The eXCHANGE

Craig Barrett
San Francisco, Calif., USA
October 11, 2000

CRAIG BARRETT: Well, good morning, and welcome to eXCHANGE. I hope you find this event as exciting as we do. I think we have a wonderful two-day program. We have over 50 wonderful exhibits in the other hall and a ton of solutions for e-Business, which I think you'll find exciting. We also have a wonderful array of speakers. I think if you integrate the entirety of this program, it's a great integration of what the industry can do to provide solutions to this challenging event we're facing--this whole event of e-Business, e-Commerce and what do we do with it.

I want to talk a little bit about why e-Commerce and why it's important to all of us. I think as we have progressed from the dot-com phenomenon, the business-to-consumer issue associated with the Internet and doing business over the Internet, we're all now getting solidified into the area that is really important: the business-to-business side of the Internet, and what impact e-Business can have on the efficiency, the time-to-market, the capability of our companies as we do business, either as we sell product to consumers or other companies, whether it's product or service, what we do in terms of our suppliers, how we hook them up to our network, how we communicate with our employees, how we communicate with our partners or joint venture capability.

The other issue here is one of business efficiency. How do we get more competitive in the marketplace? How do we get our products into the market faster? What are the solutions that are available, what sort of infrastructure do you have to put in place?

This is really what this two-day session is all about. What does the infrastructure look like? What decisions do you have to make? How do you take innovation and creativity, put that onto your existing infrastructure?

This meeting is in San Francisco, obviously. Wonderful venue. But I think we want to expand the conversation out of San Francisco, out of the United States, and really look at what's going on around the world.

I have the benefit of visiting about 30 countries a year, talking to business leaders, government leaders, and education leaders. And the general topic is, what's happening with the Internet? What are you doing vis-à-vis the Internet economy? How are you using the Internet in education? What is the government attitude?

Although when we're here in the United States, we tend to think very much about what's happening here, I think it pays to enlarge the conversation to what's going on around the world. I want to show a quick video to show you some of the things that are happening outside of the United States and some of the enthusiasm towards the Internet economy.

CRAIG BARRETT: All of those people are interested in really one thing: Using the Internet effectively to move their companies forward and make them more efficient. They're interested in solutions. And, really, solutions are the topic of this two-day meeting.

What I want to do is just briefly review the agenda that I'd like to present this morning. A little bit about The eXCHANGE; it really is an industry exchange. How we get together, exchange directions, exchange strategies, talk about solutions, and come together for integrating solutions, innovating, moving the market ahead.

The decision points we all have to make about the infrastructure we're putting in place. We all have data centers. What decisions should we make about those data centers? What capabilities should we put in them? How do we integrate them backwards with our legacy capability? How do we position to take advantage of the innovations tomorrow?

And then, I'll talk a little bit about what it means to be 100 percent e-Business company. Intel, like many of your own companies, is trying to put all of its capabilities into the e-Business basket. That's communicating not only with suppliers, with customers, with joint venture partners, and people that we collaborate with over the Internet, but also with our employees. We'll talk a little bit about this whole concept of 100 percent e-Business as we go forward.

If you look at The eXCHANGE, it is really an industry collaboration. And as you walk through the demo area later this morning, this afternoon, tomorrow, I think you'll get the feeling of the industry collaborative effect here.

What we're talking about are standard building blocks and open interfaces and solutions that you can build from the various suppliers from the industry. How do you take advantage of this bit of innovation to make your company more effective? We'll talk about how the industry is working together to achieve this.

I want to now bring someone on stage to talk a little bit about this. You saw in the video perhaps 10 or 12 examples around the world of people who are involved with the Internet and e-Business. Let's bring this a little bit closer to home. I'm going to have Jeff Lewis from Allstate join us. He is the vice president of strategic initiatives.

What we're going to do is talk about some of the strategic initiatives Allstate, a huge insurance company that insures one out of eight households in the United States, is doing to supplement their customer contact using the Internet. Jeff, come out and join me, please.

Why don't you tell the audience a little bit about what Allstate is doing in this integrated access capability of different methodologies to access your customers.

JEFF LEWIS: Thanks Craig, if you look at the history of Allstate, for 60+ years, we've been agency-based in your local community Sears stores. The recognition is that being 9 to 5 in your community isn't going to be successful in the new world. What we've built is called our multi-channel model 1-800-Allstate, Allstate.com and our local agents. What we're doing is integrating these three channels so we have the ability to service our customers when they want, however they want.

