2003 INTERNATIONAL CONSUMER ELECTRONICS SHOW

Craig R. Barrett Keynote
Chief Executive Officer, Intel Corporation
Las Vegas, Nevada
Jan. 9, 2003

CRAIG BARRETT: It's great to be back at CES after a couple of years. It was interesting to watch the history of technology, and the consumer electronics devices that technology has created over the last several years. And what we'll try to do is not trace those again, but look how technology has had an impact, the evolution of technology on the evolution of devices that consumers use. The theme I want to wind around that topic is, in fact, unwiring the consumer. I think one of the major advances in the industry in the last few years has been the whole concept of wireless technology. I'm here to really remind you all that the PC is alive and healthy, and unwiring the PC and allowing it to have access to the Internet, and allow it to communicate seamlessly with lots of other devices, allow it to converge with consumer electronic devices, is, I think, going to be the main theme that comes out of CES. So, we're going to talk about unwiring the consumer as the main topic today.

The agenda that I want to talk about very simply, we'll talk about technology forces. You saw some of those in the Elvis routine in terms of there are both revolutionary and evolutionary forces that take place. I'll talk a little bit about what you can expect going forward. Are we going to see more of the same, is it going to happen slower or faster, et cetera?

We'll talk about unwiring the consumer, what's the impact there? What does the consumer want? What do we as an industry have to do to meet the consumer's needs and to, in fact, bring more excitement into the industry going forward.

At the end, we'll talk about what goes on in the home, because I effectively want to bring it all home to, in fact, the wireless home, and what the home is going to look like in the next few years. So, along the way, what we'll try to do is have a little bit of fun, we've got several demos, we've got a couple of routines which, if I'm really lucky, I will emerge from unscathed, and you'll see what I mean as we go through the presentation. But, by the time we get done, I hope you will have enjoyed the presentation and will have gotten the message across about where the technology is going, and some of the excitement associated with the convergence of the computing world and the consumer electronics world, because that, I think, is what this meeting here in Las Vegas is all about, and it's certainly what my presentation is all about.

If you look at technology forces, over the years technology has continued to advance, the advances bring along with it both predictable and unpredictable impacts to society and the citizens of the world. The predictable impacts are when we have something called kind of evolutionary change, where we just kind of continuously improve something, make it a little bit better, a little bit smaller, a little bit more interactive, a little bit less expensive. The real big changes are the revolutionary changes, and those revolutionary changes are the ones that, in fact, are unpredictable. Their impact on society is unpredictable. We'll talk about a few of those.

The theme that I want to give you, though, is, those changes, those revolutionary and evolutionary changes are going to continue in our industry. We have engineers in labs who have been looking out five and ten years, they can see the way to, in fact, continue to move technology as it has moved in the past, and all of those new technology changes, those forces, are going to continue to impact us all.

If you look at the revolutionary, the really big changes, some of those were shown in the Elvis routine. If you look at things like the impact of the transistor radio, the impact of the television, the impact of the microprocessor and the personal computer, those have impacted all of us in the way we work, the way we live, the way we play, the way we learn. And whether you talk about the invention of the microprocessor, you talk about the invention of the peer-to-peer networking, the Internet, television set, broadband connectivity, whatever it is, those have huge societal impacts, and will continue to have unpredictable societal impacts going forward. And that's, I think, the excitement of our industry, that technological innovation brings with it huge changes that come upon society. We don't always know where those changes are going, but we do know that they're going to impact the way the world interacts with itself.

There's also superimposed on that evolutionary changes, and evolutionary changes are things like the improvement in the telephone over a period of time, where we go from a wired telephone to an unwired or wireless telephone. We continually improve the personal computer on seemingly a monthly basis in terms of speeding it up, giving it more memory, more video capability, more performance, et cetera. But fundamentally, you can always count on those evolutionary changes will make electronics cheaper, more functional, more ubiquitous, easier to use most of the time, smaller, and more useful to humanity in general. So, you have these two forces, both the big changes, and then the incremental changes going forward.

