Interview With Intel VP Tom Kilroy

We met up with Intel's Vice President and General Manager, Sales and Marketing Group at the 2010 Core Family launch to find out how he's been dealing with the global economy, and what the company has in store for us in 2010.

First of all, what are you most excited about today?
Well I would say today was quite a milestone, where we didn’t just launch our product line but we’ve brought to market what we think is a very broad offering of really groundbreaking capabilities for consumers on our leading edge process technology. That’s not to be taken lightly, we’re not starting a 32-nanometer network in a niche part of the market; this is the mainstream client marketplace, so this is a first and we think it’s a great way to start the year!

It is unusual to launch a new process with a mainstream part; is this because of any changes in the market or is this something you plan to keep doing?

I think the timing worked out where the Nehalem architecture was ready for consumer, business and mainstream right about the time that the 32nm process was ready. Westmere was I think a full quarter out, and we made this decision about a year ago when it looked like we could pull in the 32nm process so we could time it, because we weren’t going to compromise on this launch being in January. So we had to make a bet a year ago that we could pull in the 32nm launch to January to combine these. The original plan was to stick with 45nm, and we felt that the process technology was healthy enough to pull that in.

Considering it takes years to plan and design a CPU, had you any idea that the world would be in such an economic situation last year? Did you have to compensate mid course?
It’s quite the contrary. First of all, did we forsee it? No. Did we change anything? No. As a matter of fact to go put the capacity in place and from a manufacturing standpoint, our CEO [Paul Otellini] stood up in January last year at a time in the US where the auto industry was asking for bailouts, the financial industry was asking for bailouts, and he said “I’m going to go spend 7 billion dollars putting in factory capability for 32nm”. So our business model is one where we don’t flinch, we don’t back off when things are bad, because we know it’s just a matter of when they’ll turn up. So we didn’t predict it was going to be a horrible market in the fourth quarter last year, and we probably didn’t predict that the market would be in the state it is in today, which is pretty good.__STARTQUOTE__We would expect consumer to continue to be very strong because PCs and computing are becoming indispensible to consumers. With global economies being what they were, people are not just looking at PCs as discretionary buys, they were looking at them as necessary.__ENDQUOTE__So in your opinion has the market bounced back now?
Well we’re in our quiet period right now [before financial results are declared] so we’re not going to be able to talk about our performance in the fourth quarter, but if you just go look at the trending from analysts—Mercury, Gartner, IDC—you’ll see every couple of months they’ve been revising up their estimates for PC shipments for 2009, much less 2010, and what started off to be a projection of double-digit declining PCs actually grew in 2009 and by many indications we’re looking at a pretty robust market for 2010 based on these industry projections. It took them a while to figure it out although we had been signaling it.

Will you be concentrating on any specific segments more than others?
Well, consumer business has carried us through 2009. When you look at the client business it was largely because of the strength of consumer purchases. Business purchases for client PCs were substantially down so the consumer market actually surpassed the consumer market in terms of total units for the first time ever. The exception in business was servers.

We launched Nehalem in March and we’re actually quite pleased as we reported in our earnings in the second and third quarters that the trend in the server marketplace was because of Nehalem being such an efficient architecture that companies could actually money by buying it. So that was an important segment and will continue to be this year. We would expect consumer to continue to be very strong because PCs and computing are becoming indispensible to consumers. When you look all around the world, with global economies being what they were, people are not just looking at PCs as discretionary buys, they were looking at them as necessary.

When we look at 2010 we’re very hopeful that we’ll see a recovery in business and the one survey that I’ve paid particular attention to is Barclay’s Captital. They did a survey of CIOs in Europe and the US. Many of them expected to increase their hardware spending in 2010 and the number one hardware item on their lists for pent up demand was laptops. So more optimism for sure in client business, we expect consumer business to continue.