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Intel, AMD Ramp Up Chip Game

Intel and AMD bet big on revolutionary new architectures that combine CPU and GPU capabilities on a single piece of silicon.

CPU GPU

Despite the hiccup Intel announced last month with its flawed Sandy Bridge chipset, code-named Cougar Point, the company has moved toward major new performance improvements throughout its Core lineup and now looks to win over solution provider and system builder partners. Intel’s Channel Chief Steve Dallman says the chip maker saw disappointing channel sales figures for its Clarkdale and Arrandale products last year, but with the recent release of the company’s new Sandy Bridge architecture, he expects Intel’s channel partners will turn the corner in 2011.

Meanwhile, rival AMD’s Vice President of Worldwide Channel Marketing David Kenyon says system builders are essential to the success of AMD’s Fusion platform in the integrated graphics space, as the world’s second-largest chip maker tries to stage a comeback and regain momentum in the channel.

Which leads to these key points for system builders and solution providers:

• Some believe the combination of more powerful processing, and a stronger economy, will lead to a significant boost for both AMD and Intel platforms;

• Other channel partners of both companies, while optimistic about Sandy Bridge and Fusion, say they are waiting before jumping in because they need to hear more specifics from the vendors and see a stronger need by their own customers;

• Even though new form factors -- including new tablets -- have caused a significant disruption in the market, Intel still has opportunity with its Atom platform in an industry grappling with new computing models and designs.

NEXT: Change Comes To Intel

Change Comes To Intel

Dallman, Intel’s vice president of sales and marketing group and general manager of Intel’s Worldwide Reseller Channel Organization, spoke to CRN about the excitement surrounding the release of Intel’s Sandy Bridge integrated graphics platform -- which combines CPU and GPU capability on a single die -- as well as Intel’s partner strategy for its Atom products.

While many system builders partnering with Intel expressed positive initial reactions to the launch, some see major challenges ahead for resellers as they look to add value to Intel’s solutions and for Intel as it looks to compete with others in the burgeoning integrated graphics segment.

“Obviously one of the things we were hoping for was that the adoption of processor graphics would go well,” said Dallman. “The team was feeling pretty good about the launch, and they were getting a lot of customers calling up about it. I was in China on Monday after the launch and each shop in the city I was in had Sandy Bridge products complete with motherboards, which I was really pleased to see.”

Yet some in the reseller channel have yet to see the kind of customer demand and overall enthusiasm that they had hoped for from Sandy Bridge, while others believe there is a demand for the platform on traditional PCs but not necessarily on newer, smaller form-factor devices.

“Well, on the desktop side of things we currently cannot get enough of the Sandy Bridge processors to meet our customer demand,” said Andrew Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based system builder. “So it is certainly a success in the channel. However, we have not had much demand, nor have we seen a lot of movement with Sandy Bridge on mobile.”

In addition, Intel’s Sandy Bridge platform suffered a major setback in January when Intel publicly admitted to finding and immediately fixing a design error in its dual-core Series 6 Cougar Point chipset, which runs solely alongside the quad-core Sandy Bridge chips. Intel said that the error in its Cougar Point chipset will cause SATA ports in some chipsets to degrade over time, although the 16 SATA points on the Sandy Bridge processors will not be affected.

“The issue affects platforms using the 6 Series chipset, mobile and desktop,” an Intel spokesperson told CRN. “We are currently working with our channel partners to devise solutions to this issue, and can’t provide specific details as they are still being worked out.” Intel said it expects the recall to cost $300 million in lost revenue for Q1 and fixing the problem to cost approximately $700 million, bringing the total cost of Intel’s mistake to $1 billion. Intel plans to begin offering the fixed chipset to customers in late February and fully recover the lost revenue chipset by April. The company also pledged to contact the system builders and customers who purchased potentially flawed chipsets or systems in order to replace or modify them.

For Intel executives who said previous platforms Arrandale and Clarkdale didn’t fare as well as had hoped because of the recession and an absence of channel partner engagement, it’s hoped that the timing is right for Sandy Bridge once the chipset issue is behind it.

