Intel is slashing its iconic "Intel Inside" program – a major source of funding for the past two decades aimed at helping OEMs and channel partners drive PC sales growth – by anywhere from 40 percent to 60 percent, according to multiple industry sources briefed on the cuts.
Sources, who did not want to be identified, said the cuts are going to reverberate through the industry, ranging from potential PC price increases from OEMs to cutbacks in marketing from systems builders and solution providers.
"We're hearing that major cuts are coming throughout Intel's marketing and channel programs," said a top executive for a major Intel partner, who has been informed of the cuts. "The marketing funds have been moved to other groups within Intel that aren’t channel-specific or PC-centric. The funds will now go towards driving the business in data center, giving more to the data side of the house instead of compute. A lot of dollars are moving to other areas or kept in house to improve Intel’s profit and margins."
Intel confirmed to CRN changes to the "Intel Inside" program but did not specify or confirm the amount of the cuts at this time.
"While we are evolving how we co-market with our OEM customers, the Intel Inside brand continues to be an important symbol of performance and quality," said an Intel spokesperson. "The changes we are making are intended to help customers more efficiently and effectively market with Intel, while helping us market with more precision in alignment with Intel's business priorities."
Through "Intel Inside," Intel processors became a household name. The 26-year-old-program, one of the world’s largest co-operative marketing programs, offers compensation and funding incentives for channel partners and OEMs to market and sell the Intel brand on products – including PCs, servers, tablets, workstations and connected consumer devices.
Intel has used the marketing funds for decades as a competitive weapon to dominate the processor business. Major OEMs and partners have come to rely on the funds as an integral part of their sales and marketing plans year after year.
The "Intel Inside" program debuted in 1991 and, by mid-1997, 1,500 OEMs were participating in the program, according to an AdAge encyclopedia listing.
"This most likely is going to result in price increases from the OEMs," said the CEO of a major solution provider, who did not want to be identified. "It's unfortunate that it is happening at a time when component costs are at the highest they have been in years. It doesn't bode well for commercial customers with new RFPs [requests for proposal] for PC purchases."
The CEO said he expects the funding cut to have a "ripple effect" across the entire Intel ecosystem. "Intel is a piece of everything we do," he said. "When you have a cut in funding like this with a vendor that has 90 percent share of the PC and server market, it is going to have major ramifications for OEMs, partners and customers. This is the kind of crap that rolls downhill. Intel is facing major cost challenges. It's disappointing, but it's not surprising."