Intel's Otellini says it's time to take the lid off IT budgets

Speaking at the Web 2.0 Summit he talks economy, silicon, netbooks

Intel President and CEO Paul Otellini said the economy has already hit rock bottom and now that it's emerging from the recessionary mire, companies are about to take the lid off of IT budgets.

Otellini talked about the economy, PC sales, the advance of silicon and the metamorphosis of netbooks at a morning session of the Web 2.0 Summit in San Francisco today.

"We found bottom," he said. "Actually, I think we found bottom much earlier than everyone thought we would. We're likely to see PC unit volume this year above 2008, which you wouldn't have thought even three months ago."

And the head of Intel said since companies have been making due with aging laptops the last few years, it's time for CIOs to do a little high-tech shopping.

"Corporate budgets were just clamped down. CIOs and CFOs kept the lid on budgets last year and I expect that to change. We expect that to open up in 2010," he added. "The average desktop is five years old, a laptop is four years old. They have to be replaced. They're out of warranty. It's more expensive to keep the old ones than to buy new ones. And CIOs are buying that argument."

Otellini has good reason to be optimistic.

Just last week, Intel reported strong third-quarter earnings that beat analyst expectations. The company reported third-quarter revenue of $9.39 billion for the quarter that ended Sept. 26, beating the $9.04 billion estimations. Revenue was even up by $1.4 billion compared to this fiscal year's second quarter.

Over the next few years, Otellini said, much of what will drive Intel's business is the increasing focus on mobile computing: Engineers at the company are focusing on how to feed that growing market.

"Moore's Law gives you a template to build things at much higher performance, much lower cost, much lower power," he said. "We're aiming at a whole family of products of a system on a chip. We've been able to shrink the micro processor down to a very tiny part of the chip, so we can use the other transistors available to put more function on the chip.... The things we do that go in your pocket are focused on the lowest power and all-day battery life, which is the minimum you need on these things, and very high performance graphics and video with a minimal cost, while keeping the form factor very, very thin."

Otellini also said that the time is running out on using silicon to build chips.

Silicon is the basic building block of the microchip. Scientists and engineers have been working with the material and even adding other materials to try to change its properties so the chip can do more than before.

Today, Otellini said he thinks chip makers will come out with three more generations of processors using silicon and then will be looking at a different base material. He wouldn't say what that material might be. "It's cool. Trust me," he said.

Responding to a question about the choice between smartphones and netbooks, Otellini said he sees big changes coming for the netbook.

"I think the [netbook's] screen size and having a different keyboard is a different use model than smart phones," he said. "Not any better and not any worse. In places like San Francisco, people will have a laptop and a smart phone. They'll have both. In other places, most people will have to choose. We'll put more capabilities into netbooks that will make them better. They'll get smaller. They'll have GPS. They'll just get better."

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