What's On The Minds Of Intel's Closest System Builders?

CRN editors talked with four Intel advisory board members and two key Intel channel executives at last month's Intel Solution Summit in San Diego. The conversation heated up around vPro, Intel's latest whitebook initiative and the slow uptake for Vista.

System builders in attendance were Steve Bohman, vice president of operations at Columbus Micro, Columbus, Ohio; Samuel Sanchez, vice president of marketing at Coastline Micro, Irvine, Calif.; Pat Taylor, president of Proactive Technologies, Carrollton, Texas; and Chris Thorsen, vice president of product development at Paragon Development Systems, Oconomowoc, Wis. Also present were Steve Dallman, general manager of Intel's reseller channel organization; Nick Davison, director of Intel North American channel sales and marketing; Heather Clancy, editor of CRN; and Paula Rooney, CRN senior writer.

ON THE VPRO OPPORTUNITY:
CHRIS THORSEN: We're very enthusiastic about vPro and what it has to offer. It's a way to give IT their network back. What's really resonating is the remote control and asset inventory. What it does is empower the individual at the service desk to understand what they have prior to even taking that phone call and having a problem. We're evangelizing that information, taking it to clients, and they're seeing how this really plays with the management system.

PAT TAYLOR: I think it's more than what it does for the end user, though. I think what Intel has done with vPro is they've created margin opportunities for the channel. [For] the local guy who manages all the law offices in town or takes care of the dentists in his area now he can take care of them quicker. He can be more proactive, if you will, as far as taking care of problems on-site. You can't shop this kind of service the way you would a machine. There's mystery in that. And, of course, there is margin in mystery.

SAMUEL SANCHEZ: We're embracing vPro aggressively. It's opening up new doors for us, something more to talk about, especially with companies like POS [solution providers]. They spend a lot of money writing those specific software packages that tie the kiosks to the end user. And the thing that really annoys them most is that they have to refresh their applications maybe once every year. With the vPro and the 965 [chipset] series, it's got longevity. It's got at least two years, and they love it. Plus, [they like] the fact that they can tie into these kiosks anywhere in the world, which allows them to be a little more aggressive in deploying them anywhere, really. So, they really like that aspect of it.

In education, [selling vPro] is a little tricky. We treat our education accounts, because we do school districts, as enterprise. And a lot of them already have Trend Micro or some management software in there already. So with the help of Intel, we're trying to go out and say, 'You don't need to go out and buy all of this management software. We want to help you work this into your new refresh of systems.' So Intel is helping us get these systems into existing environments without having to have them spend any more money on additional licenses, refreshing their licenses, their management systems and so on. That's pretty critical, and we really appreciate that.

STEVE BOHMAN: At most [vPro is] a $20 premium because all it is is hardware on the board. And let me clarify, that's $20 over a value-priced motherboard. That's not $20 over what a lot of schools were buying last year. It's the same price as what they were buying last year. It's more value at the same price. If you're looking at cheap, it's a $20 premium.

Next: Extending vPro to servers, mobile units

ON EXTENDING VPRO TO SERVERS, MOBILE UNITS:
TAYLOR: It's critical. Until the channel gets a handle on the infrastructure, we're forced to play on the periphery, and we are perceived as white-box builders. We are competing on price alone. When we can get into the storage side of things—the servers, the networking and then, of course, the periphery—we own those accounts. The value-add is obvious, and our value to the customer goes up, as does our margin. It's critical to the long-term success of the channel.

THORSEN: There's a strong road map. That vision, that road map that extends out, is important. It's all about having the right arsenal. The cost of having something shipped in and replaced if it is just a software issue is just dumbfounding. So being able to load into it, get the driver, roll it back, whatever the challenge. That's very, very powerful.

SANCHEZ: I think it's really important to sell more servers as a solution vs. just charging more for a laptop. I'm going to charge you more for the IP SAN, the servers, the storage, things like that. That's what we're doing right now. So the disaster-recovery portion of it isn't just [extended] to the enterprise, to the office; it's also to the laptop guys, the road warriors. So now, I'm selling SAN, a really powerful server and a laptop, and maybe making an extra five points.

