The Hungarian immigrant who demonstrated to the world that paranoia could be a business virtue brought to Dublin yesterday an insight into the business acumen that built one of the most powerful companies in the world - and the message that all companies must become Internet companies, or die.
Intel chairman and co-founder Dr Andrew Grove, who also served as chief executive for 11 years until handing over the reins last year to Mr Craig Barrett, spoke to a full house at Dublin Castle on the subject "Destination Internet Economy". But while the presentation to the audience of business people was generally upbeat, the underlying message - delivered by the man whose last book was famously entitled Only The Paranoid Survive - was that companies must either rebuild their business around the Internet or become "marginalised".
"Despite all the attention that Internet companies get these days, it's just a transitory phase, because in five years' time there won't be any Internet companies", said Dr Grove. "They'll all be Internet companies." As far as he is concerned, "this is not an option".
Dr Grove warned that Internet awareness seemed dangerously low among indigenous Irish companies, whose ability to make the transition to an Internet-centric mode of business would underlie Ireland's potential success as an international centre for e-commerce, he said.
"Ireland has made phenomenal progress as a high-technology provider and supplier of services. My impression is this development has been very much driven by multinational companies. To drive toward the Internet economy, something else has to happen that is not driven by the multi national companies," he said. "What has to happen, and hasn't yet, is for local companies to be passionate about this opportunity and pursue it."
Intel, which employs over 4,000 people at its Leixlip microprocessor manufacturing plant, is in the process of shifting its own business into what Dr Grove calls a `bricks and clicks' model - one which combines both the bricks-and-mortar world of more traditional operations with the clicks world of the Internet. Intel has gone from doing no business online in 1997 to over 42 per cent this year, a figure worth $12-14 billion.
Dr Grove noted that the US government currently estimates e-commerce's contribution to gross domestic product at $100 billion, making Intel's contribution alone worth 12-14 per cent of the total. This leads Dr Grove to question the government's figures, which he thinks under estimate the vigour of e-business.
Dr Grove was quick to point out that becoming an Internet company does not mean a move into an entirely virtual world. Until now, he said, companies tended either to fall into the bricks or clicks mode. But increasingly, click companies like bookseller Amazon.com and computer manufacturer Dell are bringing in bricks - this year, 60-100 million square feet of warehousing will be utilised worldwide by Net-based businesses, with Amazon.com alone taking two million sq ft outside of London, he said.
For businesses of the future, "clicks and mortar is the perfect optimisation", said Dr Grove. "I submit that all businesses, whether of clicks origin or bricks origin, are at a point of choice." Dependent on their ability to embrace both clicks and bricks, companies "will either rise to new company highs or will be marginalised."
IMPLEMENTING the new e-business model does not mean simply selling something over the Internet, but incorporating the Net into the day-to-day functioning of the company, in particular as a mode for business-to-business transactions and for building customer relationships, he said. It involves a three-part process: building the infrastructure, modifying business processes and exploiting the data and `feedback loops` that the Internet facilitates.
The way in which each company makes the shift "is where competitive differentiation on the Internet will come", said Dr Grove. Done successfully, this shift can benefit companies of any size: "I actually believe the Internet is a major levelling force between small businesses and large businesses."
Joining Dr Grove on stage at one point, Mr Fran Rooney, managing director of Irish security software company Baltimore Technologies, emphasised this point. Baltimore began in 1996 with six employees, but now employs over 500, has a $700 million market capitalisation, and is seeking a listing on the Nasdaq.
"To be successful in our business, you have to be big, so one of the first things we did was build a website," said Mr Rooney. "What the Internet allowed us to do was to be big - to give the impression of being big."
Dr Grove noted that Intel now wants to move from being the "building block supplier to the computer industry to being the building block supplier to the Internet economy". This shift has involved new investments in communications and networking companies and a move into supplying Internet data services.
The Taoiseach, who noted "I've been listening to some good, keen advice from him", introduced Dr Grove. Mr Ahern added that the Government was committed "to build the information society" and "to pressing on to make the technical, regulatory and policy environment right for the future."