However, Kent Tibbils, vice president of marketing at Fremont, Calif.-based system builder ASI, which resells Intel’s Atom products, disagreed with Intel executives’ assessment of Clarkdale and Arrandale’s performance in the market. “I think that saying Sandy Bridge has been successful doesn’t mean that Clarkdale or Arrandale were not,” Tibbils said. “They were, in fact, very successful in terms of generating revenue for the channel.”

NEXT: Atom Faces A Changing Landscape

Atom Faces A Changing Landscape

Beyond those platforms, Intel’s Atom platform may have been victimized by disruption elsewhere in the market with the introduction of tablets and other devices, at least one channel executive says.

“In terms of Atom, it’s true that netbook sales fell short of expectations,” said Erik Stromquist, COO of Computer Technology Link, a Portland, Ore.-based solution provider. “But Atom for us in general notebooks sales dropped off, but with innovative solutions like tablet and touch-enabled convertible devices led to the growth of the Atom product line.”

Yet another perspective within the channel holds that Intel’s new processors include several advantages that could bolster channel sales, and that ultimately it’s up to the channel resellers to offer solutions that will succeed in the marketplace.

As for the performance of Atom products in 2010, Steve Brown, vice president of sales and business development at Blue Hawk Networks, a Campbell, Calif.-based system builder, said he does not expect that particular trend to continue. “Intel has learned from the lack of success in last year’s go-around,” he said. “Considering both they should fare much better with Sandy Bridge.”

Intel’s partners have noticed the shift in Intel’s strategy toward original design manufacturers. Stromquist said Sandy Bridge has a much better chance at doing well in the microprocessor market compared to previous generations of Intel processors.

“Intel has done a lot of heavy lifting to improve the ODM ecosystem and address the price gap between Tier 1 and Channel OEMs,” Stromquist said. “The burden really lies on the channel to innovate and offer competitive solutions to meet the changing market needs. It’s more than the processor that makes the price. It’s a whole ecosystem with the chassis and a whole environment.”

Others see this shift in strategy as a potential source of channel conflict as resellers look to find ways to continue to add value to Intel’s solutions. Todd Swank, vice president of marketing at Nor-Tech, a Burnsville, Minn.- based system builder, said that with this new approach, Intel may no longer consider the reseller channel to be relevant.

“What you’re seeing in the marketplace is a switch toward mobile, smaller form-factor devices, so it makes sense to shift toward ODMs,” Swank said. “The days of guys creating solutions in their shops, and the days of system builders building thousands of client-based PCs in the U.S. are already numbered. It’s over and done with. Most system builders have had to change their strategy toward providing managed services, cloud solutions or reselling to Tier 1s -- but selling mobile solutions through the channel? That seems like a dead conversation at this point.”

Swank referred to the events of CES 2011 earlier this month, and the excitement surrounding Android devices. He said Microsoft must feel threatened by the presence of another OS, just as Intel must feel the looming threat of British chip design firm ARM, whose Cortex CPU core architecture is the basis for Apple’s A4 processor as well as Nvidia’s Tegra 2 mobile chipset. Meanwhile, he said channel resellers are feeling the most pressure of anyone in the supply chain.

“You have new players in the arena,” Swank said. “Verizon and Motorola are doing tablets. Nontraditional PC manufacturers are in a space where system builders were just competing with HP, IBM and Dell before. Now they compete with telephone companies and with new solutions. There are opportunities for system builders in this space, absolutely, but the things we’re selling today are very different from five years ago.”

Furthermore, Intel’s Atom-based products may offer system builders and end users additional flexibility, especially the configurable Atom processors Intel launched last year, but Dallman said he sees the system builder channel steering away from components and moving more toward designing PC-based solutions.

“System builders take PC-type products and build PC solutions and some vertical solutions off of PCs. I haven’t seen a lot of them want to go down to the board level in terms of programming the CPU for specific I/P and services and whatnot,” Dallman said. “We’re seeing so many designs right now, including 3,800 different engagements and 1,500 design wins. System builders will resell products that these Atom products are in.”

Dallman added that Intel had only reached the “tip of the iceberg” as far as the possibilities for its Atom product lineup. It may, in fact, be too early to tell how far down the iceberg sits, as many system builders haven’t had a chance to get their hands on it yet, even though it stands to reason that an improved economy will make it easier to resell any product.