So if you look at the future, what it holds, I think, more of the same. We're doing a big digital makeover as we talk today. That digital makeover is really the convergence of computing and communications, something that we collectively have been talking about for 20 years, but we only really started in the last year or so. Probably the economic slowdown in the last one or two years really impacted the infrastructure part of that, so that the computing and communication infrastructure businesses have converged, they're both digital, they're both going to use the same building blocks. But, it's now really starting to impact the consumers. We're looking at the convergence of computing and communication, and that shows up with the convergence of computing devices and consumer electronics devices. This is a huge impact.

Content is digital, the Internet is digital. The Internet is going to have a billion users within a few years, at the same time it has a billion users it's probably going to have two or three billion devices connected to it. We're going to do US$5 or US$10 trillion worth of commerce on the Internet.

We're looking at a wireless revolution, and the wireless revolution here is, in fact, wireless WAN and wireless LAN. We're all obviously familiar with the wide area network part of the wireless infrastructure. That's undergoing some changes, going from the second generation to GPRS, to 3G, there's a form of evolutionary change there, but I think the exciting part of the wireless infrastructure is now combining the broadband wireless LAN part of the infrastructure, the 802.11 infrastructure that goes with it. So that whole wireless infrastructure, the growth of broadband, perhaps 50 million users of broadband today, going to over 100 million in a couple of years. So this convergence, and this networking or infrastructure change we're seeing consistent with the convergence is going to impact us all. So I think we're going to continue to see the same sort of change. It's going to be very exciting, lots of new devices, lots of new opportunities for those of us who provide the basic building blocks, lots of opportunities for the people who put systems and solutions in the field, and lots of opportunities for the end user.

So what is happening with the end user, and what is this convergence doing? Well, the simplest form is, the convergence of computing and communications says that every computing device will be a communicating device, as well, every communicating device will be a computer. You see this today, increasingly, as PCs are all networked, have communication capability, mostly wired capability, but going rapidly to wireless capability, and every handheld device, which previously was a communication device, is increasingly getting more memory and more computing context. These two extremes are meeting in the middle, and that's really the form of convergence. We're not going to talk about computers and communication devices separately, because you'll see the same characteristics in each one. So as they become more intertwined, computing and communication devices, as digital media becomes more pervasive, we start to see the stronger interaction of the personal computer, and all of the consumer electronics devices. That's for imaging, that's for music, that's for video, that's for anything digital and any way that we communicate.

So if you look worldwide, what's going on? There are lots of things you can say about the United States, or even the established economies of the world, and their preoccupation with technology, their preoccupation with both communication infrastructure and computing infrastructure. But, the thing to realize is that the interest in this technology extends far beyond the United States. If you travel the world, as I get to do as one of the benefits of my job, and you visit 30 or so countries each year, and you talk to government leaders, business leaders, and academic leaders, you see the same thing everywhere, the preoccupation with communications and computing infrastructure, as a way to grow the economy, grow the strength of the local country or region that you're visiting. And it's whether you look at Internet cafes around the world, you can look at the I think the Guinness Book of World Records for the most number of Internet cafes in one block is held by a block in Oman, Jordan, hardly a high tech capital of the world.

I saw in the Wall Street Journal within the last few days, when they were talking about wireless infrastructure, towns like Zamora, Spain, which has gone completely wireless, hardly a high tech center of influence. If you look at the impact of communications computing capability on such things as oil research and development, and recovery of oil resources in the Middle East, you find that even modest investments can cut the cost of production, cut the cost of drilling by tends or hundreds of millions of dollars. If you were to go to Russia and talk to them about what they're doing in terms of modernizing the Russian railway system, this is a railway system which literally has an inventory of piece parts to support the existing railway system of hundreds of millions of piece parts, computerizing that to make it more efficient, more productive, more cost effective, is ongoing.

So almost regardless of where you go in the world you see this preoccupation with digital capability. We'll talk a little bit later about whether that digital capability is associated with entertainment, whether it's associated with education, whether it's associated with business. Regardless of where you go, you see that preoccupation. I think perhaps the most exciting aspect of this is when I look out over the audience and I don't see a lot of teenagers in the audience, that means you're all middle aged or over, but it's really the youth of the world that is the brightest moment to make me optimistic about the future. This is the generation that was born thinking that airport security and personal computers have always been here. This is the group of people that can not only type out a message on a cell phone keyboard, but can do it when it's in their pocket.

