Munich The time when Intel is giving 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 Board MEMBER Christoph Schell.
“So far, we have only monetized our software a little,” the manager told Handelsblatt. It was usually delivered free of charge together with the chips or made available to developers free of charge.
From next spring, Intel will now also offer software on a large scale for a fee. Currently, a test is already underway with a dozen customers from the financial sector, the public sector and the health sector, said chief technology Officer Greg Lavender in an interview with Handelsblatt. This is the so-called “Project Amber”. Intel offers a security solution for companies.
Companies can ensure that their data is protected in data centers while it is being processed by an Intel audit. The IT industry speaks of “trustworthy data processing”.
And 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 allows to optimize the workload of servers in data centers. Further offers would follow, announces sales manager Schell.
So far, Intel lives on processors for PCs, notebooks and servers. They are the brain of every computer. To ensure that these components can be used optimally, the Intel developers have written countless programs that they offer free of charge, a kind of sales promotion and customer loyalty.
It is no coincidence, however, that Intel is currently setting out to build new businesses away from the chips. Because everything is not going smoothly in the company from Silicon Valley. In the second quarter, sales fell by a fifth, the company wrote deep red numbers.
Intel falls behind AMD and Nvidia on the stock market
Even worse: CEO Pat Gelsinger had to reduce the annual forecast by a good ten percent this summer. One reason for the loss: Intel is falling behind its rivals AMD and Nvidia technologically and is losing market share.
Gelsinger is therefore investing billions in new plants worldwide to reduce the backlog of 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 criticism of investors is growing in view of the poor results on the one hand and the high expenses on the other. Since the beginning of the year, the price of Intel shares on Wall Street has fallen by almost half. The competitor Nvidia has been much worse off with a minus of almost 60 percent on the trading floor. But in contrast to Intel, Nvidia’s share price climbed sharply last year.
It so happens that Nvidia is currently worth a good $ 300 billion on the stock market, almost $ 200 billion more than Intel. Nvidia is thus the most valuable chip manufacturer in the world, although Intel generated around three times as much revenue in the most recent quarter. Even AMD, another much smaller competitor in processors, is valued at a good $ 100 billion, almost as high as Intel.
Analysts warn of “turbulent” months ahead
The bad news of the past would have an effect, explains Peter Fintl, semiconductor expert at the consulting company Capgemini, the weak performance on the stock market for months. For example, Intel has repeatedly launched products late to the market. The fact that the billion-dollar investments will depress profits for years to come is also not conducive. Analysts at Morningstar warn that the coming months will be “turbulent” for Intel.
According to Greg Lavender, Intel’s chief technology Officer, employs 20,000 software engineers. This corresponds to almost the entire workforce of the competitor Nvidia. It makes sense to get more out of the programmers than before.
Lavender expressed confidence to the Handelsblatt that “Project Amber” will be a success. “Customers will accept that. But I wonder if we can ramp up the offer quickly enough, ” the manager said.
How much the service will cost is still open, but it will be “affordable” for the companies. It will be billed according to usage, i.e. according to the number of security checks. First, Intel wants to start sales via partners in the USA, before it also starts in Europe.
One thing is clear: for the software business to be relevant for Intel, it must grow quickly. For the group, which had $79 billion in revenue last year and made $19.9 billion in profit, small-small is not an option.
A lot of flops outside the core business
In the past, however, many forays into new areas have failed. Despite several attempts and multibillion-dollar acquisitions, Intel has never been able to penetrate the smartphone chip business. The Californian competitor Qualcomm dominates here.
The Americans also had little luck with software. So, in 2011, Intel for $ 7.7 billion swallowed McAfee, a well-known provider of antivirus programs. Six years later, Intel withdrew from the business and parted ways with McAfee. The US magazine “Insider” therefore once called the group the “worst buyer in tech history”.
Intel CEO Gelsinger is currently trying to bring Mobileye to the stock market. With the Israeli company, the Americans wanted to push into the self–driving car business – so far with mixed success.
Head of Sales Schell promises that Intel will focus more on the market in the future than before – and less on the ideas of its own engineers. The native Swabian knows exactly what needs to change. He only joined Intel this spring. Previously, he worked for 25 years at the computer manufacturer HP, one of Intel’s largest customers.