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Intel casts eye on consumer electronics
By Julie MacIntosh and Paul Taylor in New York
Sunday May 4 2008 20:40
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After the technology bubble burst at the start of the decade, Mr Gelsinger said Intel bought several companies that ranked as the second or third-tier players in their respective markets to avoid paying steeper prices for top assets. In retrospect, that may have been a mistake, he said.
Along with shifts in Intel's strategy, this has led to a string of asset disposals, including the sale of the XScale processor business, whose products are used in handheld devices, to Marvell Technology for $600m in 2006. Mr Gelsinger admitted Intel had sometimes rushed to integrate acquisitions and "smothered them with love" rather than allowing them to thrive as subsidiaries.
But he added: "We have learned lessons." He said Intel has since given select new businesses more room to breathe, and learned to make acquisitions only in areas in which a strategy has already been developed, rather than creating a strategy after making a purchase.
He cited the acquisition of Havok - the Irish video provider of interactive software and services used by digital media creators in the game and movie industries - in September as an example of Intel's approach to purchases. Havok now operates as an independent subsidiary within Intel and has become a key element of Intel's visual computing and graphics efforts.
Mr Gelsinger identified five areas where Intel could look to boost its in-house technology and expertise with acquisitions. including the rapidly growing markets for high-end smart phones and mobile internet devices, or "mids". Some mids are expected to run on the next generation of wireless broadband networks, including those based on WiMax technology, which Mr Gelsinger acknowledged "Intel has placed a big bet on".
He also said Intel may make targeted investments to boost its presence within consumer electronics, embedded devices, visualisation technologies and the market for low-cost computers such as its own Classmate PC Netbook model.
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