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E-Commerce Armageddon: Intel Gets Ready for Battle

By Chet Dembeck
Apr 27, 1999 12:00 AM PT

Lately, what Intel top dogs have been telling any analyst willing to listen, should send a shiver up the T-1 line of any e-commerce startup carving out a niche.

E-Commerce Armageddon: Intel Gets Ready for Battle

Intel, the microprocessor maker that corners about 85 percent of its market, is saying that within two to three years about 90 percent of its $26 billion plus revenue will be coming -- not from Pentiums -- but from e-commerce.

This is a disturbing piece of news for those who think Intel got off with just a slap on its wrist when settling with the Federal Trade Commission in March over alleged monopolistic practices.

While jousting with the government, Intel was also busy building up it defenses for a future e-commerce Armageddon.

It's no accident that the Santa Clara, California chipmaker has partnered with Excite, Inc. and put seed money into startups like Pandesic LLC of Sunnyvale, California, a company that helps medium-sized businesses launch e-commerce Web sites.

"Let's face it, with the plummeting of costs of hardware and software," said David Baltaxe, an analyst with Sterling, Virginia-based Current Analysis Inc. "It's time for Intel to move on to other things."

And if the rumor is true that Intel is getting ready to gobble up 3Com Corp., the No. 2 maker of computer networking products -- it would certainly sharpen Intel's e-commerce teeth. Add to the mix Intel's chief executive officer Craig Barrett recent comment that its networking business should break $1 billion if the purchase of Level One Communications Corp. is approved, and you have the makings of a mean -- fighting-machine.

"And this is only the beginning," says Baltaxe "They're just starting to roll out their strategy."

Does this mean we're going to see countless mom and pop e-commerce startups rolled over or up by Intel in the next 12 months?

"Fortunately no," says Albert Pang, an analyst with Farmington, Massachusetts-based International Data Corp. "The Internet is the big equalizer," he says.

First, Intel will have to protect its flank against such e-commerce giants as America Online.

What do you think? Let's talk about it.


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