Intel's Maloney Pushes Pet WiMax Project to Fight Sagging Sales
By Ian King and Jason Kelly
Sept. 8 (Bloomberg) -- Intel Corp.'s Sean Maloney is betting he can
reverse a drop in sales at the world's biggest chipmaker with a wireless
Internet technology he spent four years and more than $1 billion promoting.
Maloney, Intel's chief sales and marketing officer, got Sprint Nextel
Corp., the third-largest U.S. mobile-phone service provider, to commit
$3 billion last month to the standard, known as WiMax. Motorola Inc. and
Samsung Electronics Co. agreed to supply equipment to Sprint for its
WiMax-based network.
``This has basically fired the starting gun for the race,'' Maloney, 50,
said in an interview. ``There's not a single service provider in the
world that hasn't looked at it and paid attention.''
Like wireless fidelity, or Wi-Fi, WiMax creates an area in which
electronic devices can wirelessly connect to the Internet. While Wi-Fi
hot spots usually cover a coffee shop or home, WiMax networks can
encompass entire cities. The peak range is 30 miles, meaning one tower
would be able to cover downtown San Francisco.
Maloney says WiMax may be more successful than the Wi-Fi standard used
in Intel's Centrino chips, which helped the Santa Clara,
California-based company boost sales an average of 13 percent a year
from 2003 to 2005.
Intel's sales and profit dropped in the two most recent quarters,
though. Chief Executive Officer Paul Otellini in April said revenue will
fall this year for the first time since 2001 as Sunnyvale,
California-based Advanced Micro Devices Inc. gains market share in
computer microprocessors.
Worst in Dow
The outlook for sales has led to a 23 percent plunge in Intel's stock
this year, making it the worst performer in the 30- member Dow Jones
Industrial Index. They fell 9 cents to $19.22 yesterday in Nasdaq Stock
Market composite trading.
Otellini, 55, is looking to WiMax to revive Intel's sales over time. He
is trying to revive Intel's main processor business and announced 10,500
job cuts this week to reduce costs by $3 billion annually starting in 2008.
``There's no doubt they need some catalyst,'' said Daniel Morgan, who
helps manage $5.45 billion at Synovus Investment Advisors in St.
Petersburg, Florida. ``Laptops is the one area that's had the greatest
growth, but it's already starting to wind down.''
Otellini also is looking to Maloney for help. In July, he picked the
London-born executive, who's been with Intel for 24 years, to direct all
of the company's sales and marketing.
Maloney, who had headed Intel's laptop and phone-chip business, has
promoted WiMax as the logical successor to Wi-Fi. His efforts paid off
when Nokia Oyj and Motorola, the world's biggest handset manufacturers,
endorsed WiMax and said they would build it into future products.
`Love Intel'
``I love Intel,'' Ed Zander, CEO of Schaumburg, Illinois- based
Motorola, said in an interview. He stood on stage with Maloney and
Sprint Nextel Chief Executive Officer Gary Forsee at a New York event
last month to announce the Sprint deal. ``I just want to own the next
big thing.''
The similarities between Wi-Fi and WiMax technologies, as well as
Intel's deep involvement, will help sell WiMax to more carriers and,
eventually, consumers, said Tero Ojanpera, Nokia's chief technology officer.
``Intel has been very active with WiMax and with Wi-Fi,'' Ojanpera said
in an interview. The Sprint decision ``will give WiMax a push.''
With WiMax, Intel is taking on rivals including Qualcomm Inc. that are
pushing competing standards for wireless Internet access. Qualcomm has
dismissed WiMax as no immediate threat, noting Sprint already uses its
technology, called EV-DO, in handsets. ``WiMax is still nascent and
proving itself,'' Qualcomm Vice President Jeff Belk said in an interview.
Competing Technologies
Espoo, Finland-based Nokia is already working on gear that uses
competing technologies such as HSDPA, or high-speed downlink packet
access. Cingular Wireless LLC, the biggest U.S. mobile- phone company,
uses HSDPA and hasn't said whether it will build a network based on WiMax.
Intel is trying to win support from wireless companies for WiMax after
announcing in June plans to sell its cell-phone chip business, ending
what analysts said was a failed $5 billion effort to break into a
faster-growing market. Nokia was among companies that declined to buy
those products.
This week, Intel completed a $600 million investment in Clearwire Corp.,
run by cell-phone pioneer Craig McCaw, to assist the company in building
WiMax networks in cities from Jacksonville, Florida, to Eugene, Oregon.
Those funds and other investments bring Intel's total WiMax investment
to about $1 billion, said Amy Martin, a company spokeswoman. Reston,
Virginia-based Sprint's agreement last month to spend $1 billion next
year and $1.5 billion to $2 billion in 2008 adds to that.
That commitment made it easy for Maloney's wife to release him from a
family vacation in northern Vermont to attend Sprint's August event in
New York.
``She knows how a big a deal it was,'' Maloney said.
To contact the reporters on this story: Ian King in San Francisco at
[EMAIL PROTECTED] ; Jason Kelly in Atlanta at [EMAIL PROTECTED]
Last Updated: September 8, 2006 00:04 EDT
http://www.bloomberg.com/apps/news?pid=20601103&sid=ad3A1G7Rwogc&refer=news
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