It's in recognition of a couple things. One is the market needs to change. And people's expectations are changing of when they can get service from their insurance agent or their insurance company. There's some real growth issues. It's a slow growth industry. As you're aware, it's difficult to either acquire new companies or write new business or retain business. We've got to do some things around that issue.

So we chose to go with the Internet Telephone Call Center giving us access to new markets as well as giving us the ability, hopefully, to do a better job of retaining our existing customers.

CRAIG BARRETT: So the customers get a greater capability to interact with you.

JEFF LEWIS: Whenever they want, however they want, we're there, including the presence of a local agent when they need them.

CRAIG BARRETT: What decisions did you have to make from an information technology, basically, an infrastructure perspective when you moved to this multiple access points to the customer?

JEFF LEWIS: A couple big issues for us. One was we've had for quite some time the Allstate.com site. But it was pretty much information and agent locator. Now what we've built is the ability to get a quote and the ability to actually purchase an insurance policy on the Internet. We had to change our expectations certainly about reliability, from an information only site, to one that we expect to be driving revenue. We needed availability, scalability and reliability. And, again, thus the relationship with Intel and the expectation we have to be there on a different basis than we were before.

We also had to partner with some other people, the IBM, Microsoft, and others, to make sure we could build this in a rapid deployment process. We did this in about six months.

CRAIG BARRETT: This whole area is moving so fast. That's pretty good for yesterday. What are you going to do for tomorrow?

JEFF LEWIS: I think a lot of the tomorrow is we have a lot of legacy issues we have to live with. A lot of the conference issues are around CRM, we have to know our customer better, service them better. A lot is going to be moving towards taking advantage of our legacy world, rewriting where we can, but putting some better front ends on it. We have a seamless need to move data from agent to Internet to call centers. There's a lot of opportunities for us in that environment.

CRAIG BARRETT: Great. Thanks for joining me. I wanted to hear from Jeff from the standpoint, he explained his industry is slow growth. Every morning when I get up in the newspaper, I'm reading about the fact that we're in a slow growth industry as well. Maybe we could do something about that at this meeting. But what this really says is that no company can be without an Internet strategy, even a classic old, here is your insurance agent at the corner of the next block type of capability.

What Allstate is doing is combining face-to-face contact with 1-800 contact with Internet contact and trying to seamlessly provide that information access to their customers to provide better service anytime, anyplace, anywhere.

What this really suggests is that just about any company around the world can't consider itself as an island when it comes to the Internet. You really have to play on the Internet. You have to use the capability to address your customers, to interface with your suppliers, and to interface with employees or your partners as you go forward.

It is really this concept of how do you use this capability to improve your operation, improve your customer service, improve efficiency, regardless if you're in the grocery business, the insurance business, or the integrated circuit business.

When you make the choice that you have to get involved, I think you then are faced with a decision of, well, how do I do this? What options are there? If you look at the way the industry is structured today, I think there are really two fundamental choices that you have going forward. You can go to one supplier and say, "Provide me all this capability." And that may be a proprietary, closed system. And then you're beholding to that supplier. Or you can look for an open industry focused approach to life, where, in fact, with open interfaces, standard interfaces, standard building blocks, then in fact the entire industry can innovate, the creativity of the entire industry can come forward and build upon those standard building blocks and move forward faster than any one single company can do that.

What the eXCHANGE event is about is this industry-focused approach. How does the industry work together to bring solutions to the end user? And, realistically, what the end-user wants are solutions. They're not so interested in microprocessors or operating systems per se. But they want a solution that they can use to increase the efficiency of their company. And it's this fundamental choice of how you go, with a closed, proprietary system, or you go with an open, industry driven system.

If you look at the open industry driven system, it has this familiar horizontal infrastructure, what I've referred to here as a modular Internet structure. It says there are different layers in this infrastructure. And you can buy from a variety of people in these different layers. If you look at the hardware layer, you can buy servers from a variety of suppliers, you can buy clients from a variety of suppliers. You can buy server appliances, if you want to talk about SSL acceleration or XML acceleration, or load balancing in your data center, all of those hardware components are available from a variety of suppliers. In fact, then the innovation comes with who has the best idea and who can bring it to the marketplace and they're interchangeable.

If you look at the network, there's a variety of networks we all have to interface with. Most of us are familiar with a wire-line network for the current Internet structure today. But when you start to look forward three or four years and there are a billion cell phones as well as a billion PCs attached to the Internet, how do those two networks play? You can be always wired. You can be always mobile. Or you can be sometimes mobile capability. We need to have the entire industry work together on that solution.

