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Intel to enter new business
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September 21, 1999: 10:37 p.m. ET
Chipmaker plans to build and operate server farms for e-commerce
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NEW YORK (CNNfn) - In a move that could alter the electronic-commerce landscape, semiconductor maker Intel Corp. plans to enter the computer-services business.
The manufacturing firm plans to offer customers an electronic-commerce hosting service using computer centers it will build and operate itself, according to the Financial Times newspaper.
The newspaper said Intel would announce details of its plan to ``rent out'' highly reliable, 24 hours a day computer capacity in centrally controlled ``server farms'' next week.
The plan, according to the Financial Times, is to initially target small and growing companies in the United States before expanding to Europe.
Customers would be those companies which do not have the internal resources to operate their own data centers to support growing e-business operations.
Andy Grove, Intel chairman, told the newspaper that the service provides computing power "a [computer] bit at a time."
Grove said the service is designed to help smaller companies deal with the unpredictable demands and rapid growth of e-commerce.
The Intel (INTC) server farms will be equipped with "state of the art controls and encryption, and all of those things that are used by large companies today," Grove told the newspaper.
Entering this new business seems to put Intel in head-to-head competition with International Business Machines Corp. (IBM) which increasing markets itself less as a computer builder and more as a provider of e-commerce services.
Also on Tuesday, IBM announced it plans to open eight centers across the globe in the next six months to help companies tie together disparate computer systems, the latest move by the No. 1 computer maker to extend its powerful position in e-business.
The first so-called competency center is slated to open on Thursday in Chicago, followed by others in San Mateo, Calif. and Hursley, England in October. Early next year, Armonk, N.Y.-based IBM will have centers in Stuttgart, Germany, Paris, Tokyo and Singapore, Reedy said.
IBM is not only as the world's largest computer maker but is also the biggest computer services company -- the fastest-growing part of IBM's business, analysts said.
Since taking the helm in April 1993, Chairman and Chief Executive Louis Gerstner has consistently focused on its services business as a linchpin of IBM's growth. In May, Gerstner told Wall Street investors that $20 billion, or 25 percent of IBM's 1998 revenues, came from demand for its e-business hardware, software and services.
-- from staff and wire reports
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