Intel Streamlines Channel Approach

In the horse race that sees vendors jockeying for mindshare among VARs, Intel has come in with a Daily Double. It has implemented a broad, corporate reorganization, which includes the formation of a new Channel Products Group, and has reached a major milestone by marking the 10th anniversary of the launch of its first official reseller customer programs.

That confluence of events--just in time for the Intel Solutions Summit in Las Vegas this month--has launched Intel executives into a flurry of activity. They're pledging to intensify the chip giant's focus on the overseas markets, which provide 75 percent of its channel revenues, while not neglecting the domestic sales landscape.

Intel's grand objective is to refine all of its channel programs in 2005. The goal is to foster face-to-face dealings with more of its partners than ever before, the better to nudge sales in the direction of emerging technologies. Intel's channel group also plans to give resellers advanced training in the company's burgeoning product line, so that they're up to speed on the new wireless platforms and multicore processors due to hit the market in the coming months.

"In 2004, we added about 20 new countries to Intel's channel program," says Sophia Chew, vice president of Intel's Reseller Channel Organization. "For 2005, a key goal for us is to grow deeper--improving our relationship with the customer in countries where we've established new programs."

Chew points out that Intel can't have personnel everywhere to call on every single account. So the idea is to draw on the company's experience in North America to roll out programs that can train its VARs in sales, distribution and account relationships.

Chew's strategy is seconded by Bill Siu, who is leading the new Channel Products Group. Siu moves over from his position in charge of desktop processors and platforms as vice president of the Intel Architecture Group.

"We want to continue to strengthen the technology, training, sales and other capabilities in mature markets while continuing to expand globally, in terms of the reach of the program and the products we'll bring to specific geographies to meet their needs," Siu tells VARBusiness.

A case in point is the recently launched Internet Cafe PC aimed at the Chinese market. "[That's] an outstanding example of where there is a need that is very specific to a market," Siu says. "You will see more of those products and activities. That's part of my agenda of growth in the emerging markets."

Nor will North America be neglected.

"We ship to between 12,000 and 15,000 of our Intel channel members each quarter in North America alone, and we touch about 40,000 customers, either through mail, phone, training or events, each quarter," says Steve Dallman, Intel's director of North American distribution and channel marketing. "That has caused us to reshape how we bring products to market. Ten years ago, we'd come out with a new product, and it didn't get to the channel for several months. Today, we try to stock products into the channel a week or two before we launch them."

Still, Intel may have to hold its partners' hands more than in the past if it's to help them sell the coming wave of highly complex technologies, which are part and parcel of the company's "platformization" strategy. Under this approach, Intel hopes to break away from a marketing story about faster clock speeds. Instead, it is emphasizing nonprocessor technologies, such as faster memories and I/O interconnects. The idea is that such features will drive overall increases in system performance beyond what can be accomplished by boosting the speed of the processor.

"[Intel president] Paul Otellini has reiterated that they build platforms," says Steve Bohman, vice president of operations at Columbus Micro Systems, a custom builder in Columbus, Ohio. "I think Otellini is an asset to the channel...I have faith in the way they run their business."

As part of its platform play, Intel has introduced its first multicore processors, for shipment in the second quarter. It has also just fielded a next-generation Centrino wireless platform with enhanced audio and video capabilities, which will turn notebook computers into mobile entertainment systems.

And Intel is moving swiftly to deliver a feature called virtualization, which allows a PC to run multiple OSs and applications in independent partitions on a single processor. Intel also plans to offer Vanderpool in desktop processors later this year.

Fortunately for partners, Siu vows to be a hands-on manager who promises to address VARs' concerns. "We need to be out there, in touch with the customers," he says. "In all of my previous jobs, I've always been a hands-on person, involved in the technology and working with customers. I like to be out there, talking with people and understanding what the issues are."

Given his deep technology roots, it's not surprising to come away from a chat with Siu with the impression that he's a careful manager who is looking to build on the progress made under the leadership of Jason Chen, the departing head of worldwide sales and marketing. (Chen left Intel at the end of January to attend to family business, according to the company.) Anand Chandrasekher, currently the notebook processor honcho as general manager of Intel's Mobile Products group, will divide up Chen's duties with Eric Kim, the former Samsung executive who joined Intel last November.

"To the VARs, my intention is to be out there, understanding their needs," Siu sums up. "[We want] to be in a position to marshal the right kind of resources and technologies, to help them to solve their problems. That's both in the established markets, as well in the emerging markets, where we plan to drive the enormous growth potential."

Along with the channel group, there are several other legs to Intel's broad reorganization. The company has set up four other divisions: the Mobility Group, which will develop notebook PCs and handheld computing devices; the Digital Enterprise Group, which will develop computing and communications infrastructure platforms; the Digital Home Group, focused on entertainment and media computing; and the Digital Health Group, which will explore product opportunities in health-care research and diagnostics.