Intels Barrett Takes Hard Line With Govt

Upset with California's high business taxes, CEO Craig Barrett tells a Gartner audience that Intel will invest elsewhere.

LAKE BUENA VISTA, Fla.—Intel Corp. CEO Craig Barrett is not happy with governments role in high technology investing—in the state of California specifically.

In his Gartner Symposium keynote talk here this morning, Barrett condemned the Californias high business taxes and said Intel is not making any new investments in the state. "Were investing outside California. Its workers comp system and taxes are a disaster," he said.

/zimages/1/28571.gifFind out what Microsoft CEO Steve Ballmer had to say in his Gartner keynote.

At the same time, Intel is investing where its customers are—and 70 percent of its revenues come from outside the United States. However, despite the trend to send development to offshore outsourcers, the ratio of Intel employees outside the United States versus inside the country has not changed in a decade, he said.

"It is the migration of the customer base, the migration of the skilled employee base," that is behind the trend, Barrett said. While the number of graduating engineers has declined in the United States in recent years, it has greatly increased in countries such as India, he added.

"The diminishing number of IT graduates in the U.S. is an alarming trend. The most intelligent thing to do in the U.S. is to beef up education so that we dont have to go chasing [skilled workers]," he added.

Barrett advocated a change government policy toward foreign nationals who come to the United States for advanced degrees. "Fifty percent of advanced degrees go to foreign nationals. We educate these people at taxpayer expense. They should staple a green card to their diplomas and let them stay here," he said.

Barrett also spoke about the convergence of computing and communications and how that is shaping Intels product direction.

"Were starting to see a blurring of distinction between a computing and a communications device. That is the most exciting trend that I see. It has implications for the home and business."

According to Barrett, broadband in the home is making it possible for more workers to telecommute, although at Intel that is dictated by the workers job. At the same time, there needs to be "a balance" between working at home and interacting live with coworkers. "Weve had a policy to promote telecommuting. But Intel limits that to one or two days a week. "Our experience is that you need that physical contact to be effective," he said.

Barrett took the opportunity to prod Symposium attendees, who represent some of the biggest buyers of IT products, into boosting their IT spending.

"There is a need to be more competitive. U.S. companies need to be more productive and efficient. The rest of the world is coming up to the [level of capital expenditures that the industry witnessed in the high-tech boom]. The U.S. has invested a bigger percentage of GDP than any other country. You have to keep that up to remain competitive," he said.

Barrett described a "sea change" that has taken place in the last decade, with the entrance of countries such as the former Soviet Union and China into the world economy.

"The U.S. has to decide how to compete [with those countries]. You can invest in R&D, in education and in infrastructure and do no harm. California did harm through [anti-business] legislation. How the U.S. will compete in the world economy is the bigger issue than offshoring," he said.

In response to the Harvard Business Review paper that suggested IT is obsolete, Barrett said, "Its the latest thing that people will forget six months from now."

If Barrett could have own law similar to that of Moores Law, it would be to "invest for the future," he said. His advice to the attendees: "Look to be more efficient than your competitors. Dont sit still. Dont be a follower. Invest in products, capabilities and infrastructures. Know your business well, take the best ideas, and make them come true."

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