TR: What will high-end server-class microprocessors, network processors and custom logic chips do for us?
GERSTNER: What’s happening in the semiconductor marketplace is not so much about what the chips are going to do for us, as what we are choosing to do with our computers. We have entered a post-PC era. The self-standing, self-contained personal computer is no longer going to be the locus of interest and investment in this industry. In just a few years, non-PC devices like personal digital assistants, data-enabled cell phones and game consoles are going to make up well more than half of all Net access devices. There will be hundreds of millions of PCs in the world, but billions of other Net access devices. Coming right behind that, perhaps trillions of “things” we’d never call computers: household appliances, machine tools, medical devices, our cars. All of them will be outfitted with the ability to communicate, and with specialized, energy-efficient, inexpensive chips–which are a very different animal altogether than the brains inside today’s personal computers.
So that’s one end of the spectrum. At the other, chips for the big servers. Workloads are shifting off desktops to the infrastructure of computing and communications. The demand for transaction processors and Web servers is going to explode in the years ahead, because these are the systems that make sure e-business applications can scale, are available, reliable and much more secure than applications have had to be in the past.
And finally, if we’re going to realize the full power and potential of doing real e-business, the networked infrastructure is going to have to advance in leaps, not increments. The Internet we know today will look primitive in five years. Before long, we’ll see traffic moving over the Internet increase 1,000-fold, so we’re going to see explosive demand for chips to power chips in the networking and communications gear that keeps all of the digital information moving at high speed and bandwidth.
TR: How do last summer’s management changes address these challenges?
GERSTNER: You’re never going to implement a strategy without a structure that reinforces and complements it. We’ve evolved our e-business strategy for four years now. And we’re to the point in that strategy that it has taken hold in a way that an entire new market is exploding all around us. So the thing we need most right now is a very, very focused execution capability in the company.
At the same time, it’s pretty clear that we’re already moving out of the first phase of e-business. In the first phase, the killer app was business-to-consumer e-commerce-the race to offer all kinds of retail services on the Net, from stock brokerage to cars, loans, flowers and pet food.
In this next phase, we’re going to see a few things happen. Enterprises are going to get beyond e-commerce and integrate the entire enterprise using networked technologies. This includes business processes and relationships with other enterprises and industries, which is fueling all the interest in B2B [business to business] solutions. We’re also going to see a proliferation of applications deployed to take advantage of all kinds of Net access devices. We’ve been spending billions of dollars getting ready for this new world, to build out-with our customers, with telcos [telecommunications companies], with service providers-the enormously sophisticated infrastructure that will be required to support the next generation of e-business.
So the organizational moves we made last summer delineated these two related, but very different, business imperatives: executing today’s e-business strategy and seizing emerging opportunities in the next phase of e-business and beyond.
TR: What differences have you found in running a technology-based company versus an American Express or RJR Nabisco?
GERSTNER: One, they’re all competitive, but I’ve never seen an industry that’s as intensely, consistently and relentlessly competitive as this one. In every other industry I worked in, you could list the competitors and go back 10 or even 20 years and they were all the same. Today, every time you open the newspaper, there’s a new competitor-a real one-staking its place in this industry. I’ve heard people say this is a business for young people. I understand the thought behind that, but I disagree. This is an industry for hungry people. It’s “eat or be eaten.” And your appetite has to be big, or you’re going to look around and find out that someone else has carved up and devoured your customer base and market share.
The second thing I’d mention is speed. No industry on earth moves as fast as this one. Ever since the days of the first PC in the early ’80s, technical advance has come on shorter and shorter product cycles. Today, even in an industry known for speed, the rate of change is unprecedented, and it’s only being accelerated by the Net. It’s fun. It’s a challenge. But if you pause, say good-bye.
Finally-and I don’t want to gloss over this-this is an industry that does create things that make the world a better place. Every government in the world recognizes that investments in information technology are essential to their ability to drive economic development and the prosperity of their citizens. This is an industry that matters in ways far more profound than speeds and feeds and terabytes and areal densities.