Software I think is pretty obvious. A variety of software suppliers, a variety of infrastructures already exist in our legacy data centers. The basic rule here is, my software has to play with your software. If that doesn't work, then I don't have the advantage of the industry infrastructure creating innovation and moving forward.

And, finally, the rest of the solution stack, this is what I think you'll see in our demo area later today, over 200 different applications playing on 50 different solution stacks. The creativity of those 200 applications all comes to play, because we have an open infrastructure.

So the industry is creating to the innovation. The industry is driving forward. And it's really driven by this standard-based building block and open interfaces, open solutions. The obvious choice moving forward is to make maximum utilization of the Internet and to make maximum utilization of the creativity of the industry.

The decisions that we're all making today about how to build out our three-tier data centers, what sort of capability to put in place, have consequences well beyond just what is the hot solution of the day, you know, whether it's supply line management or the reverse auctions or whatever they are, what infrastructure you put in place determines what your structure is going to look like for the next decade.

It's a very important decision that we're all facing. Do we depend on the total industry to innovate and drive us forward? Or do we depend on a single supplier to do that?

Now, I mentioned that I wanted to talk a little bit about a 100 percent e-Business company and what that looks like. My simple model looks something like this.

The computing environment is at the center of this model. And then the company interfaces with a variety of constituents. The constituents can either be customers or suppliers or partners or employees.

And what we really need to do is to make sure that that computing environment is flexible enough to take advantage of all of the new technology that's coming forward. If you just think for a minute about the new technology, you can think of, well, one of the latest buzzwords is peer-to-peer computing. As we spread an array of computers around the world and we want to have collaborative interaction with our suppliers or partners. Each one of those computers is capable of doing, say, a billion instructions a second, has a 20 GHz hard drive, that deployed compute power, that deployed memory capability can be joined together in a peer-to-peer network and enhance your capability to do online collaboration.

As we start to look at voice and data combining, and they are converging into a converged communications system, we only need one network, obviously, with digitized voice; will your infrastructure be able to take care of that? As you start to put intelligence in your network and we start to put service-level processors into the network infrastructure to do things like billing or traffic monitoring, is that going to be capable of accepting all of the latest innovations in that space?

As wired and wireless Internets converge and they start to interact, will we have a managed solution to be able to draw the content either from the wireless Internet or the wired Internet at our choice?

These are just a few of the innovations that are coming forward. And that computing environment has to handle all of them. But then it also has to interface with these people. Intel is trying to turn itself into a 100 percent e-Business company. We've gone from 14 servers in this computing environment a few years ago when we were doing nothing more than displaying our products on intel.com, to over 700 servers today, where we're using those servers to do $2 billion plus a month in sales to customer, billions of dollars a year in acquisition from suppliers. All of our communications with our employees, whether it's stock options, employment information, health information is done over the Intranet. And increasingly, collaboration with our partners.

This computing environment has to continue to grow, expand, and accommodate all these new applications. This is what I think we are all looking at, how do we accommodate that? How do we take advantage of all the innovation that's coming in to make ourselves as productive as possible, to be 100 percent e-Business company?

This is the choice we're facing. What does that computing environment look like? Let me give you a simple example of some of the innovation that's taking place. To do that, this event is called eXCHANGE. eXCHANGE kind of carries with it the connotation of the stock market. A good example would be in fact how we can use this capability, a computing environment as we're showing here, to address the challenges of the stock market.

I'm going to do is have Philip Berber, who is the founder and chairman of CyBerCorp, it's now part of Charles Schwab, come out and talk a little bit about what CyBerCorp is doing, and in fact what their strategy is, how they've made their decisions about infrastructure and some of the capabilities that they can bring forward to the end user.

CRAIG BARRETT: Good morning.

PHILIP BERBER: Good morning, Craig. How are you?

CRAIG BARRETT: Why don't you tell the audience a little about CyBerCorp.

PHILIP BERBER: CyBerCorp is a next generation online broker, based down in Austin, Texas. And we've really been pioneering and innovating what is called direct access technology. And what that means is that we can connect traders and investors directly and electronically through our electronic trading technology, direct each of the market makers into the exchanges.

Five years ago, we started with a 486 Intel chip. Really, about '98, we embraced the Internet. And our vision was to create a virtual trading room. In 1999, we became the fastest growing online broker here in the U.S. In March of this year, the Charles Schwab organization acquired CyBerCorp, and we've started now to look to integrate this next generation electronic trading technology into the Schwab organization.

