Sept. 11, 2000

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Intel's Goal: To Grow With E-Commerce

By Matthew G. Nelson

hip giant Intel is getting bigger every day--and a significant factor in continuing that growth is Intel's strategy of acquiring other companies worldwide. Over the past year, Intel has acquired a string of smaller companies, typically firms that have developed networking and E-commerce technologies, such as iCAT, iPivot, NetBoost, and Shiva.

The chipmaker's goal is to grow beyond its core business in PC microprocessors, analysts say. Intel is looking to expand into new areas of business. "They're building data centers and soliciting large companies to host their E-commerce applications on them," says John Enck, research director at IT advisory firm Gartner Group. "They're looking at ways of leveraging their core technology in other markets. They're moving up the stack and providing many more solution-oriented products."

The rapid pace of acquisitions presents a major challenge for Intel's information-technology staff: how to quickly incorporate newly acquired companies and their systems into Intel. "Over the past two years, Intel has been doing, on average, one acquisition a month, and most of those companies have been focused on engineering," says Doug Busch, VP of IT. "We've got design teams that are producing new CPUs and chips that are scattered all over the world." Enabling these distributed teams to collaborate effectively is extremely important, Busch says. "Product deliveries depend on these teams being able to work together very effectively."

To facilitate the integration of new employees with Intel's 70,000-plus existing workforce, Intel's IT department has an acquisition team of 60 staff members and two packaged sets of hardware and software systems designed to speed the integration. The systems, called iPOD and MegaPOD, are "the organizational equivalent of plug and play for acquisitions," Busch says.

To connect new hires to essential Intel applications--corporate and engineering applications, E-mail, human resources, and security, the acquisition team will bring in an iPOD, a 19-inch rack with several servers, routers, and modems, and storage configured as a firewall.

Intel has also recently begun MegaPOD, a system that's installed at one of Intel's main data centers and provides access for employees at the newly acquired companies to Intel's systems through a secured Web browser.

Using iPOD and MegaPOD have helped to cut integration time. "Two years ago it took four to six months to get acquired companies integrated. Today, it's less than a month," Busch says. "As we get better at this, we're finding that we're getting real positive feedback from the employees of the acquired companies. The ability to get information at the beginning of the acquisition process affects the overall acquisition."

Intel's IT department positions itself to be a key enabler in a successful acquisition process. "What we really want," Busch says, "is for an acquired company to feel like an integral part of Intel in just a few days."

Return to main story, "Chipmakers Reach Out To Internet."

Illustration by Jeffrey Fisher

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