BUSINESSWEEK ONLINE : MARCH 13, 2000 ISSUE
COVER STORY

Intel's Path beyond the PC


How the advent of the Internet and cheap PCs made Intel reboot

FEBRUARY 1997
Compaq unveils a $999 PC using a cheap Pentium clone chip. Intel execs downplay sub-$1,000 PCs as a fad, but the machines catch on, and Intel's share of the low end drops to 30%.

APRIL 1997
Barrett wants the troops to break their old habits and diversify. He compares Intel's microprocessor business to a creosote bush, a plant that kills off nearby vegetation.

JULY 1997
Barrett is named president in May and, fearing the impact of low-cost chips, kicks off the first of eight seminars for Intel's top brass. The classes are aimed at getting them to dream up new businesses.

OCTOBER 1997
Intel buys DEC's chip unit for $700 million. The deal contains a gem: Rights to the zippy StrongARM processor, which Intel adopts for some mobile and networking products.

DECEMBER 1997
Intel ends the year with record sales of $25 billion and a blowout $6.9 billion in profits. But analysts worry about the potential financial impact of cheap PCs.

JANUARY 1998
Intel surveys 2,000 Internet service providers and discovers they want simple servers that do jobs such as encryption. So Intel develops server appliances that debut two years later.

FEBRUARY 1998
To kick-start a networking business, Intel hosts a press event in San Francisco and unveils dozens of products, including routers and switches.

MARCH 1998
Barrett is named CEO. But lower chip prices in part prompt a warning of lower first-quarter results. To reclaim lost share, Intel launches the cheap Celeron chip. But it's poorly received.

JULY 1998
Barrett O.K.'s the launch of a new-business group to fund internal startups and asks manufacturing veteran Gerry Parker to head the new unit.

AUGUST 1998
The company forms a home-products group to develop Web appliances and Internet-enabled TVs and set-top boxes.

SEPTEMBER 1998
Five managers, led by Renee James, study the Web-hosting business--but it's a risky leap from making chips. The board gives it the O.K. six weeks later.

NOVEMBER 1998
Intel completes a crash, 12-month program to set up Web-based order taking for its customers. In 1999, online revenues soar quickly to $1 billion per month.

FEBRUARY 1999
Intel unveils plans to co-develop a digital signal processor with Analog Devices. This could help it gain ground in markets such as cell phones and consumer electronics.

MARCH 1999
Intel makes its largest acquisition, buying networking chipmaker Level One for $2.2 billion in stock. The company specializes in chips that connect network cards to wiring.

APRIL 1999
Intel announces a home networking kit, the first product it will sell directly to consumers over the Web. The product sends data over phone wiring in homes.

JUNE 1999
Straying far from its roots, Intel buys Dialogic, a maker of PC-based phone systems, for $780 million. Dialogic gives Intel technology for the convergence of voice and data networks.

SEPTEMBER 1999
Intel unveils 13 networking chips and opens its first Web-hosting center in Santa Clara. With a capacity for 10,000 servers, it could serve hundreds of e-commerce companies.

OCTOBER 1999
Intel acquires DSP Communications, a leader in wireless phone technology, and IPivot, a maker of gear for speeding up secure e-commerce transactions.

JANUARY 2000
Barrett spells out a plan to sell info appliances through phone companies and ISPs later this year. The devices use Linux software--not Windows CE from its longtime partner Microsoft.

FEBRUARY 2000
Intel launches a line of seven server appliances, called the NetStructure family, that speed up and manage Web traffic. This puts Intel in competition with Cisco Systems and others.



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