CRN Interview: Pat Gelsinger, Intel

Pat Gelsinger, senior vice president and general manager of the Digital Enterprise Group at Intel, has been with the Santa Clara, Calif.-based chip giant since 1979. He discussed Intel's relationship and involvement with Apple, Microsoft, Bill Gates, Xen, Windows Vista and system builders, among a range of other topics, in an interview with CRN Senior Writer Paula Rooney at the fall Intel Developer Forum in San Francisco.

CRN: Aside from AMD, what keeps you up at night?

GELSINGER: Our execution. Do we have the right product strategy, and are we executing effectively?

And beyond that, well, there are lots of things that keep me up at night. Are we satisfying customers? We have OEMs, tier-two [OEMs] and channel customers. Are we really understanding what they need, and are we delivering against it?

CRN: Over the last year, how has Intel fared in working with the channel?

GELSINGER: Given our supply situation and product situation, we didn't have a good year with the channel in 2005. And over the last couple of quarters, the channel has seen a much, much better relationship with Intel. We've seen more market-share growth and are giving them products and getting them supply. All of those things [give partners] an overall good feeling and attitude toward Intel in the channel right now.

CRN: How important is the channel to Intel, vis-a-vis OEMs? What's the current ratio of business split between OEMs and system builders? Does the channel represent more than 50 percent?

GELSINGER: I don't know that we'd give out the ratio, but the portion of our business that's in the channel is substantial. Everyone on our executive branch knows that. The channel is not more than 50 percent [of our business], but it's a substantial force. We take it pretty seriously. It's an important piece of Intel.

CRN: Why?

GELSINGER: The channel tends to be a good complement to our OEM relationships. A few years ago, say 10 years ago, our channel was extremely important to us when we went to a new country like China. It's a great way for us to move into a marketplace, and we're using it effectively -- specifically to move into new market segments and, sometimes, for introducing new products. Another example is small business. OEMs have never done a good job of satisfying small businesses, which need local touch and support. So the channel complements our OEM and big business and retail focus. It's a symbiotic relationship.

CRN: Microsoft says SMB is the fastest-growing market. What do you say?

GELSINGER: We'd say emerging markets. Everyone refers to the "Mr. BRIC" countries: Mexico, Russia, Brazil, India, China. We're seeing second-tier emerging countries like Thailand and other Asian countries, and there's some growth in the Middle East, Turkey and clearly the Eastern bloc countries beyond Russia.

CRN: So Intel's growth is more geographically driven than segment-driven at the moment?

GELSINGER: Yes. But beyond that, the SMB [market] has more strength in it than the enterprise or government [segments].

NEXT: Intel's relationship with Apple and Bill Gates. CRN: Intel shared the stage at IDF with Apple. How will Intel's relationship with Apple evolve in 2007, or is the cooperation mostly finished?

GELSINGER: It's far from done. Let's take it in phases. First was the honeymoon, where we won Apple as a customer. The second phase was execution and getting products done and, third, we just finished that. The MacBook Pro was the last product. We just finished the birthing. We've just gotten that done, but a number of projects are under way with Apple on next-generation technologies -- but I can't detail those. Apple is very secretive, even to us. It's the nature of the company.

CRN: Has Microsoft expressed concern about the Intel-Apple pairing or frowned at your relationship with yet another new operating-system vendor besides Linux?

CRN: Well, certainly, of course. They look at it that way. But our response [to Microsoft] is that we have a customer that wants to use our silicon. Of course we support them. At the same time, I'd say our Microsoft relationship is as good if not better than it has been in our 20-year history.

CRN: Why?

GELSINGER: We both see that we might have border quibbles on a particular issue, but if the PC industry is not good for [Microsoft], then it's not good for us. That shared challenge and opportunity [for Intel and Microsoft] is significant. We have a mutual view of the business market [and grapple with issues like] what does it take to address security and management? We share common views of the next problems and hurdles to enable that. We have a common perspective on how to get to the next layer of growth.

CRN: Bill Gates, Microsoft's chairman, co-founder and chief software architect, announced earlier this year that he will step down from his day-to-day role at the company by July 2008. Given that you've worked with him directly for years, do you think his absence will affect Intel's relationship with Microsoft? And to what extent has Intel worked on the technical side with current Microsoft Chief Software Architect Ray Ozzie?

GELSINGER: Bill is innovative, brilliant, ruthless, aggressive, demanding and challenging. You can't take a figure like that and remove him from the company and not expect the company to be different or the relationship to be different. I meet with lots of industry execs, and I don't need to be briefed as well for any other as well as when I meet with Bill. He's smart, aggressive and does his homework.

Sometimes I show up for a meeting [with Gates], and he knows more about some aspects of my product than I do. He's a force. So you have to look at it and say, 'Wow, if he steps aside, Microsoft will change.' Everyone recognizes that, but at same time, Microsoft is much bigger than Bill. There are many brilliant people there, like CTO Craig Mundie. And I've known Ray [Ozzie] since Lotus and worked with him through the Notes days and have a great relationship with him. I just had dinner with him a few weeks ago. Ray is brilliant.

CRN: What did you talk about over dinner? Enabling software-as-a-service?