These are the people who would destroy my high school typing teacher, because primarily they type with their thumbs. These are the people who are always connected, they're into gaming, they're into DVDs, they are really almost the heart of the digital universe in the United States. Digital capability really is their being. These are the people that are going to be the trendsetters going forward, these are the people who are going to be the purchasers of consumer electronics. These are going to be the people who establish the products, the solutions, the systems that we bring in the marketplace. It's that digital youth, these people who have grown up thinking that this capability has always been here that we have to deal with. That's one of the reasons I'm very optimistic about the future. I may not be able to convince you as a group to go out and buy our next greatest generation of technology, but I have no trouble convincing this younger generation to do that. They expect it, they expect the technology to continue to grow, they never say, what am I going to do with that extra processing power, that extra video capability, why do I need more? They're never going to ask do I need more memory storage, the answer is always yes to all of those questions.

So if I look at that younger generation, where they're going, look at the interest around the world, I have to conclude basically that all consumers are going to be digital consumers. The digital world is really the convergence of computers and communication, or computers and consumer electronics devices, and this is the world that we have to deal with. So assuming that for a minute, then you have to say, okay, what do I need to do to attract these people, what are they interested in? What's next in their mind? What do they want? So what you do is, in fact, you go out and interview people and you say, what do you want? What do you expect from your technology? What's next? And by the way, you won't see any teenagers in the little video I'm about to show you, I'm going to show people like us, but we're even saying the same thing that those teenagers are. So you're going to see some familiar comments, but I think you'll see some kind of fascinating insights, as well. So what we're going to do is just roll a short video which is, The Voice of the Consumer, which is something I think we all ought to listen to.

(Video segment begins and ends.)

CRAIG BARRETT: I'm not sure you heard anything in that video that you didn't intrinsically feel already. People want technology to improve their lives. They want to be able to do more with it. They want to be able to have it mobile, to take it with them, have access to information anytime, anyplace, anywhere. They want to be able to use their content anytime, anyplace. They want devices to interact. The concept of being unwired is fantastic.

What we want is something that's simple, capable, you take it out of the box, it works. Absolutely self-configuring, and something from this manufacturer works with something from that manufacturer. So, what we want to do is basically unwire our lives. We want to make it simple. We want to make it practical. We want to make it easy for us all to go forward. And the more you talk about unwiring the consumer, the more you kind of get esoteric. What is it? You're unwired, you're wireless, you can't see what's going on. So you have to kind of visualize what's happening.

What I wanted to do was not talk about unwiring and show you nothing. I wanted to show you a little skit that really represents making the invisible, the wireless, visible. So, we have four assistants who are going to come out here and do a little routine for you. They're going to show you what being wireless is all about. So, let's watch them bring wireless to life.

(Skit with Flying Karamozov Brothers begins and ends.)

CRAIG BARRETT: At the start of that routine, they mentioned technology brought to you by MIT, and I can't do the YMCA or the MIT deal. But I do want to bring out an equally weird professor from MIT who is the technical advisor to this group. All you have to do is listen to his title, and you'll understand that he kind of is a little bit different. Professor Neil Gersenfeld is the professor at the Center for Bits and Atoms. I was a material science major at Stanford, and I know MIT is the Stanford of the East, but we didn't have a Center of Bits and Atoms. So, please welcome Neil. I want him to come out here and explain what's going on.

(Applause.)

CRAIG BARRETT: You've got to tell the crowd, you know, what is a standard, run of the mill MIT professor doing with a group like this?

NEIL GERSENFELD: Well, I didn't wake up one day and say, let there be juggling. But I was minding my business at MIT and these crazy guys appeared and they said, you know, we've gone as far as we can juggling on this planet. Can you help us juggle on another planet? And, I told them I can't quite do that, but the more we spoke, what came out is, they were really asking how can technology help both them and the audience do more together than they could do alone. And that's what we tried to build in this project.

