Intel Partners Tackle The 3Vs: vPro, VBI And Vista

What's on the minds of Intel's closest system builders? CRN editor Heather Clancy and CRN senior writer Paula Rooney held a roundtable this week with four Intel Premier Providers (all members of the vendor's board of advisers). Ultimately, the conversation heated up most around the "3 Vs": vPro management technology, the Verified by Intel (VBI) whitebook initiative and the so-far slow uptake for Vista.

In attendance were Steve Bohman, vice president of operations at Columbus Micro in Columbus, Ohio; Pat Taylor, president of Proactive Technologies in Carrollton, Texas; Samuel Sanchez, vice president of marketing at Coastline Micro in Irvine, Calif.; and Chris Thorsen, vice president of product development at Paragon Development Systems in Oconomowoc, Wis.

CRN: Can you discuss your plans for vPro?

Thorsen: We're very enthusiastic about vPro and what it has to offer. It's a way to give IT their network back to them. What's really resonating is the remote control and asset inventory. ... What it does is empowers 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.

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We focus on LANdesk and [Microsoft Systems Management Server]. So really the reach, it's a way to get back the network for IT. The challenge now is it maybe only is 25 [percent] or 33 percent, and it isn't a full part of their estate, so how do you take full advantage of this technology? Our rebuttal to that is to look for if it's multifloor, so you don't have to "sneaker-net" -- run up and down steps. If it's at a campus, deploy it so you don't have to do a truck roll or hit the pavement with a car or a truck to take care of it.

The other piece that's real intriguing is the out-of-band management. We always have wake-up LAN, that little trickle power that you're able to turn the system on. Now when you're rolling out patches, you're rolling out applications; there's a great hit ratio with regard to being successful with the systems that are turned on. Because what will happen is they will hit it with LANdesk, they'll hit it with SMS, but there will be a fallout ratio. With the out-of-band management, the system just has to be plugged in, have a TCP/IP network have your management system have vPro, and you're successfully loading that.

So, it's all of a sudden giving a vision to IT management -- the challenge with doing more with less, and this has given them what they need.

CRN: What is the cost of a typical system with vPro vs. non-vPro?

Thorsen: It's the only systems we sell. Actually, it was [Intel Active Management Technology] 1.0 we started with. I was out at the launch event and I had a CIO that came. It was very interesting. A VP from EDS talked and said that there were benefits that [his company] was seeing and it's very tough to talk to your CEO and refresh $2 million worth of assets that you just spent on for a new platform. ... But she said if you look at the revenue streams, the productivity, what you have and what you're going to benefit from this, all of sudden you can find ROIs in these statements.

The takeaway for the CIO that was there. He said, "What if we were to focus my team really, really well on the first year deploying desktops, the second year on tablet PCs, the third year on notebooks, and the fourth year on entry-level servers?" He said, "I have to take that [idea] back to my team." Well, he's putting two budgets together, 2007, 2008, for refreshing 4,000 systems. So, there's definitely ROI around the standards, and we like to hear those kinds of stories.

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. The local guy who manages all the law offices in town or takes care of the dentists in his area, those people trust him because he's local and knowledgeable and has some sense of control. 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. Increase his value to them, and of course they don't know exactly what's happening. 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.

NEXT: vPro's impact on the bottom line.

CRN: Has vPro actually already increased your margins? Is it forward-thinking?

Thorsen: It is forward. It takes quite a bit of time to get this new technology out. It's not overnight. It's laying the framework. It's similar to being an architect or building a house. You have to lay the right foundation in order to correctly manage what you have.

Sanchez: We're embracing vPro aggressively. It's opening up new doors for us, something more to talk about, especially companies like POS. 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 the fact that they have to refresh their applications maybe once every year, possibly. With the vPro and the 965 [chipset] series, it's got longevity. It's got at least two years, and they love it. Plus 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, that's 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 getting in that aspect of it, 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.

CRN: What is the average cost of a vPro system?

Sanchez: Well, you've got to figure it's not that much more than what we're selling.

Bohman: It's at most a $20 premium, because all it is is hardware on the board.

Sanchez: All it is is a newer motherboard, which is maybe $10, $15 more.

Bohman: 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.

CRN: Have you looked at implementing the next-generation vPro platform?

Sanchez: We're looking into it, definitely looking into it. At this point, I can't say yes or no.

Bohman: We're very much in our infancy. We're very excited about it, but we, unlike my peers here, don't have any experience with remote managed services. Our idea of managed services is we'll pay you a visit quarterly or monthly, or whatever is appropriate.

Taylor: You can even predict failures. We've sent customers disk drives, saying, "This is for slot 4, shelf 6, it's going to fail sometime in the next two weeks, just thought we'd let you know." [Laughs] Our costs of service decrease dramatically.

CRN: How important is it that this sort of technology be advanced on the server platform and, then, on the mobile platform?

Taylor: Critical. Until the channel gets a handle on the infrastructure, we're forced to play on the periphery and we are perceived as whitebox builders; we are competing on price alone. When we can get into the storage side of things, the servers, networking and then, of course, the periphery, we own these 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's out. 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 for the infrastructure to sell more servers as a solution vs. just charging more for a laptop. No, 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 to the enterprise, to the office, it's also to the laptop guys, the road warriors. So now, I'm selling SAN, a really power server and a laptop, and maybe making an extra five points.

Taylor: Now we're not just a bunch of geeks offering the next whitebox.

NEXT: The conversation shifts to how Intel will increase its support for more whitebook sales

With the transition from desktops to notebooks at the client hardware level gaining momentum, Intel remains committed to finding ways to extend its Verified by Intel initiative for supporting more whitebook sales. The conversation probed for a progress report as well as what custom builders need to increase their influence in this important segment.

CRN: Can you give us feedback on your whitebook efforts and things you need to happen to make more happen here?

Bohman: Probably the biggest advantage that VBI has brought to the table is the validity is 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.

CRN: Where is it helping you win the game?

Bohman: Well, getting in the game is step one to winning, period. You win if you get in. Because 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. Mobile led the way to us losing all their client business. So, if you get into the game, in my opinion, you've take the first step toward winning.

CRN: Where have you had success in winning?

Bohman: 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.

You have to shift with the industry. You can't sit and complain about the pricing all the time, because that's not going to get you anywhere. You've got to think of different ways to sell these. Like I mentioned before, we own school districts and we have to keep these guys happy. So we need to be creative in how we sell these to keep them happy -- even if I have to throw on an extra year's warranty, instead of a three-year to a four-year. You know, things like that. And we can do things like that with VBI and the relationship with Intel, as well.

NEXT: When Vista will make an impact on the advisers' businesses.

Finally, the advisers shared their thoughts about Vista, the latest Microsoft operating system, a release that has yet to have a meaningful impact on their business and is not likely to do so until next year.

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, you know. 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.

Taylor: It's more than the card -- it's the memory.

CRN: But isn't that the goal in a way, to get the value of the PC up higher?

Bohman: In a lot of ways, it's 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 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 has been 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 set up and 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. As we talked before, it's the hardware that needs to be set perfectly. What we're recommending right now is at least a gig of memory, if not two, if they're going to be deploying Vista within three years.

Taylor: We're certainly seeing the same thing in the industrial segment. The investment that they have now is something they'll carry forward with 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.