Intel's Grove: Next five years will be big for Internet

Despite all the hype and billions of dollars spent on the Internet in the last
few years, the industry is only 10 percent of the way toward where it will be
in 5 years' time, according to Andy Grove, chairman of Intel Corp., speaking Thursday
in an interview at Stanford University's Business School, monitored in Tokyo.

"I think the impact of the Internet in the next five years in practical
terms, not in stock market terms, is going to be bigger than it was in the previous
five years," he said during a public interview at the business school chaired
by Wired magazine's John Heilemann. Grove writes in and appears on the cover
of the magazine's June issue.

Grove, who had earlier spoken of his admiration for the customer service management
employed by Amazon.com Inc., added he holds this view because the number of
companies that are still truly benefiting from the Internet in the way they
interact with customers is small. "It is going to be bigger simply because
right now, I couldn't think of the second candidate to extol after Amazon in
terms of customer relationship management (CRM), and I couldn't even think of
the first candidate who is really the epiphany of supply chain management (SCM)
that I could hold up in an Amazonic role and fashion," he added.

"The impact of this thing is precisely proportional to the portion of
the economy that participates in the benefits of these two factors (CRM and
SCM), so we are less than 10 percent of the way there," he said. This backlog
is not for a lack of money. The billions of dollars plowed into the industry
over the past few years, most of it raised in the stock market, has laid the
ground for coming improvements, he said. "Roughly 25 percent of the necessary
investment has been made, and we've got 5 percent of the benefits so far."

In fact, the money that arrived in the industry, and particularly Silicon Valley,
solved one of the largest problems facing the first inhabitants of the Internet
economy: Who is going to pay for all of the infrastructure needed?

"In the early Nineties, if you think back to the time people were thinking
of the information superhighway, the question everyone wanted answered was,
who is going to pay for the deployment of the information superhighway? Is the
government going to pay, are companies going to pay? The whole thing didn't
make any sense, and then all of a sudden investors rushed to pay for it and
put it in place," he said.

"The boom was a healthy thing because the infrastructure that is needed
for (CRM and SCM) depends on hundreds of billions of dollars of infrastructure
investment that ordinarily would not have been available. What bank would lend,
in a short period of time, money to companies to invest in a business model
like Amazon or the European telcos buying up digital spectrum licenses? The
answer is none. Those things wouldn't have happened or would have happened at
an infinitely slower speed."

"The money may be gone, but the infrastructure is there, and the infrastructure
was put there in record time," he said.

ITworld.com

Sign up for ITworld's Daily newsletter
Follow ITworld on Twitter @IT_world

• Email
• Print
• Share
  • Slashdot
  • Digg
  • Stumble
  • Reddit
  • Newsvine