CRAIG BARRETT: So, you're trying to build a relevance between technology and the individual here, and I guess I should then ask you, why is that relevant?

NEIL GERSONFELD: That was an exercise in the project. When this was done, I thought, phew, this is done. But just as you said exactly in the introduction, what we heard was from people all around the world who said, this is great, because when the technology comes out in the world like this, it becomes relevant to the rest of the world. So, projects after this, we made a bathroom for seniors that helped them manage medication, or a playroom for kids for toys, or one of my favorite projects shown here is in the far north of Norway, far above the Arctic Circle, instead of tracking jugglers, we're tracking lap-herders, reindeer and sheep, which is actually a little bit like the jugglers. And for all these people, this kind of wireless distributed technology makes computing relevant to them.

CRAIG BARRETT: What is the basic foundation? What makes this thing work?

NEIL GERSONFELD: More than any one thing, it's everything. A lot of little gadgets we developed, but I think the most interesting thing is in what you saw and what you will see, everything and everyone has radios everywhere, and the solution isn't any one of those, it's all of them. When you form them into a great big distributed wireless network, all these pieces together solve problems. In fact, coming out of this project is a new project called Internet Zero, which has really created an Internet architecture for the physical world.

CRAIG BARRETT: This is interesting, we're going to see another example of your work with them a little bit later on. And I guess I will take back the comment about MIT being the Stanford of the East, but

NEIL GERSONFELD: You can keep the weird comment.

(Laughter.)

CRAIG BARRETT: The only thing I can really say about our two universities is, our football teams about equally powerful this year. Thank you. We'll see you later.

(Applause.)

CRAIG BARRETT: When I was here a couple years ago, we were just beginning to introduce the concept of the extended PC, and that concept was really that the PC was a personal computing device, but increasingly as content around the PC went digital, then, in fact, that content could be readily interfaced with the PC, and the PC could extend its capability to deal with that digital content, whether that digital content was images, whether it was music, whether it was video, whatever it was. The PC had great capability to, in fact, take that content, catalogue it, convert it, change it, display it, whatever you might want to do with that content. And that's been happening.

In fact, if we look at the sale of digital cameras, the sale of digital camcorders, the number of MP3 players and the number of people that are basically burning CDs, all of that digital content has, in fact, revolved around the PC in some fashion. So the PC, the extended PC concept continues to grow. What I think is really interesting now is that what we're finding is that extended PC gets to go a step further. With the ability to unwire, with the ability to have broadband local area wireless capability, we can start to interface that rich digital content from all the consumer electronic devices with the personal computer.

We could all argue, what's at the center of the network. I don't think anything is at the center of the network. We have TVs, we have other consumer electronic devices, we have PCs, we have content coming into the home. The ability is to be able to take that content and do something with it. You can be a couch potato and just view it or, in fact, you can take that rich content in and customize it to your purposes. And that's where the PC with its interactive capability becomes so important in this equation.

So, the PC from my standpoint, when we talked about the extended PC two years ago, we were just starting a big change in the industry. Now as we start to talk about broadband and wireless capability, I think we're even increasing the importance of the PC in the equation.

So the PC is in fact, the most versatile piece of equipment in the house. IT is the most interactive piece of equipment in the house. It can handle all of this rich data, and it can also create that rich data. Now, what sort of things does Intel do in this area? You all know that we make personal computers, but we do a whole lot more than that. We're invested in different devices than the PC, because increasingly people want to have rich content not just on a desktop in front of them, not just on a handheld device in their home, not in perhaps a remote screen in their home which is wirelessly tethered to the PC, but they want to have rich content taken with them as they leave the home.

