Arik Hesseldahl

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Otellini: The Internet Is Really Big; Good News for Intel

Sales of PCs may be slowing down, and Intel may as yet be all but nowhere in the emerging market for smartphones and tablets, but that’s okay with Intel CEO Paul Otellini.

Despite the headwinds, Intel delivered on its quarterly results. Profits were up 48 percent year-over-year, and Intel set all-time records in sales and profits both for the quarter and the full year.

As he pointed out in his prepared remarks in today’s quarterly earnings conference call, sales at Intel’s Data Center Group grew by 15 percent in the fourth quarter and finished 2010 up 35 percent. What’s driving such healthy growth? The Internet, of course. Its growth is causing a mushrooming demand for servers of all kinds, which means demand for Intel server chips is going up right along with it.

Traffic on the Internet was 245 exabytes in 2010, he said–greater than all previous years combined, and within five years another billion people getting online will push that to over 1,000 exabytes a year.

(What’s an exabyte? 1,024 petabytes. What’s beyond the exabyte? The zettabyte. Incidentally, Royal Pingdom released some interesting numbers about the size and scope of the Internet today, and they’re worth reading.)

Hear the snippet from Otellini’s remarks below.

Later, in response to a question from Patrick Wang of Wedbush Securities, Otellini talked about where enterprises are in their PC refresh cycle, one of the few bright spots for PC sales that Gartner and IDC mentioned in their sales estimates yesterday. Reiterating an earlier comment that he expects PC sales to grow at a rate in the “low to mid-teens” in 2011, Otellini said he thinks many corporations haven’t yet updated to using Microsoft’s Windows 7, and so the upgrade cycle hasn’t yet, in his view, reached its midpoint. Then Intel CFO Stacy Smith jumped in with some comments about where cloud computing figures into sales of server chips. Another two-minute audio highlight is below.

Also asked during the call by Shawn Webster of Macquarie Research about Microsoft’s announcement that it will create a version of Windows for ARM-based chips from Qualcomm, Texas Instruments and Nvidia, Otellini said it didn’t seem to him like “new news,” and that versions of Windows for chip architectures other than Intel’s x86 family have been around before. In this 90-second audio clip he talks about the potential pluses and minuses of Microsoft’s move for Intel.