Who says the PC is dead?

Intel backs controversial file-sharing technology as the next big thing

By Fred Vogelstein and Surekha Vajjhala

To many in the entertainment and publishing businesses, 23-year-old Ian Clarke is an anarchist-or worse. He thinks information should be free and thumbs his nose at copyright laws. He's even written a computer program that reflects his ideology: Called Freenet, his file-sharing software lets fans swap music, video, and information files with one another online, much as Napster and Gnutella do. But unlike Napster, Freenet is not owned by anyone; and unlike Gnutella, it's completely anonymous. Freenet users can't be
tracked. (Clarke originally designed the program to enable people living under totalitarian regimes to exercise free speech.) The publishing and entertainment industries would love to sue him or shut down Freenet, if only they could.

So it may have struck his enemies as more than just a little odd when they learned that Clarke would be an honored guest and speaker at an important Intel conference last week. After all, Intel is one of the most respected corporations in the country and has fought vigorously to protect its own intellectual property rights. But Intel is convinced that Freenet's software, along with the technologies that drive Napster and Gnutella, represents the digital era's next big thing. "We liken Freenet, Napster, and Gnutella to Mosaic," says Pat Gelsinger, one of Intel's top technology officers, referring to the world's first Web browser. "They provided the spark that changed all of our perspectives."

That's quite a mouthful from one of the most powerful companies in the world. Six months ago, the file-sharing crowd was mostly seen as a loose collection of pseudo hackers or show-off programmers. Shawn Fanning started Napster out of his college dorm room. Justin Frankel wrote the first Gnutella program in his childhood bedroom. Clarke wrote Freenet for his senior thesis. Andy Grove, Intel's 63-year-old chairman, has lived nearly as long as the three of them combined.

But Intel sees the future of the personal computer in these new programs. In recent years the giant chip manufacturer's once unassailable market position has been eroded by competitors like Sun Microsystems. Computing power has migrated from the desktop to the large servers made by Sun and others. New chips like Transmeta, designed not for power but to prolong laptop battery life, are starting to attract the attention of computer manufacturers. Many have proclaimed that the PC is dead.

Global sharing. Not Intel. It believes file sharing, or peer-to-peer networking, could eliminate the need for centralized computing hubs, but not for the PC itself. Intel imagines a world where the only computer in the workplace is the desktop computer and where people share everything across the Internet-files, hard-drive space, even unused processing power. "Peer to peer will be one of the things that shapes the direction of computing going forward," says Craig Barrett, Intel's CEO.

It's not just rhetoric. Last week the chipmaker officially threw its weight behind the new technology, establishing a Web site to promote it and promising money and resources to nurture existing companies and create new ones. It has formed a peer-to-peer working group that includes 16 start-ups plus IBM and Hewlett-Packard. Its venture arm has identified 75 companies that it will consider funding.

Why should this be of any interest to businesses? Because it will save them money, says Boris Pevzner, chief marketing officer for Centrata, in Menlo Park, Calif., one of the new peer-to-peer companies. The reason: The servers at the center of corporate computer networks are expensive to buy and maintain. "When you can take those kinds of costs out of the system, everyone benefits," says Pevzner.

The ramifications are profound. One day, individuals may no longer need permission to access their credit card, tax, or Social Security records from companies, banks, or the government. All the data will be stored on your own home PC. If the government or bank wants the data, it'll have to obtain your permission, not vice versa.

Peer-to-peer networks pose a major threat to companies that have built their businesses around huge, centralized computers. Is a company like eBay necessary if consumers can search one another's computers for classified listings and perform their own auctions? Consumers may also be able to bypass the likes of America Online and Yahoo!

Private investor Bill Krause, who was one of the founders of 3Com and now sits on the board of Exodus, a giant computer storage company, says, "I've got it teed up for the next Exodus board meeting." He's an investor in a new file-sharing company called Apple Soup, started by Napster cofounder Bill Bales. He's worried that if peer to peer catches on, there'll be less demand for central storage companies like Exodus.

Wholesale changes are years away. Napster, Gnutella, and Freenet have proved that it's possible to share files across the Internet; but no one has figured out how to do it securely or reliably. Companies like Centrata, which just raised some $6 million from the top venture capitalist firm Kleiner Perkins, and Groove Networks, which has $50 million in the bank, are trying. The goal is audacious: make millions of different computers hooked to the Internet behave as if they were part of one corporate network.

But it's clear the idea has tremendous promise. "You wouldn't believe the number of venture funds that tried to get into one of our recent deals," says Bill Burnham, a partner at Softbank Venture Capital in Mountain View, Calif. Using peer to peer to reliably harness unused computing power is getting particular attention. Though Americans may stare at their computer screens a lot, in truth they don't tap much of the machine's processing power. It's not used when they're home or at lunch; nor is it used when they talk on the phone, attend a meeting, or chat around the office water cooler. That adds up to a lot of unused resources.

No mainframes. Intel has been sharing processing power within the company for 10 years, having scrapped its mainframes in 1995. Now, when it needs computing power to run complicated simulations, it borrows it from desktop machines. That has saved the company roughly $500 million in the past decade. Boeing recently worked with Applied MetaComputing to exploit unused computer power. Boeing needed the processing muscle to study airflow dynamics to bid on a government contract.

More significant, in the past year, a research group at the University of California-Berkeley called SETI@home has used the Internet and some slick software to tap computing power from desktops in all corners of the globe. In its quest to find life in space (SETI stands for search for extraterrestrial intelligence), it has amassed 10 times the power of the fastest supercomputer-at virtually no cost.

The possibilities in just this segment of peer to peer alone are mind-boggling. Visionaries foresee a time when computing becomes like electricity-bits of data will flow as freely as electrons in a power grid. "If it's dark in Hong Kong, maybe they're providing cycles to Chicago," says Larry Smarr, professor of computer science at the University of
California-San Diego. "But to have that work, there's this information infrastructure that doesn't exist that has to be brought into being." With Intel pushing peer-to-peer networking, the technology's widespread adoption may happen sooner than most think.

With Janet Rae-Dupree

(From the 9-4-2000 US News & Business Report)