Intel keeps a firm hand on the tiller

Computing spoke to Graham Palmer, head of Intel UK, about the role of IT in today’s business environment and the likely impact of the changing economic conditions.

Are environmental issues likely to remain high on the business agenda?

Yes. The IT sector is doing a lot to address its carbon emissions, which make up about two per cent of the global footprint. And in terms of the other 98 per cent, IT is interwoven in pretty much every business on the planet, and these can benefit from efficiencies in IT.

But regulation aimed at influencing consumer behaviour is not always the right solution. For example, mandating against using standby could negatively affect behaviour, because if people think they will lose data by turning off devices, they might decide to leave it on full power. So a holistic view is needed.

How should businesses measure the energy consumption of their servers?

It is best to measure absolute power consumption, to give an actual consumption figure that can be translated into energy cost in terms of Kw/h.

In terms of best practice, customers should take a detailed inventory of every physical box they are running in their estate ­ – most do not have a complete picture. They should take detailed readings on how many boxes, the age of the boxes, the type of operating system used, how many applications, how many users are being supported for each application, which ones are business critical, and so on.

And they should look to generate a clear picture of the actual use of each server, ideally over three months. Customers will often find that average utilisation for the whole estate is only five to 10 per cent.

This allows customers to take control of their servers and define optimisation programmes. The key aim here is to maximise efficiency by driving up actual utilisation to above 50 per cent. Many customers find that they start to “end of life” applications that are no longer required or are supporting very few users.

What are the motivations and incentives for adopting green IT?

As a “consumer” of IT, the factors are financial. The escalating cost of energy is a major driver to deploy more energy-efficient IT. Businesses increasingly want to demonstrate corporate responsibility in driving down their carbon footprint.

And as a producer of IT there is an opportunity to meet customer demand for more energy efficiency. Efficient management of the IT real estate, enabling IT managers to enforce best practice such as ensuring all PCs are turned off when not in use, is being developed continually.

How will the credit crunch affect IT, and is it likely to trigger an extension in refresh cycles?

Although businesses are looking harder at their spending, we do not expect to see an extension in refresh cycles.

As businesses consider ways to increase efficiency, they look to IT to provide them. More enlightened businesses consider both the upfront costs and the running costs when they buy IT. Bringing these two elements together is important.

Why did Intel post a reduction in profit despite achieving record turnover?

The net income year-on-year reduction was accentuated by a tax-specific reduction, and the impact in terms of operating income came from factors such as overall processor write-offs.

We also incurred startup costs for refitting to enable manufacturing of our 45nm chips.

Of course, higher costs upfront can be good news at a later date.

How long do you expect to maintain the lead in nanometers?

Our 45nm chip has set us up for sustained leadership for the years ahead. We have a high degree of confidence that we will continue to lead in this market.

Other companies have talked about 45nm chips, but we are already in full p roduction.

Are there any plans for different numbers of cores inside a chip, such as a three-core chip?

We do not see a three-core route but we are very comfortable with our pattern of two, four, six, eight and 16 cores ­ – and beyond.

When do you expect to resolve the EU anti-trust probe?

Obviously, I cannot comment on the specifics of the case, but we are fully complying with all requirements. And we believe that our business practices are entirely ethical.

Reasons to be cheerful

Intel believes it will buck the global downward economic trend with predictions of solid second-quarter revenue of between $9bn (£4.6bn) and $9.6bn (£4.8bn) and a gross margin of about 56 per cent. For the full year Intel expects gross margin of 57 per cent “plus or minus a few points”.

Reporting its first-quarter results on 16 April, Intel declared profit was down by 12 per cent compared with the first quarter of 2007and down by 36 per cent on the previous quarter.

First-quarter revenue was $9.7bn (£4.9bn), a rise of nine per cent compared with the first quarter of 2007 and up 10 per cent on the previous three months.

“We remain optimistic about our growth as we continue to reap the benefits of our 45nm technology leadership,” said Intel chief executive Paul Otellini.