Barrett on Business Models
InfoWorld writes about a talk given by Intel’s CEO when he was in India recently:
Peer-to-peer (P2P) sharing would never have gathered momentum if the music industry had adopted models for distribution over the Internet, said Intel Corp. Chief Executive Officer Craig Barrett.
“The music industry absolutely stonewalled the distribution method associated with the Internet to the point that peer-to-peer sharing became so prevalent, that it didn’t make much difference,” Barrett said.
“Five to eight years too late we are starting to see distribution models set up for distributing music over the Internet, where actually somebody gets paid for it,” he said. “People are inherently honest and want to pay for goods and services and that would have happened if the music industry had adopted the technology and come up with commercial distribution models a lot earlier.”
The film industry faces a similar challenge as bandwidth increases enable downloading movies over the Internet. “It would be interesting to watch whether the movie industry will in fact rapidly and aggressively adopt a distribution model consistent with the new technology,” he said.
A number of companies have benefited by changing the rules, said Barrett, citing retailer Wal-Mart Stores Inc. and Dell Inc., which sells configured-to-order computers direct to customers. Wal-Mart uses IT to control inventory and point-of-sale information, to know exactly what is selling at any of its locations, how to price a product, how to price it by region, and how to replenish inventory automatically.
“Wal-Mart is really an IT company in disguise,” Barrett said. “They just happen to sell products to the consumer.”
Intel changed the rules to its advantage using four key strategies, according to Barrett. These included its “Intel Inside” branding program, shifting the definition of computer architecture from computer makers to companies like Intel, creating a new distribution channel of about 180,000 system integrators that build computers with Intel technology, and setting up a venture capital business that invested in companies with technologies supporting or compatible with Intel’s own technologies.