That's bigger than the revenues of most high-technology companies, but it's only about 10 percent of total revenue -- and it's a percentage Intel is keen on increasing. That task falls to Sean Maloney, the executive vice president and general manager of Intel's communications business. Under Maloney, the chipmaker moved into the high end of the network processor market with the introduction of chips that run at 10gbps (gigabits per second). But Intel is not alone in this competitive market. Rivals, such as Applied Micro Circuits, have beat Intel to the punch by churning out versions of their own high-speed network processors earlier. But Intel remains a formidable presence, owing to its size and experience in the chip field. In addition to the billions of dollars spent on research and development, Intel has spent heavily to acquire networking and communications companies since 1999. The company has also invested in many telecom start-ups through its venture capital arm. Its optical portfolio now includes 36 companies, including T-Networks and Princeton Optronics. Intel has also invested in companies such as IP Infusion, Tornado Development, SmartPipes and Tejas Networks. CNET News.com recently spoke with Maloney to get his take on upcoming technologies in the telecommunications and network chip market. Q: Do you have a rough idea of when the telecom market might start to pick up again?
A: No, the "com" recession is not over yet. There's also no slowdown in Internet traffic growth, so you have the continual paradox of a slow market and a continually growing traffic base. And neither of those factors have changed. It's a bit like water rising behind a dam. At some point, there's going to be a big wave of purchases, but as ever, it's not happened yet. Can the kind of telecom gear that's being produced now handle the future growth of Internet traffic?
I'm not sure that the equipment going in now will be able to cope. If you go back to 1992, Internet traffic has pretty much doubled every year since then, and it's carried on doubling, even though we've gone through a recession. Given the demographics, it's reasonable to assume that the current rate will be sustained just through simple arithmetic. Internet traffic is going to catch up on everybody, and I think the (telecom) industry as a whole needs to bear that in mind. It's a profound change. So from the gear makers' standpoint, what do they have to do? It's hard to sell gear to carriers in a recession, so do they focus on getting the next generation of advanced gear ready?
The telecommunications industry has not had many recessions. The computer industry has had multiple recessions, and the computer industry knows that you get out of a recession on tomorrow's technology, not today's. You always go to the next generation, and that's what pulls you out of these recessions. We think that there are four or five post-recessionary technologies; wireless Ethernet is one of them; 10-gigabit Ethernet is another. And from an equipment maker point of view and from a service provider point of view, 10-gig E is the sweet spot. That's the next generation of equipment. What are the applications for that technology?
Currently, most of the networks that are going into metropolitan areas operate at 2.5gbps and below. Those networks are likely to fill up, given the growth in traffic.