlon and Opteron processors have proven very successful in the marketplace, with even a former stalwart Intel customer, Dell, now offering AMD-based machines. Add to the mix the announcement by Microsoft that it is delaying the launch of its next-generation Windows operating system(OS), Vista, until next year and you could just possibly forgive Otellini for reaching for the Latin phrase book. Industry watchers and analysts are concerned that if customers hold off on buying new machines until Vista is finally shipped it is going to drag down the market this year. Worse, some of those sales may not be recouped next year either, with customers looking at other electronics items — such as LCD TVs — as alternative ways of spending their disposable income. All of which goes some way towards explaining just why Intel has high hopes for this month’s launch of its vPro platform brand. For Intel, the vPro is the latest offering that it is badgeing as a complete solution — a combination of hardware and software, designed to solve real problems for real businesses, as Intel puts it. This formula worked extremely well for Intel in the notebook space with its Centrino platform (it is no coincidence that AMD has not been able to compete as well with Intel on notebooks) and rather less well in the consumer space with its Viiv platform. So far, the indications are that vPro is set to emulate the success of Centrino rather than the shortcomings of Viiv. Early reviews of the Core 2 Duo processor that lies at its heart have been overwhelming ly positive, signalling that Intel has won back mind share in dramatic fashion. For instance, the venerable Tom’s Hardware Guide web site said that “for the first time in about two years, Intel is offering a superior desktop processor that may cause more than just a headache for AMD.” Other reviewers have said that this ends “years of wandering in the wilderness” for Intel. As well as the whiz-bang performance of the Core 2 Duo processor, Intel is also banking on some nifty features of vPro to capture attention, most notably its Active Management Technology (AMT). The VPro platform delivers secure desktop PC management capabilities to IT administrators that were quite simply not possible previously. A combination of hardware and software enhancements integrated into the motherboard of a computer now allow administrators to remotely manage a PC even if the system power is off, the OS has crashed or the software-based management agents do not work. This ability means IT departments no longer have to make desk-side visits for a whole host of management and security tasks that would have previously necessitated a technician being onsite — saving time and money. This, it should be noted, is not just Intel saying it. IT service providers have been queuing up to sing VPro’s praises, claiming the technology is capable of saving huge amounts of money. For instance, in trials of the platform by service provider Atos Origin, the French firm found the vPro technology reduced first level calls by 33%, labour time by 40%, travel time by 80%, and onsite support time by a massive 95%. Other IT service providers have also released similarly impressive results from tests of the platform. Global IT outsourcer EDS reported a 50% reduction in desk-side visits related to hardware problems, a 75% reduction in desk-side visits related to software problems, and a drop in the time it took to get users back up and running from one day to two hours. European IT service provider WM-data Services calculated the cost of a desk-side to visit average out at around US$150. So where previously a company found itself paying US$15,000 for 100 desk-side visits, that amount could be reduced to just US$750. “Those kind of numbers are dramatic and I think the savings will be substantial,” states Gregory Bryant, general manager of Intel’s Digital Office Platform Division, (pictured, bottom right) speaking at the European launch of the platform in Antwerp, Belgium, this month. With savings of this magnitude being reported, Intel will be hoping companies of all sizes will be knocking on PC vendors’ doors to purchase vPro-enabled PCs. Unsurprisingly, almost all major PC vendors, including HP, Fujitsu-Siemens, Lenovo and Dell, have got behind the technology and announced they are now, or will be in the coming months, shipping vPro-enabled PCs. So have IT service-oriented management software vendors like Altiris, HP, Landesk and Microsoft. One of the clever things about Intel’s platform strategy is that to utilise the capabilities of vPro, a PC must have a specific set of hardware and software, all of which is made by Intel. In addition to the CPU, a computer also needs Intel’s new Q965 Express chipset and 82566DM Gigabit Network Connection, a similar combination to the extremely successful Centrino platform. However, it is the microprocessor — the most expensive component of a computer — that Intel is most focused on ramping the take-up of. ||**||Taking on AMD|~|80DellOtellini.jpg|~|Intel, led by CEO Paul Otellini (right) is keen to win back business in the high-end server sector from Dell, founded by Michael Dell (left). |~|The fight with chip rival AMD in recent years has left Intel a little bruised and it has been at pains to show that its new generation of CPUs are far superior to its rivals. “We have the best processor on the planet in Core 2 Duo,” Bryant states boldly, and can point to the above-mentioned reviews to back up his claim. The Core 2 Duo processors for desktops and notebooks — previously codenamed Conroe and Merom — are the replacement for the Pentium processors that made Intel a household name over the last decade. Core 2 Duo dual-core processors are designed in a different way to the Pentium chips, based on Intel’s new Core micro-architecture, in order to maximise performance while at the same time lowering the amount of power the chips consume. The two cores allow the processor to execute more instructions while using less power. Intel has also developed a more intelligent cache memory design and altered the way instructions move around the processor, improving its performance and eliminating inefficiencies in the link between the processor and the main memory. The move to squeeze out more performance using less power is one of the three fundamental