Munich The time when Intel gave away its software is coming to an end. The US chip giant wants to earn money with self-developed programs in the future. There is software from the group that can be sold independently, i.e. without semiconductors, explained Sales Director Christoph Schell.
“We have only monetized our software a little so far,” the manager told Handelsblatt. It was usually supplied free of charge with the chips or made available to developers free of charge.
Starting next spring, Intel intends to offer additional software for a fee on a large scale. A test is currently running with a dozen customers from the financial sector, the public sector and the healthcare sector, explained chief technology officer Greg Lavender in an interview with the Handelsblatt. It is the so-called “Project Amber”. Intel offers a security solution for companies.
Organizations can ensure their data is protected in data centers while it’s being processed with verification performed by Intel. The IT industry speaks of “trustworthy data processing”.
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That’s not all: Intel took over the Israeli start-up Granulate in the spring. Now the Americans are selling the company’s software, which can be used to optimize the workload of servers in data centers. Sales manager Schell announced that further offers would follow.
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So far, Intel has made its living from processors for PCs, notebooks and servers. They are the brain of every computer. To get the most out of these devices, Intel developers have written countless programs that they offer free of charge, as a way of promoting sales and retaining customers.
But it’s no coincidence that Intel is now starting to build new businesses off the chips. Because things are anything but smooth in the company from Silicon Valley. In the second quarter, sales fell by a fifth, and the company was in the red.
Intel falls behind AMD and Nvidia on the stock market
Worse still: CEO Pat Gelsinger had to lower the annual forecast by a good ten percent this summer. One reason for the loss: Intel is technologically falling behind its rivals AMD and Nvidia and is losing market share.
Gelsinger is therefore investing billions in new plants worldwide to reduce the backlog on TSMC. AMD and Nvidia have their chips manufactured by the Taiwanese. The world’s leading contract manufacturer is miles ahead of Intel with its production processes.
The Intel boss is under pressure because profits are shrinking and at the same time he is investing billions in new plants.
(Photo: Reuters)
Investors’ criticism is growing given the poor results on the one hand and the high expenses on the other. Since the beginning of the year, Intel shares have fallen by almost half on Wall Street. The competitor Nvidia got it much worse with a minus of almost 60 percent on the floor. But in contrast to Intel, Nvidia’s price rose sharply last year.
So it is that Nvidia is currently worth a good 300 billion dollars on the stock exchange, almost 200 billion more than Intel. This makes Nvidia the world’s most valuable chipmaker, despite Intel generating roughly three times as much revenue in its most recent quarter. Even AMD, another much smaller processor competitor, is valued nearly as high as Intel at just over $100 billion.
Analysts warn of “turbulent” months
Peter Fintl, semiconductor expert at the consulting company Capgemini, explains that the bad news from earlier would continue to have an effect on the stock market’s poor performance for months. Intel has repeatedly brought products to the market too late. The fact that the billions in investments will depress profits for years to come is also not conducive. Morningstar analysts warn that the coming months will be “turbulent” for Intel.
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According to Chief Technology Officer Greg Lavender, Intel employs 20,000 software engineers. That corresponds to almost the entire workforce of the competitor Nvidia. So it makes sense to get more out of the programmers than before.
Lavender was confident to the Handelsblatt that “Project Amber” will be a success. “Customers will accept that. But I wonder if we can ramp up the supply fast enough,” the manager said.
How much the service will cost is still open, but it will be “affordable” for the companies. It is billed according to use, i.e. according to the number of security checks. Initially, Intel wants to start sales via partners in the USA before it also starts in Europe.
One thing is clear: In order for the software business to be relevant for Intel, it has to grow quickly. Small-small is not an option for the group, which had sales of $79 billion and a profit of $19.9 billion last year.
Many flops outside of the core business
In the past, however, many advances into new areas have failed. Despite several attempts and acquisitions worth billions, Intel has never succeeded in breaking into the smartphone chip business. The Californian competitor Qualcomm dominates here.
The Americans had little luck with software either. In 2011, Intel swallowed up McAfee, a well-known provider of antivirus programs, for $7.7 billion. Six years later, Intel went out of business and parted ways with McAfee. The US magazine “Insider” once called the group the “worst buyer in tech history”.
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Intel boss Gelsinger is currently trying to get Mobileye public. With the Israeli company, the Americans wanted to break into the business with self-driving cars – so far with mixed success.
Head of sales Schell promises that Intel will in future focus more on the market than before – and less on the ideas of its own engineers. The native Swabian knows exactly what needs to change. Because he only joined Intel this spring. Previously, he worked for 25 years at computer manufacturer HP, one of Intel’s largest customers.
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