Intel Partners Weigh In On Formation Of Tablet And Netbook Group

Intel on Wednesday said it is starting a new business unit dedicated to mobile devices called the "Netbook and Tablet Group."

While Intel did not officially announce the creation of the new unit -- which is unusual -- an Intel spokesperson on Wednesday confirmed the formation of the group and said that other business units within Intel will not be affected.

"Intel has formed a business unit focused on the continued growth and success of Intel Atom processor-based companion devices, lead by Doug Davis, the current head of Intel’s embedded and communications group," the spokesperson told CRN.

"The goal of this group will be to maximize the synergies between netbook and tablet Atom product line development, delivering innovative form factors and exciting new user experiences that integrate the platform software and hardware into both product segments," the spokesperson said.

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According to a blog post from The New York Times on Wednesday, Intel formed the Netbook and Tablet Group in response to increasing competition in the mobile space.

’Netbook shipments will be heading north of 100 million and we’ll all soon find out what kind of market potential there is for tablets and these increasingly popular hybrid designs,’ Bill Kircos, a spokesperson for Intel said, according to The New York Times . ’It makes sense for us to sharpen our focus on these friends of the PC, and Doug’s experience running a similar and very successful embedded division makes him the right guy to lead the group.’

Some Intel channel partners believe this could be a positive sign that will increase opportunities to create solutions.

"I am very pleased to see Intel focus on this growing tablet segment," said Erik Stromquist, COO of Computer Technology Link, a Portland, Ore.-based solution provider. "They should have formed this group two years ago. However, I am confident it will provide a benefit to the worldwide channel."

Whether or not Intel's reseller partners benefit from the new platform depends as much on the level of flexibility and opportunity for innovation that Intel provides as it does on the technology itself.

"I believe that it’s essential for Intel to strike the right balance here so that as a system builder, we still have the opportunity to add value and help to design new platforms," said Andrew Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based system builder.

Next: System Builder Concerns

"We look for Intel, and other manufacturers, to provide us with the tools and building blocks so that we can innovate and break open new markets for this technology. My only concern would be if Intel were to offer near-complete solutions," Kretzer said. "Would that be the case, we would shy away from it like the plague."

Another system builder is concerned that by offering increasingly complete solutions, Intel could be creating channel conflict and reducing, rather than expanding, opportunities for custom builders.

"As these technologies progress and become highly integrated the custom system builder will more than likely have come to that fork in the road -- where do they go now -- for what’s left to build? All the integration will have to be done at the factory level," said Tim Ulmen, principal at Midwest IT solutions group, a Wichita, Kan.-based system builder.

There will still perhaps be opportunities left for VARs from a software configuration standpoint to generate revenue, but for the custom system builders revenue opportunities from this particular market will be minuscule, Ulmen said. "I truly believe this new netbook and tablet group initiative is where Intel focuses less on the custom system builder channel and hands that portion of business opportunities to retailers and e-tailers who will become the main 'channel partners' in the distribution model of Intel’s mobile product line," he said.

Steve Brown, vice president of sales and business development at Blue Hawk Networks, a Campbell, Calif.-based system builder, isn't impressed with Intel's new business unit and says the company is playing catch-up in this market.

"I don't really think it's ground-breaking, frankly," he said. "It makes sense that Intel has to form the group to focus on a burgeoning market like they did with Xeon and Pentium, but I'm surprised it's taken so long since the Atom has been an out for some years already.

"Intel has to do this or they're going to lose a ton of market share. They have to go beyond what they're doing today and make different chips for different devices," Brown said. "The problem is that when you get to the mobile world there is more competition, so they need to rev it up and keep the heat down on those little chips."

In tackling the market for tablets, Brown suggested Intel focus on a specific, if somewhat undefined, segment for its processors. "Where they'll do well is in the market for something like the Dell Streak, between netbooks and smartphones, that 7-inch market that's sort of undefined--the in-betweens," Brown said.

Next: Intel's Oak Trail Platform Dell has a great relationship with Intel and is its biggest customer, and if Intel doesn't get into this market, Apple and Lenovo and others are going to dominate, according to Brown. "They have to have a play in the netbook space, period," he said. "

Intel says the new version of the company's popular Atom processor, code-named Oak Trail will be optimized for tablets, along with newer netbooks, and will feature lower power consumption and improved thermodynamics.