CRAIG BARRETT: So I don't have to have this Bloomberg terminal or something that I get up out of my office and walk and see the stock quotes. You're going to feed that to me?

PHILIP BERBER: I'd say Michael who? And you can say through one terminal, through the Internet, have access to the entire pool of liquidity. Which means through one terminal, access to all of the market makers, all of the exchanges through that single terminal and keyboard.

CRAIG BARRETT: How about showing us how this works.

PHILIP BERBER: I'd love to. We're going to be joined by Brad, who is from Intel. Perhaps you'd like to talk about what we're displaying here.

BRAD: We have a Pentium® 4 processor system that we've hooked up the client-based PC software back to CyBerCorp's servers. We'll be seeing on this machine is a complete set of real time streaming quotation data. If we take a look over on these monitors right here, I'd like to show you some simple views. Over here, we have a market view that these are some of the guys that we really should keep an eye on. If we look over here, we have NASDAQ and the New York Stock Exchange. We can see some of the top gainers and decliners.

If we move over here, we can actually see something that's kind of cool-- we can showcase the Pentium 4 processor and what we're able to do with some of the graphic capabilities of our latest and greatest processor. Finally, if we come down here, we can actually take a look at how we're doing ourselves, Intel.

CRAIG BARRETT: How is Intel doing this morning? I'm almost afraid to ask.

BRAD: Well, you can see down here, this shows a view of the various market makers and ECNs. If we wanted to buy some Intel stock, for example, we'd look over here and see the value is set at a thousand shares. And then we can actually click a cell button here and go in at this price right now would be about there.

PHILIP BERBER: Looking at that stock, Intel, going off at 37 5/8, that looks like a buy at those levels.

CRAIG BARRETT: I think the SEC would put me in jail if I said anything at this stage. We're in a quiet period. So you guys do whatever you want with Intel stock.

BRAD: Philip, I'm pretty fired up about this technology. I built the system up, so I'd like to try it.

PHILIP BERBER: I think that's my money and my account. And if we really believed in our technology and we believed in Intel at this level, what we'd go over here and do is click on this "buy" button. And I'd click and go to "buy" and execute the stock. And, in fact, we've already executed this stock in the time that I was speaking. You can see that we opened a long position. We've got 580 shares at 37 7/16. And we got the balance, the 420 shares of Intel, again, at 7/16. We can see some of the executions were actually executed on island. So I'd be pretty comfortable about that trade. That's just taken place live with real money in my account.

CRAIG BARRETT: Thank you. Well, Philip, can you tell us a little bit about the infrastructure? What we're doing is streaming a ton of data at the individual user here. What's the infrastructure look like for this?

PHILIP BERBER: To clarify here, it looks as if we're just one user. And we're not. What we've actually done is, we've created and emulated a simulation of 750 users right in this moment on these racks. What we're doing is, 750 multiple users, and they're watching an array, a broad array of stocks. For each of these stocks, there's market makers and bids and asks. So all of this data processing is going on right here right now.

We wanted, with Intel's help and Intel Labs' help, to see about issues of scalability as we took this technology and made it more widely available and powering a broader number of online investors. What we have seen, truthfully, is very, very impressive scalability.

CRAIG BARRETT: Well, this is what's running all this, you're in fact simulating 750 users on this system as we speak.

PHILIP BERBER: That is correct. And what we'd like to do now, and, again, live, is we would like to ratchet this up from the 750 users to take it up to a simulated environment of 7,500 users live, simulated on the rack in front of everybody right now.

CRAIG BARRETT: All right. So Brad's going to do that. While we're waiting for the response here and see what impact it has on the utilization of the servers behind us, Philip, you can tell us a little bit about when you were making the decisions to put your infrastructure in place, what was critical to you?

PHILIP BERBER: To understand our world, we speak of trading as war, and speed is key. And that's the environment that we're functioning in. In terms of data, we're dealing with real time streaming data on 10,000 stocks from every market maker. So we need the data to be reliable and accurate and in real time. As a development environment, we really need to have a processor environment, an architecture, where we can rapidly evolve and rapidly deploy the technology.

In fact, it was the words of Andy Grove, who said that only the paranoid survive. And that echoed with us, in order to accelerate our own rate of technology evolution. After you have delivered it, the issue becomes scalability. Can you take this technology and this depth and breadth of streaming real time data, and make it available to a far, far wider and broader universe? These were some of the challenges that we faced.

CRAIG BARRETT: It looks like we've scaled up to 7,500 users.