So, we're working on architectures for the PC, architectures for handheld devices. We're working on software capability to be able to port easily applications from one of these architectures to the other. One of the beauties of the PC, besides the fact that there are 150 million or so sold each year, are that there are hundreds of thousands of applications written for the PC. There are hundreds of thousands of programmers who are capable of programming to the PC. What we want to be able to do is take that programming talent, take that application resource, and be able to quickly port it to other mobile devices. So, we're working on all of these, different form factors, different architectures, software interoperability. And obviously what you need to make all of this work is, in fact, you also need some degree of standardization. You need to have your PC be able to talk to your handheld device, be able to talk to you consumer electronic devices. We'll come back a little bit later on, but there is a lot of work that the industry has to do to make all of these devices work together.

So, let's talk a little bit about extended wireless, and what I want to do is talk a little bit about just taking a standard PC in the home, and what can we do with it from an extended wireless standpoint. We want to take a PC that can run multiple applications. We want to take a PC that's flexible. We want to take a PC that's powerful. And we want to be able to do something with that. We want to be able to combine it, say, with remote monitors. We want to be able to take it and manage our photo album. We want to be able to, in fact, download the content to handheld devices. We want to be able to add some mood music in the background.

What we're going to do now is a simple demonstration of how you can do that. Basically taking a relatively high performance 3 gigahertz, Hyper-Threaded, Pentium® 4 processor based PC, something you all have at home, but we want to also take a remote monitor, Intel X-Scale based ViewSonic monitor. We want to take some Adobe software to manage photo albums. We want to take some Mood Logic software so we can put some nice background music into our system, and just see what we can do with all this. And Eric is going to lead us through this little demonstration. Right, Eric?

[Demonstration of Extended Wireless PC. Demonstration of Gaming Wirelessly from a variety of devices begins and ends.]

CRAIG BARRETT: I think you get a sense that we're really into this wireless thing. Yesterday we announced one of our latest products, really a new mobile architecture brand, and today I want to show you that product in some operating computers. And I want to do this in kind of a formal fashion, because our branding people said I had to. So what we're going to do is I'm going to say, ladies and gentlemen, let me give you Centrino™ Mobile Technology.

Notice the multicolor brand, notice the dropped E in the Intel, for those of you who were Intel Inside fans it's always been a raised E. But, Centrino mobile technology is cool for a couple of reasons, actually four reasons.

It's the first time we've really taken technology specifically for the mobile platform and created it really from the ground up, and there are really four things you're interested in the mobile platform, one is performance. People increasingly want the equivalent of desktop performance in mobile devices. But, they also want sleek form factors, slim devices, they want good battery life, and they want connectivity. That's really what this Centrino technology is all about. The microprocessor, chipset, and the wireless connectivity, in this case 802.11b. This is what it looks like in a fully integrated fashion, desktop power, a couple of hours more battery life typically than you see in a laptop today, slim form factor, built in, self configurable really, 802.11b capability to start with. And we're in the final stages of testing this with our OEM partners, and if all goes well with the final verification test we plan to introduce this in the March time frame on the single band characteristic, and add the dual band 802.11a with b sometime in the second quarter.

I could talk about the technology, but what I really want to do is have our team come out and demonstrate what this technology can provide. So what we're going to do is show you a series of applications using this technology. Jackie is going to do the first. And rather than introduce each one of the speakers I want them to just do a short introduction and show you what unwired technology can bring.

[Centrino Mobile Technology Demos: 1.) Snapstream personal video recorder; 2.) Virtual spectator; 3.) There; 4.) Wireless video camera. Demos begins and ends.]

CRAIG BARRETT: I think the key point of all these demos is very simple, the consumer wants technology any time, any place, on any device. That's what we heard when we talked to the consumers over the holidays, and we showed you in the video. That's what we've tried to demonstrate for you today. This is what I think is going to be the most exciting change in our industry, change in this convergence, the computing with communication, and consumer entertainment industry going forward.

So I think the interesting thing now is to bring this home, and what I want to do is bring it to the digital home, and in a few minutes we'll show you a demo of what the digital home, a few years out, will look like, and try to impress you that it will be simple, it will be easy, it will be seamless, people will just bring in new consumer electronic devices, new computer devices, they will hook into a wireless local network in a seamless fashion, self configuring. I'm not going to say that you can do this all today. There's a lot of work that our industry has to do to provide any content, any place, anywhere, but the devices that people are producing today, the technology that's coming out today, is going to make this work.