benefits espoused by Intel of the vPro platform. Along with energy-efficient performance is built-in manageability and proactive security. Bryant claims that in surveys of enterprises conducted on behalf of Intel, energy-efficiency, manageability and security came up again and again as firms’ biggest IT challenges and that these three pillars played an important part in shaping Intel’s technology strategy. “We did a lot of research in the market place and addressing security concerns, manageability concerns and driving down cost were the biggest issues,” he explains. A recent survey of 900 IT managers in Europe by research firm Coleman Parkes found, perhaps unsurprisingly, that enterprise and data security was the number one priority of administrators, with user behaviour identified by 66% of respondents as the greatest threat to network security. The survey also revealed administrators said tasks such as responding to user requests, software and operating system upgrades, and tracking inventory could be made more efficient with bettor management tools. The advances in PC management and security in vPro are achieved though the use of Intel’s ATM, its Virtualisation Technology (VT), and of course the Core 2 Duo microprocessor. ATM is built into Intel’s new Q965 Express chipset, and VT is integrated in both the CPU and its new 82566DM Gigabit Network Connection. There is also non-volatile memory embedded on the motherboard that is connected to the chipset that allows an IT administrator to access information about the PC even if the system is down. ATM allows an IT administrator to remotely access any PC on the company’s network that is connected to a power supply, even if it is turned off or has crashed. The memory stored on the motherboard can be accessed while the PC is shut down and the administrator can find out information about the computer as well as a chronological list of actions that the system has performed. The administrator is able to remotely wake the computer up and carry out tasks such as software or operating system updates or diagnose and repair a PC if there is a problem with it. ATM also allows administrators to better enforce security policies, can prevent end-users from disabling security and management agents installed on their computers, and can even cut users of the network completely if their PC is compromised. Intel’s VT technology also has a lot of security functionality that gives IT administrators the ability to virtualise an end-user’s computer environment, running a service operating system behind the user’s, which provides a gateway that sits between the user OS and the network. The chipmaker is banking on the vPro platform driving the company’s growth in the business sector. It, along with the vendor’s Viiv platform for entertainment PCs and Centrino platform for notebooks, is an integral part of both Intel’s development strategy and the vendor’s efforts to turn its falling profits around. “This is a mainstream business offering from Intel. We plan to ramp it aggressively. I think it clearly demonstrates what Paul [Otellini] wanted us to do when he started taking the reins in terms of getting us focused on the core business and what matters,” claims Bryant. “We need to build platforms that people care about, that solve real problems and take advantage of our strengths. This is exactly what we need to do to be successful and grow our business,” he adds. For several years Intel has been trying to expand its repertoire so people see it as more than just a maker of CPUs. The expansion also serves as a differentiator between itself and bitter processor rival AMD, which has been making significant inroads into Intel’s market share. These inroads had mainly been limited to the server market, but more recently AMD’s processors for desktop PCs — Intel’s heartland — have also been increasing in popularity with computer makers. Most recently Dell, the largest PC manufacturer in the world and therefore by far Intel’s biggest customer, announced it is to launch a range of desktop computers powered by AMD processors. However, Bryant states that Intel is determined to win as much of Dell’s business as it can, and vPro would help it do this. “I want to win as much of Dell’s business as possible by having the best processors and best platforms,” he declares. “Dell is a big customer of ours, they will remain a big customer of ours. We do a lot of great work with them and we are working on vPro with them,” he adds. Dell’s decision to go with AMD processors in its desktop PCs came just a couple of months after the computer maker announced it was to begin using AMD’s CPUs in its high-end servers. The server market has been an area in which AMD has had the most success against its rival and Intel has been desperately working to get reinforcements out into the market that can successfully compete with AMD’s line of Opteron microprocessors. Pulling the release date in by three whole quarters, Intel also took the vPro launch event to announce the introduction of its dual-core Xeon 7100 series MP server processors — previously codenamed Tulsa. Although not based on Intel’s Core micro-architecture — Tig- erton is not set for release till next year — the vendor claimed the new Xeon 7100 series gives it back the technology edge over AMD in the MP segment. To speed up the number business operations and processor can do, Intel has increased its cache to a massive 16MB to reduce the need for the processor to go to main memory so often, which slows it down. “This has been the most challenging space and Tulsa was pulled in three quarters to address the market,” says Malcolm Hay, business manager, Intel Europe, Middle East and Africa (EMEA). “With this new chip it puts us back in the lead in the MP server space. We are back with a really good story to tell.” Intel’s fiscal third quarter results will be released in mid-October. While it will be too soon to measure the success of the vPro platform — or gauge in full the effects of staff lay-offs — industry watchers will be keen to see how well the chip maker has performed. For Intel and Otellini, a positive set of results matched with strong take-up for vPro will go a long way toward determining how this year is going to be remembered. ||**||

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