Intel Program Aids White-Box Builders

The Santa Clara, Calif.-based chip maker is in the early stages of a 60-day pilot program, called the Intel Channel Supplier Program, aimed at reducing inventory levels for white-box builders by improving logistics with five or six regional distributors.

"We're trying to improve a whole lot on logistics," said Steve Dallman, director of channel sales and marketing at Intel. "More of the white-box [makers don't want to hold any inventory at all. In the past, they've held a few weeks' worth. Now, they're holding a few hours' or a few days' worth."

Intel's move comes at a time when white-box activity is at an all-time high and an increasing number of partners are reporting more frequent component shortages, according to exclusive CRN research.

The number of solution providers citing white-box PCs as their best-selling desktops jumped to its highest level ever of 55 percent in February, up from 40 percent in December, according to the CRN Monthly Solution Provider Survey.

White-box notebook popularity among solution providers has also surged, with an all-time high of 14 percent of partners citing it as their best-selling notebook in February, up from 3 percent in the same month a year ago.

"Intel is piloting this program to attract more people to go [through authorized channels," said Warren Finkel, CEO of RLM Group, an Intel-authorized distributor and white-box manufacturer based in East Brunswick, N.J.

While RLM is not part of Intel's pilot program, Finkel said he believes a primary aim is to cut down on the need for solution providers to seek out product from the gray market because of pricing or availability issues.

"Intel is trying to get product where it is needed, quicker," Finkel said. "It's our job to make sure customers who need product have it that day or the next day without hassling them on terms."

Walter Prophet, vice president of Alpha Engineering Associates, a white-box builder based in Annapolis, Md., said the new program should help improve the supply of processors and white-box components.

"We try not to keep more than a few motherboards, processors and other [white-box components on the shelf," he said. "We rely on our distribution channel for that."

The only potential snag is if the distributors also build and sell white-box systems and compete with partners, said Ray Rueda, president of Honor International, a white-box maker in Miami.

"That happened with some of the Latin American distributors," he said, noting that customers are turning to his company for higher-end four-way systems, which are not available from tier-one vendors such as IBM or Compaq Computer.

Dallman did not disclose the names of the distributors in the Intel Channel Supplier Program, but he said Intel wants to see "what we can do to help . . . cut down the logistics so [solution providers can buy that inventory locally and stay within Intel's program."

Currently, Dallman said estimates on Intel channel inventory range in the three-to-four week time frame, which is about as low as can be expected now without running into availability issues.