The requirements are really pretty simple. New wireless capability in the PC. The interoperability of the PC with the consumer electronic devices. You need industry standard technology, standard interfaces, probably a no-brainer, there's going to be Internet protocols, probably a no-brainer you're going to have Universal Plug and Play type of configurability. You need ease of use, that self-configuring capability, because people don't want the fuss to load programs to try to configure devices on their own. You're going to need broadband capability, and it's going to need to be wireless, or unwired capability. And we're going to need content. We're going to need the sort of content we were creating there at the end, with that digital camcorder, but we'll also need professional content, content that is, in fact, purchased, premium content, I'll call it.

We need both of those types of content around the home. We need to be able to time shift and space shift those. And one of the things we always get embroiled about when we talk about content, actually professional or premium content, is the issue of content protection. I just want to use this forum for a minute to talk to you about content protection. Obviously for a company that invests US$4 billion a year and files about 2,500 patents a year, we're strong believers in intellectual property. But we also think that when we provide digital technology to consumers, there are basically expectations of consumers for their use of the technology that is provided to them, and that technology is both our technology and the content that they legally purchase.

So, we've been working with the content industry, and the consumer electronics industry over the last half-dozen years on digital rights management, content protection issues to, in fact, allow the distribution of content over mediums such as the Internet in a fashion which allows people fair use of that content when they obtain it legally, it allows them the ability to time shift or space shift that content, and to avoid copyright violations.

The challenge here, obviously, is that there's a lot of content on the Internet that was not put there in an entirely appropriate fashion. There are also a lot of people who, in fact, pirate content and then distribute it. There's no simple solution in my mind on this, there's really a combination of solutions. Law enforcement has a role to play in terms of policing the situation, and anyone who actually violates someone else's copyright should be severely dealt with. There are technical issues as we look at the proposals for digital TV protection today, putting a flag in the signal that limits the retransmission of that digital TV signal.

But there has to be really other things involved as well. There has to be an acceptable commercial model for people to distribute content over the Internet. It's these areas that we're working with the content providers on today. But let's assume for a moment that, in fact, those problems are solved, digital content flows freely, there are commercial models by which you can obtain digital content in the home, and then repurpose it to your needs in a legal fashion consistent with your fair use rights.

What we want to do then is, in fact, look and see what the home of the future is going to look like. What digital devices, what sort of content, what sort of interactions, what sort of multiple devices sharing that content, sharing that information on the network exists? So, we're going to look for the ability to share music, video, audio, digital information, and also not just share it, but also manipulate it, change it, repurpose it to our needs. So, it's time to take a look now at what the unwired digital home of the future looks like.

[Demonstration of the wireless digital home with personal computers and consumer electronics seamlessly working together. Demo begins and ends.]

CRAIG BARRETT: Home of the future, wireless, maybe not here today, it will be here in a few years in just this fashion. You get all of this hardware.

The key message here is, in fact, that the technology is here. This technology is going to change the way we all interact, the way we all deal with digital content, not just the way we create digital content, but the way we view it, the way we transmit it, the way we share it, the way we enjoy it. This is really, then, the future of the consumer. The consumer is going to be unwired. This is going to inspire a whole new wave of innovation, and new opportunity, again, for companies like Intel, Microsoft, Sony, and others who are dealing with this technology as we go forward.

What I want to do now is close with another little bit of a wireless demonstration that is going to be interesting. We're going to have to move some of this stuff off the stage, but I want to bring the Flying Karamazov Brothers back. They've worked with my weird professor from MIT, Neil, to create the world's largest musical instrument. And we are going to play the world's largest musical instrument on the stage for you tonight. We wouldn't be doing this if it weren't wireless, obviously, so there's going to be a lot of wireless technology here.

So all four of them are going to come out. They are all four integral to this musical instrument. So let's be inspired by these crazy guys.

(Skit begins and ends.)

(Applause.)

CRAIG BARRETT: Thank you for your attention this afternoon. Just remember as you go away, be inspired and unwired.

(Applause.)