BRAD: Yes, we have. I'd like to describe what we have. You can see looking at the screen that we actually are doing pretty well. We have our processors here. We can see it's a four-way, which I'll be pointing out. All four processors are doing pretty well. And we are up at 7,500 users, a factor of 10 more than we were.

What we have in this rack right here is supposed to be very, very similar to what they have back at CyBerCorp. We have a four way Pentium® III Xeon™ processor up here in this server. Down here, we have a two way Pentium® III processor. And if you look down here, these clients right here are actually supposed to represent what the customer is doing requesting the streaming stock quotations. So, again, pretty much the same situation we have back in Austin.

CRAIG BARRETT: Okay. We've scaled this up to 7500 users. Look at the utilization graph here. We still have a lot of headroom. And I presume when the market does participate in the antics the market is participating in these days, we can get lots of volume and you need that headroom?

PHILIP BERBER: We've seen some spikes in the Intel stock, for example, quite recently. And we're used to building systems that can accommodate the volume of data that we're generating here. You have to try to imagine 10,000 stocks from NASDAQ and New York and every bid and every offer from every market maker and ECN. You also have to imagine that we're also streaming options data. That's all of the calls and puts and every single contract. We're doing this in real time, 12 hours a day. When you start to get a sense of the volume of quotations going through here. We estimate, with 7,500 users and the volume of data, somewhere between one to four billion quotes a day in real time we're delivering off the back of the Intel Architecture that we're seeing here.

CRAIG BARRETT: Fantastic. I presume, going forward, as the business builds up, as Schwab takes more advantage of your capability, what you're going to do is just expand the system, front end, customer interface, and the backend database capability?

PHILIP BERBER: Absolutely. The challenge becomes scalability. And we've been delighted with the results that we have had from the Intel Architecture in that regard.

CRAIG BARRETT: Thank you, Philip.

PHILIP BERBER: Thank you very much.

CRAIG BARRETT: Great demonstration. I think what we're really talking about here is, in fact, the ability of all of us to have at our disposal the concept of agility, to be able to adopt new capability, flexibility and change, new systems, new challenges, new environment takes place, to be able to scale our data centers very much as we talked about here, with simple, scalable building blocks.

If you want to go from 700 users to 7500, to 75,000 users, you can simply scale out the front two tiers of your data center, the Web servers, the application servers, and scale up the database servers on the back end.

More importantly is, innovation comes out, the software innovation that CyBerCorp brought to this capability. You can readily integrate that with your system.

It's this excitement of how easy it is to build solutions and capability going forward, and this is what customers want, solutions. They're not so much interested in the basic building blocks, but how does the industry provide solutions. And that's what this eXCHANGE event is about.

Now, we think this concept of an open architecture, open capability, open standards, really is what drives the industry and what will drive the industry going forward. This concept of unlimited possibilities I really translate into the creativity of all of the smart engineers in the world, these people who when they have a smart idea, they can write an application program, they can write a solution which can integrate with other standard building blocks, and bring that into the marketplace rapidly. And then we can all take advantage of that.

That's what I think the whole concept of this eXCHANGE event is about, is how the industry comes together, how it provides unlimited possibilities to all of us to use this technology, this capability, to improve our own business conditions, to increase efficiency, drive margins higher, drive down the time to market, make our employees more productive. Those are the challenges we have. And we think that this is the industry wide capability that allows that to happen.

So let me just briefly summarize. I think all of us are connected, interconnected, if not today, we will be tomorrow, on the Internet, whether supplier, customer, partner, collaborator, employee, or employer.

We have to be involved with this technology when it comes to the Internet. We're all making decisions on how to build out our infrastructure. The decisions we're making today have to take into account the structure of the industry, the concept of innovation and creativity and how can we take maximum advantage of that going forward.

We're all striving to become 100 percent. And that means not only dealing with customers, but suppliers, and not just direct customers, but indirect customers, indirect suppliers, collaborative design capability, joint ventures with other companies.

Many wonderful examples of people designing complex either integrated circuits, automobiles, complex mechanical structures around the world with different design teams interacting today. Your infrastructure has to allow you to do that.

Lastly, this concept of open architecture, of modular Internet standards, building blocks, that we can put together to maximize the potential for creativity capability going forward. That's why we're all here today. It's really the industry coming together to provide solutions to you and your customers. I've tried to give a high level view of this.

What I'd like to do now is introduce Paul Otellini, who is our executive vice president in charge of our Intel Architecture business group. Paul is going to talk to you in a little more detail about how the industry is coming together to provide these solutions.

Paul Otellini's Keynote at The eXCHANGE

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