GELSINGER: Yes, that was certainly one of the topics, [as well as] Microsoft Live and Microsoft's data center visions for the future. Ray, as a practicing software developer, is probably the best in the world, and he is a very deep thinker with respect to many aspects of software and software architecture. But he's also a very congenial person. He doesn't have that incredible external intensity as Bill, so he's a different personality. He will be a tremendous person for Microsoft, and I look forward to working with him a lot more going forward.

NEXT: The impact of the Windows Vista launch and virtualization technology. CRN: On the subject of Microsoft, how big will the Windows Vista launch be for Intel in 2007?

GELSINGER: For the consumer, it will happen in 2007. Consumers will move quickly. The product has a new user interface and the strength of Microsoft's marketing. The market for businesses will, of course, be more conservative. But they will look at it. They want a clear value proposition, and BitLocker and different security models and mobile capabilities [in Vista] all have a clear, solid value proposition. But it's a conservative customer base, so as a result it'll be late 2007 and 2008 when the business [customer] impact will start being felt. Even though I expect that once [Vista's value is] proven, customers will demand Vista-ready platforms today. They may not deploy for three more years in some cases, but we can expect it as a basic buying requirement very quickly [after Vista's launch].

CRN: Many industry analysts say Vista will require the purchase of a new PC. Yet other analysts say PCs shipped in the last couple of years are adequate. What's the truth?

GELSINGER: We'll have customers taking a look at their [PC] fleet and saying they will upgrade their year-three and year-four models now because in 2008 they will want to move to Vista. So we tend to see an acceleration in the replacement rate of older machines.

CRN: Do you expect Vista to drive a big PC refresh in 2007?

GELSINGER: We are expecting a positive [increase in PC sales]. A big refresh would clearly be overstating it.

CRN: With all the hype about Linux on the desktop and a new "LinTel"world, it seems the open-source operating system is failing to make gains in mainstream business desktop use. Why?

GELSINGER: [A lack of] applications.

CRN: Intel's relationship with AMD of late has been quite contentious. Now that AMD has partnered with Dell -- and upset some system builders -- do you see this as an opportunity for Intel to approach AMD's system builders and VAR partners?

GELSINGER: I can't answer that question.

CRN: Because you don't know or because you don't want to comment about AMD?

GELSINGER: Because I don't want to comment.

CRN: The launch of several version 1.0 Xen platforms -- including XenSource Virtual Iron in October and Red Hat Enterprise Linux 5 in the fourth quarter and Novell's currently shipping SUSE Linux Enterprise Server 10 -- is expected to drive sales of processors, since Xen harnesses Intel's VT-x extentions. What do you think will happen?

GELSINGER: We're enthusiastic about it, of course. I've got [virtualization] features in silicon, but the whole virtualization model has great value to IT pros. And we see that having a value even to clients with the vPro model and for appliance models. On the server side, we see Xen as absolutely great because VMware has been the only solution. You see Microsoft coming along with Viridian, and we've collaborated with them closely. I have a team of Xen developers. We are developing into the code base of Xen, making direct contributions.

NEXT: More on virtualization, silicon's rising capabilities and a look at the whitebook space. CRN: Is it fair to say Intel is going to be partial to Xen? Will Xen run better on Intel's VT-x technology than on other virtualization platforms?

GELSINGER: No, I love them all. They each have a different virtualization model -- a hosted vs. hypervisor model -- so each has different strengths and weaknesses. When you go to corporate buyers, the VMware proprietary solution is strong there, unless they're a big Linux shop and have made in investments in IT competence and have their own OS manager, even if they're getting Red Hat support. This class of customer may be more passionate to move to Xen. If your company has a heterogeneous data center, VMware is clearly a solution.

CRN: Where do you see opportunity for Xen?

GELSINGER: No one is taking the approach to the midsize market, and that's where Xen has very interesting potential. I mentioned Novell's announcement [this week that SLES 10 Xen virtualization has been optimized for Intel VT-x].

CRN: As Intel subsumes a lot of software services like virtualization and storage into silicon, how will that impact Intel's ecosystem?

GELSINGER: There's a giant sucking sound, and the magnitude of the sucking is called Moore's Law. ISVs need to keep moving to the next wave of innovation. For example, virtualization once was all software, and now we're taking a piece of it and doing it in silicon. But does this mean virtualization software has gone away? No way, we're far from it. But some differentiation is in hardware, so now the vendors have to move to virtual machine monitors, virtual machine applications or data center-wide virtualization. You have to move forward, and any ISV that doesn't stay on the bow of the wave really suffers in that vortex of Moore's Law.

CRN: Why do whitebook builders continue to have a hard time? Any chance the climate will improve for them soon?

GELSINGER: We hope so. Part of the reason is a lack of standards. So we've done more work to standardize building blocks of the notebook -- like the battery, display and motherboard form factors -- to close the barriers to entry.

CRN: Will Intel's next-generation Centrino platform, code-named Santa Rosa, give a lift to whitebook builders?

GELSINGER: It won't be Santa Rosa. We have a mobile acceleration program. That's a structured program to address that weakness. It won't change overnight, but it will make the channel a more viable alternative to [top-tier OEM notebooks]. We launched it a year ago but in a fairly modest way.