Intel Still Bullish On Internet Build-Out

Despite poor economic conditions that have weakened the sale of IT solutions for the last year-and-a-half, channel executives at Intel Corp. are bullish about the demand for new technologies driven by the Internet, including desktop and mobile PCs, servers and connectivity and communications solutions.

That's why the company has spent upwards of $8 billion in R and D and $13 billion in capital investments over the last two years to become the "building block supplier" of this new boom, said Gordon Dolfie, marketing director of Intel's reseller products group.

Dolfie presented his message Sunday night to system builders and white box solution providers who attended CMP's Tech Builder XChange event this week in the Loews Coronado Bay Resort in San Diego.

The bad news, said Dolfie, was that 2001 marked the first year since 1985 that PC sales were down from the year before. However, the last year brought a number of positive developments as well, including the continued importance of the Internet as a major economic growth driver, the transition to next-generation technologies like Pentium 4 and 802.11 and Bluetooth wireless standards, and increased activity in verticals like government, education and small business.

The reseller and solution provider channel played big roles in all of those areas, he said.

"Even in a very difficult environment, you remained very resilient out there, and overall did very well," said Dolfie to the audience, noting that in the last several years, the reseller channel has increasingly become a bigger part of Intel's go-to-market strategies over the last few years.

Dolfie also talked up the future of PC, saying that despite reports to the contrary, the PC market is alive and well and positioned for strong growth over the next few years. One reason in particular, he said, is the fact that so many companies purchased their last PCs in 1999, making them ready to upgrades in 2003 and 2004. The other driver, he said, will be increased bandwidth capabilities that will drive the demand for better machines.

"PCs are becoming more and more the center of a whole bunch of digital devices, and as wireless infrastructure and broadband infrastructures get played out in SMB and homes, there is going to be a lot more room for growth."

And while the biggest growth will be seen in emerging markets, Dolfie said he believes the market in North America is still strong because there is still so much room for improvement. For instance, he said 94 million U.S. adults and 39 percent of U.S. small businesses still don't have Internet access. Of those small businesses that do, 89 percent still don't have broadband access.

Catering to his audience of system builders, Dolfie highlighted the white box segment of PC builders in particular, noting that Intel studies have shown that companies are increasingly embracing white box systems over established brands like Compaq, Dell and IBM.

Dolfie also spoke about investments and new releases Intel will be making in areas like mobile PCs, servers and networking, striving to establish standard building blocks for computing and communications convergence. For instance, Intel plans to release its 3 GHz Pentium 4 by the end of 2002, only to improve on that with the much-awaited hyper-threading 'Prescott' chip next year. And the Pentium 4M mobile processor will be launched later this year, only to make way for the more powerful 'Banias' mobile processor in 2003.

Aside from technology, Dolfie also discussed the ways Intel plans to expand its channel marketing and support programs this year to help solution providers play a bigger role.

"The key thing is to make sure we invest in the programs to go with all those products and technologies," he said. "We keep seeing the opportunity coming forward with Internet growth, and we are very bullish about the future and keep putting our money where our mouth is."