“We have not worked with Sandy Bridge at all yet,” said Michael Rathburn, senior technical specialist at Applied Systems Associates, a Murrysville, Pa.-based solution provider. “We have used Atom processors in some industrial panel PCs that we have sold. They worked well and did so at a low voltage and stayed fairly cool, which was important. All of Intel’s offerings will probably do better this year as the economy improves.”

Despite the anticipated success of Sandy Bridge, one Intel partner offered a long-term corrective to a problem that may be caused by Intel’s adherence to a “tick-tock” strategy, whereby products are brought to market based on a strict, fast-paced road map that may not be suited for a bearish economy.

“If Intel were to launch a series of Sandy Bridge-based Atom platforms that are available for two or more years, as they do on some of their server and workstation platforms, and with a better price-to-functionality ratio, they will definitely do well in the channel,” said the partner, a system builder who asked not to be named.

NEXT: Sees Energy In The Channel Behind Fusion

Sees Energy In The Channel Behind Fusion

Compared to other integrated graphics solutions such as AMD’s Fusion and Nvidia’s ARM-based Tegra 2, both of which launched at CES along with Sandy Bridge and were featured inside several consumer devices, Intel’s channel chief says the product itself will make the difference regardless of the surrounding strategy. Dallman said that the graphics capability on Sandy Bridge is strong for an integrated CPU-GPU platform and that with its video and media capabilities, Sandy Bridge will offer a much-needed refresh for a lot of graphics applications in the near future.

“Intel’s got a lot of work cut out for them,” Stromquist said. “They’ve been taking steps by forming a netbook and tablet division to get some design wins. I think they’ll be a player in these devices one way or another.”

AMD’s Kenyon said his company is confident its Fusion platform will strike a chord with channel partners because, he said, it provides system builders a greater variety of technical designs and business opportunities than Sandy Bridge.

“We’ve been working hard on the channel programs, especially our Partner Portal, which launched last year,” Kenyon said. “We’ve started rolling out new programs and marketing campaigns to promote Fusion as well. We see it as positive momentum.” Some aren’t jumping in just yet with either of Intel’s or AMD’s new platforms.

Brad Penner, manager of eBytes Computers in Manitoba, Canada, said his system builder business uses both Intel and AMD, but his company hasn’t started carrying either Sandy Bridge or Fusion chips yet. As far as AMD goes, Penner said the chip maker represents a shrinking percentage of his business. And while Penner said he’s aware of the new Fusion APUs, he said he hasn’t heard one word from AMD on the technology.

“We haven’t explored Fusion at this point, and we haven’t heard much about it from AMD,” he said. “Quite frankly, it seems like they haven’t been aggressively marketing Fusion in the channel. AMD has a lot of ground to make up on Intel. They need to find a better way to market the company and the value proposition.”

Jon Layish, president of Red Barn Computer, a system builder based in Binghamton, N.Y., said Red Barn has not started carrying Fusion processors yet either. “I’ve seen very little from AMD on the Fusion technology,” Layish said. “They’ve been a little quiet in the channel recently, which is strange since they just launched Fusion.”

Layish added that Red Barn used to do quite a bit of AMD business years ago, especially after the chip maker introduced its 64-bit processors in 2003. But the system builder’s AMD business began to decline after the chip maker’s first entry into quad-core chips in 2007 with the launch of the Opteron 2300 series processors, code-named Barcelona, was derailed because of a serious glitch in the chips’ architecture. “We haven’t done much with AMD in recent years,” Layish said. “We haven’t done as much business with them ever since the quad-core Opteron bug. That really hurt them.”

Now that Intel is experiencing similar difficulties with its Cougar Point chipset, Layish said he’s had to deal with uncertainty and added labor as a result of the vendor’s mistake.

“It’s been a real pain,” he said. “The problem is that we’ve shipped systems to customers that now need their boards replaced. And while Intel is covering the cost of the new hardware, the problem is we have to take out tech support guys and send them all over to fix these systems, which costs us work hours.”

Despite the ripple effect of Intel’s Sandy Bridge recall, Layish said Intel—which promptly identified the problem and offered a tentative timetable for issuing corrected chipsets -- will resolve it.

“It’s an unfortunate episode, but Intel has been responsible and I’m sure they’ll take care of it. I still think there will be demand for Sandy Bridge after it’s over,” he said.

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