Barrett optimistic about IT recovery

Intel CEO Craig Barrett woke up this morning, turned on the television and saw a newscaster saying that he had predicted the economy would recover by early 2003.

LAKE BUENA VISTA, FLORIDA – Intel CEO Craig Barrett woke up this morning, turned on the television and saw a newscaster saying that he had predicted the economy would recover by early 2003.

Barrett said Sunday at a conference in Seville, Spain, that the IT industry would recover by early 2003. But apparently that comment has been interpreted incorrectly to mean that he predicted a full-blown economic recovery.

Answering questions from two Gartner analysts Tuesday at Gartner’s Symposium/ITxpo conference here, Barrett clarified that he’s optimistic about the future of the IT industry, but that he’s not making predictions about when the economy in general will rebound.

“The computer sector is relatively ripe for further investment,” he said.

This is because the last cycle of robust IT spending happened several years ago and was fueled by purchases to fix the Year 2000 problem, by investments from Internet companies and by the build-out of communications infrastructure. PCs bought in 1999 for the Year 2000 problem are now obsolete and due to be replaced, he said. The overcapacity in communications equipment will take longer to work off, he said.

Companies must invest in technology to maintain their productivity and remain competitive, he said. “The unique thing about technology is that it doesn’t recognize economic recessions,” he said. PCs and servers continue getting more powerful, and companies that stop investing in IT put themselves at a disadvantage with competitors.

Intel practices what it preaches, he said. Over the past two years, the chip giant has invested in an IT project that has allowed it to realign its factory processes with customer demand in three days, down from 45 days, Barrett said. The process was based on spreadsheets, paper and human calculations, but now it’s much more automated with enterprise software from SAP, he said. Intel would like to cut that process down to 24 hours to further reduce inventory write-offs, Barrett added.

When asked about the future of the PC, Barrett said that within a year or so, wireless functionality will be ubiquitous in PCs, because the demand for wireless LAN connectivity is growing very fast. Another trend will be the further integration and interoperability of handheld devices with desktop PCs and backend systems, he said.

Regarding Intel’s Itanium chips, Barrett said his company has been working very hard over the past year with partners to line up applications and other related software, such as operating systems, that support the new technology. He said he remains convinced that Itanium and its future generations, of which there will be one every 12 months in the coming years, will take hold in the market starting now, despite the timid adoption it had in its first year of existence.