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Diversifying beyond PC processing into networking, broadband

Fri, 11/30/2001 - 7:00pm
Duffy Hayes

Google Factor: 541,000

At Intel, it isn't necessarily all about the Pentiums.

Though PC processing accounts for more than 75 percent of its bottom line, the rest of the balance sheet is filled out with networking and broadband initiatives. And though Intel has been force-fed diversification over the past couple of years, almost to the point of unprofitability, it has charted a course into new markets where it can ideally make a serious impact on the broadband and networking sectors on the whole.

Part of that diversification strategy has stalled out for sure; it's currently in the process of phasing out the unsuccessful Connected Products Division, which developed digital cameras, personal audio players, Web tablets and Internet appliances. It also retrenched in the DSL chip market, which it entered via an acquisition of small-time silicon supplier Ambient Technologies in February 2000. But in the home networking and residential gateway space, its prospects are a little brighter. The company has been the early leader in first-generation consumer home networking products, with its line of AnyPoint modules that predominantly work over the HomePNA phoneline protocol. More recently, it spotted an opportunity to join the nascent residential gateway market, with the introduction of the Linux OS-based AnyPoint DSL Gateway 4200. (See Residential Gateways, p. 19.) Where Intel was slow to react in the DSL chip market, it apparently learned from that experience and is moving quickly into the gateway market.

But perhaps its best prospect for diversification is in the wireless LAN space, specifically in the 802.11x wireless networking market. Where it once had separate wireless networking divisions, one for the enterprise and one for the home, it's consolidating into one wireless division with a fine focus on the next-gen 802.11a wireless protocol, which can transfer data at rates as fast as 54 Mbps. As part of the strategy, Intel recently announced that it will be developing wireless LAN products using 802.11a chipsets from Atheros Communications of Sunnyvale, Calif.

But Intel probably has eyes for a bigger piece of the 802.11a pie, and the Atheros chipset is likely an interim step to get products to market while it develops its own proprietary 802.11a silicon. It's clear that Intel is placing bets on the 802.11x wireless platform–it appears it's phasing out the HomePNA, HomePlug and HomeRF networking protocols to focus on the 802.11x wireless platform. So far, only a handful of smaller players like Proxim, Intermec and TDK Systems have shown that they're bullish on being first to market with 802.11a networking products. Look for Intel in the near term to release a slew of 802.11b products into next year, and eventually evolve into the more robust 802.11a sphere after that.

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