ON WHITEBOOKS AND THE VERIFIED BY INTEL (VBI) PROGRAM:
BOHMAN: Probably the biggest advantage that VBI has brought to the table is the validity it has given to the whitebook market, the confidence that it has given to channel members to jump in. In addition to that is the pricing advantage. The aggregation of the purchase by the company that they're working with has given a pricing advantage to the channel, and I don't mean advantage as if to say that we are now less expensive than tier ones. But we're able to get in the game with tier ones because Intel has put forth the effort to aggregate our purchasing abilities and get the attention of the ODMs. The channel members just don't buy enough [individually] to get their attention.

If you're not in, if you're not selling your own notebooks, you're running the very distinct risk of losing your customers. We at Columbus Micro faced it in a very real sense. We have a customer that we used to do all of their desktop, mobile and server. And, unfortunately, we were not able to fulfill their mobile needs; we lost that business, and with it went their desktop business, not because we fell down, but because they don't buy desktops anymore. Fortunately for us, we still have their server business.

We've had tremendous success with some of our educational customers, in particular. Tremendous success. We've sold hundreds of VBI SKUs to education, and they're lined up, ready for us to come back this summer to deploy more VBI SKUs.

SANCHEZ: When [VBI] was first launched, it was successful for us. But I think what happened is the [multinational companies] were feeling threatened by it, so mysteriously you start seeing HP [systems] coming out at $699. You've seen a significant drop. So I think VBI had a major impact on the mobile arena. I think what's helping us is the CBB portion of it—the common building blocks—vs. just VBI. It's allowed the ODMs to build an alternative to VBI that is a little more cost-effective, so I can actually transition over to CBB solutions that still have the VBI value to it. So it's kind of working.

Next: The impact of Vista, so far

ON THE IMPACT OF VISTA, SO FAR:
BOHMAN: I would say that one way to look at Vista and the launch of Vista is that it has been a significant investment, I think, on most channel members' part to get prepared for it, to do the testing they need to do, to learn how to deploy it. Frankly, there has been very little return because it hasn't generated new demand. Customers are not clamoring for it. So it has been very unsuccessful, in my opinion.

SANCHEZ: If anything, it has actually raised the cost of the systems because of the graphics you need, the larger hard drives. So that takes the system for us from $599 to compete against the [multinational companies] to $899 or even $999. So all of a sudden, the cost of the systems are going up. The end user is under the influence that they automatically need to have these really high-end graphics cards. So they automatically ask for it when they are ordering Vista.

BOHMAN: In a lot of ways, [the added cost] is a positive. It makes competing against the $399 PC that is advertised on television easier because you can really talk to the customer and say, 'That's really not going to do what you want it to do. It's not going to perform the way you want it to perform.'

SANCHEZ: When I get into the school districts, that's probably where it is the most painful because they are trying to get the ratio of school-to-system down as much as possible. The only way they are going to be able to do that is staying with more cost-effective solutions.

THORSEN: This is more for larger enterprises. What we're seeing is that there are some individuals that have signed a Technology Adoption Program, or TAP, with Microsoft, so we're very excited about it. But the challenge is that their core applications have not been validated yet. Microsoft does have answers to address that, but it complicates the image a little bit. So really what we're seeing is that 2007 is a year of understanding their environments, their apps, what they're currently going through and getting it ready for deployment in 2008.

There are quite a few changes within the operating system to be able to take advantage on the network. It's more of a consumer play with the Windows 3-D flip and the user interface, but on the business systems, when people start to utilize it, they'll really see how quickly they'll be able to search for any content on your hard drive, similar to what the Internet can offer now. But the challenge is still for IT to embrace it.

TAYLOR: We're certainly seeing the same thing in the industrial segment. The investment that they have now is something they'll carry forward until at least next year. They're not particularly excited because it's not a cohesive system. Vista's here for the desktop, but it's not a solid server play. And they're not going to mess with the systems that are running right now. Especially in a three-shift shop, a 24-hour environment. They're not even interested.