Intel Capital Summit: Proof That Innovation Is Working

Evolution for the sake of marketplace relevance has been the theme of not only Intel Capital's Global Summit but a more recent one for the industry in general.

Examples of this abound in the M&A activity and large breakups of companies such as Hewlett-Packard and Symantec.

Executives from Intel and Lenovo touched on that theme at the Intel Capital conference Tuesday, one with specific examples of the reinvention of the PC business and the other touching on recently completed blockbuster acquisitions.

[Related: Intel Capital Fuels 16 Startups with$62M]

"Innovation is working," Kirk Skaugen, Intel senior vice president and general manager of the company's Personal Computing Client Group, said of the company's PC business.

Skaugen reported Intel marked its fourth consecutive quarter of year-on-year growth in the recently ended third quarter, with notebook unit sales up 21 percent year on year. Desktop sales, he added, are up 6 percent year on year.

That growth is being driven by a number of factors beyond last year's Windows XP refresh, he said. Maturing markets continue to mature and screen sizes continue to bifurcate as tablets move to 7- or 8-inch territory.

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Skaugen's talk boiled down to an overall theme of the conference and the industry, which is that innovation is key to growth and one of the reasons why corporate venture arms -- such as Intel Capital -- make sense as larger companies seek to remain relevant.

While much of the industry talk has focused whether the PC is dead, bright spots such as the all-in-one category and mini PCs have been a boon for Intel, Skaugen said.

Over the next 12 to 18 months, company projects are centered on three main goals: removing all wires from computing, eliminating the need for passwords, and transitioning to natural user interfaces with voice and 3-D.

"What's making this happen in many cases is our portfolio companies," Skaugen said. "We're invested in about 419 companies. About 25 percent of the companies that we represent are sponsored by the PC division."

While large companies may sometimes invest in startups with promising technology that can be beneficial to their own businesses, others make major buys.

Lenovo, an Intel partner and Intel Capital syndicate partner, saw its presence in the marketplace surge with the closing of its purchases of IBM's System x business and Motorola Mobility -- both deals fresh off October closings.

But even with the overnight market-share growth, innovation will be key to solidifying its place in the market, said Lenovo Group Chief Technology Officer Peter Hortensius.

"This moves our server business from being No. 6 to No. 3. … In the case of the Motorola business it moves our No. 4, No. 5 phone business to a strong No. 3 smartphone business worldwide," he said. "It gives us a strong presence in markets like the U.S. and others so we will move now quite aggressively out of being just an emerging markets phone business to a global business."

Partners are also seen as critical as Lenovo embarks on its next phase.

"What excites me about that [server] business in particular and it excites a lot of people here is this is a business where we are very open to partners," Hortensius said. "Lenovo doesn't have a big established footprint so we're looking for people that can help us."

PUBLISHED NOV. 5, 2014