Global technology goliaths and investors sported their best smiles at the thirteenth annual Intel capital CEO summit held in California last fortnight, a technology networking event, which saw a record turn-out of over 1,000 such executives – their highest so far. But beneath the veneer, there lay doubt and trepidation about the future of the technology business. It just shows the over-enthusiastic technology world is also not isolated from the negative business sentiment floating around.
Perhaps, this explains why the chief of world’s largest semi conductor chip maker thought it was more prudent to use his keynote presentation to share his views on the economic trends worldwide than to chit-chat about the next technology wave or their investment plans going forward.
For one, President and Chief of Intel Corporation, Paul Otellini, expressed grave unhappiness over the direction of his home state California is taking, and he was worried that it could end up like Greece. This was in response to a question from former California Republican Congressman Tom Campbell on whether he was “bullish” on the state of California as they engaged in a question-and-answer presentation on stage.
“Oh God,” he said. “I was born in California and raised here. But, we’ve messed it up so much. … I’m afraid the abyss will be like Greece.”
Otellini, a fourth generation Californian, said that Intel has not increased headcount in California in the last 10 to 12 years – as much as they would like to – and has in fact closed a factory in the state. This is because employees are facing challenges such as unaffordability of a house in California, and complaints about the local schools. “If it wasn’t for the magic of Silicon Valley, there would probably be a net [population] exodus,” he asserted.
Discussing how U.S and world economics are impacting the business environment, Otellini said that the corporate tax rates in the US are among the highest in the world which is proving to be a dampener for companies to bring cash from overseas to the US. He called for a lower, more competitive tax rate combined with the elimination of tax loopholes (is Obama listening?).
Otellini also acknowledged the fact that India and China are proving to be more expensive to hire engineering talent than the US; that the cost of doing business in India and China is rising, and it offers new opportunities to bring high-end jobs back to the US, he added.
Citing an instance, he said that the cost of working with mid-level engineers in these two countries is similar to that of the US, whereas the cost of working with senior-level management is becoming higher than in the US. This is primarily because finding such human resource with strong English-language ability and management experience is tough.
He urged the need to turn the economic discussion away from the problems of outsourcing and instead focus on bringing jobs back home.
The business class also needs to share the blame, he reasons. “It’s important for business leaders to speak out…we need to reduce the uncertainty and bring the money back,” he argues
Speech Computing is the next big thing
According to the technology major, ‘perceptual computing’ or ‘speech computing’ as it’s popularly called will bring about the next wave in personal computing going forward. “Voice will emerge as a mega trend over the next few years. It will completely change the way users currently operate a personal computer,” said Arvind Sodhani, Executive VP of Intel and President of Intel Capital. Articulating the vision, Sodhani added that the new perceptual-based interactivity will be built around voice commands, facial recognition, eye-tracking and gestural controls.
In Intel’s view, consumers are in the process of leaving behind mouse and keyboard, as perceptual computing offers a more “natural and intuitive” way to interact with your device. This is also the key to Intel’s future as it soaks up high degrees of computing resources and hence Intel Capital – the strategic investment arm of Intel – will invest aggressively in this space across the globe, Sodhani said.
On Intel capital’s investing appetite in India, Sodhani said that “emerging markets have performed well for us”. Sodhani is particularly bullish on making investments out of Intel Capital’s ‘Connected car fund’ besides betting on startups in the perceptual computing space in the country.
In February, this year, Intel capital announced a $100 million fund dedicated to investing in technology that will accelerate the development of Internet-connected cars. The investment company said that it will target new in-vehicle infotainment solutions, seamless mobile connectivity, compelling applications and advanced driver assistance systems. However, the fund will choose to act quietly and smartly. “We might not announce some of these investments,” Sodhani added.
Slowdown will not impact Intel Capital’s aggressive push on technology investing. “Downturns come and go, innovation never stops. Investment is mother’s milk of innovation,” Sodhani signed off.
Intel Capital has evolved as one of the largest technology investors in the world with more than $5 billion put to work till now across the globe.
The corporate venture capital arm has been investing in India since 1998 and deployed over $300 million in 80+ companies across 10 cities in India.
(Shrija Agrawal attended the event held in Huntington Beach, California, on Intel Capital’s hospitality)
(Edited by Prem Udayabhanu)