Intel Channel Chief: Intel To Ramp Up Channel Spending By 30 Percent This Year

Intel plans to increase channel spending by 30 percent in its budget for 2011 as it seeks to reassure system builder partners of its commitment to them while expanding its presence in the ODM channel.

However, system integrators won't see a 30 percent increase in spending from Intel, according to Steve Dallman, vice president of Intel's Sales and Marketing Group. Instead, Intel will broaden its investments to its partners in embedded markets under its membership 2011 plan.

"Intel is doing integration and eventually we'll do some embedded things, and we want to include all of that in membership 2011," Dallman said Monday in an interview with CRN at Intel Solutions Summit 2011 in Las Vegas. "We did not take away from our integration guys. We're just not growing as fast vertically, we're moving horizontally."

Intel is looking to dispel any rumblings about channel conflict or Intel de-emphasizing traditional integrators and system builders due to disruption from emerging mobile device segments.

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"One of our concerns is our system builders feeling that 'Intel is not focusing on us anymore,'" he said. "Intel has been more focused on them consistently over the last ten or fifteen years than other suppliers and they worry about us dropping them."

James Huang, product marketing manager at AMAX, a Fremont, Calif.-based system builder and long-time Intel partner, has seen details of Intel's upcoming technology as it relates to the channel.

"We're excited about the new products and technologies that Intel will launch in the next few quarters," Huang said. "We'll be integrating them into our own solutions for corporate, education, and government environments."

Huang said Intel's partners were encouraged to hear of Intel's additional investments in the channel this year. "All the newly added resources will greatly help us to reach out to new markets and further penetrate the markets we're currently in with Intel-based solutions," he said. "We're looking forward to seeing more details on these resources and how we can integrate them into our marketing campaigns and products."

Dallman said Intel's channel revenue in the enthusiast market grew 60 percent in 2010. Dallman also said Intel last year sold more through ODMs than through distributors as a result of the emergence of the netbook PC category, which he said created a different distribution channel from ODMs to end users worldwide and spawned additional sub-distribution channels.

"Look how many ODMs are at these events, compared to the hard drive and monitor guys you used to see," Dallman said. "That's why we need to make these changes to our channel program this year; it’s a whole new ecosystem with ODMs."

Next: Intel's ODM Strategy

Dallman said Intel is showing distributors its specific figures and details regarding the unified Intel Technology Provider channel program that launched on Monday at ISS. Resellers were able to take netbook products and distribute them internationally with success, although according to Dallman, Intel did not do as well recently selling notebooks through the channel as it did selling netbooks, nor did Intel achieve its targets for channel sales in the mobile space in 2010.

"Other distribution channels for products with a different value proposition have taken over some of that volume and it would be a good idea to start engaging these guys," Dallman said. "Having Atom running on the netbook was a wonderful thing."

Dallman said Intel has put together a much healthier ODM ecosystem in Taiwan and China in particular, and that Intel will now try to sell its products across that ecosystem. "As devices get smaller, the whole goal is to develop a stronger ODM ecosystem that supports the channel," he said. "One of the other areas of investment is enabling dollars to work with those OEMs on SKUs that the channel requested from Intel rather than Intel telling them what to sell."

Asked whether channel partners have embraced Intel's Atom products to this point, Dallmam pointed out that Intel's Atom line extends to a variety of device categories said that the channel accounts for 66 percent of Intel's global entry-level desktop business. He said that Intel's North American channel partners have been able to use entry-level desktops for vertical markets such as digital signage, which require relatively little processing power and low power consumption.

Meanwhile, he said Intel's channel activities are trending toward rural areas of the world, where partners are becoming local providers and earning enough to achieve Platinum-level Intel Technology Provider status by selling lower-end Atom-based products.

"We're seeing high-density innovative products, some that are partially integrated and some that are not," Dallman said. "We have all-in-ones that look like PC desktop models right now, we're going to do well on tablets, and we're going to do much better on notebooks as we can either sell through someone else or do local integration."

Next: Channel Opportunities In Mobile

In addition, Dallman said that enabling tablet technology is going to involve software development more than hardware-based innovation. He said that a lot of work remains to be done to offer optimized hardware for the tablet market.

"Mobile stuff is more of a hardware play," Dallman said. "Tablets will be turned into scanners, they'll be used for commercial applications, and they'll be mounted on a wall. It's going to change everything."

One area where Dallman was significantly less optimistic in terms of channel opportunity is the emergence of cloud-based solutions. Dallman says the cloud offers opportunities to corporate and high-performance computing segments and creates opportunities from a server and services standpoint.

"I just don't know how big of an involvement for the rank-and-file in the channel there is. The cloud is going to be a services business, its part of what we call the 'consumerization of IT.'"

Dallman was asked about Intel's commitment to the open-source MeeGo OS, which it developed jointly with Nokia, and which Nokia officially pushed to the margins of its platform strategy in favor of Windows Phone 8. "It is the policy of this corporation that every OS run best on Intel architecture and we're still acting based on that policy," Dallman said. "Sometimes we've developed our architecture for platforms that no one ever bought."