Intel Plans Low-Cost, Dual-Core Xeon Exclusively For Channel

Pat Taylor, president of Proactive Technology, a Carrolton, Texas-based system builder and member of Intel's board of advisors, told about 350 Intel premier partners at the Intel Solutions Summit in Scottsdale, Ariz., that the chip giant would offer a low-cost, dual-core Xeon processor exclusively for the channel.

"The message is that on servers, desktops and whitebooks, Intel is bringing out channel-only SKUs," he told CRN Monday in an interview after his keynote speech.

Few details on the offering were available, but system builders said they expecte Intel to offer an aggressive rebate on the product to bring down the price. Steve Dallman, Intel's director of distribution and channel sales and marketing, has said that this year Intel expects to offer channel rebates on its new CPUs to help spur the adoption of dual-core technology.

One system builder, who asked to remain anonymous, said Intel will likely offer a dual-core Xeon for the Bensley platform that runs in the 2.8GHz range, the low end for that class of product. But he said rebates could bring the price down as low as $200 to help system builders compete with aggressive pricing on branded systems.

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Byron Hay, production manager at HBR Technologies, Carrolton, Texas, said a low-priced, channel-only SKU is necessary to compete with Dell in the low-end server space. "It would give us a price advantage over Dell," he said.

HBR has been successful building higher-end white box servers but has had trouble competing with Dell at the low end, where special deals, rebates and end-of-life products make its prices extremely low, he said.

Indeed, OEM pricing tactics have been a key discussion point among system builders at the show. They complained in particular about Dell and IBM bidding below cost on big deals to pick up new customers. One system builder, who asked not to be identified, said he has been driven deeper into specialized vertical markets and now refuses to advertise his services to stay out of the Dell and IBM radar. Each of those OEMs has made a practice of underbidding him on big projects, he said.

Intel has promised that Bensley, its next-generation server platform, will bring down power consumption and improve processing power. The platform is Intel's first to use a new memory technology called Fully Buffered DIMM, moving away for the DDR, the current standard in the Industry. The CPUs for Bensley are code-named Dempsey. The CPUs and their motherboards are expected to ship to OEMs and system builders later this month.