Q&A: Intel Channel Chief Talks Stimulus Strategy

Intel has long pushed for steady public investment in long-term education and IT infrastructure projects. Now, with federal stimulus money beginning to arrive in state and local coffers, the Santa Clara, Calif.-based chip giant is fine-tuning its strategy for participating in IT-focused projects to digitalize health-care records, spread wireless broadband coverage across the country, develop a "smart" power grid and more.

Intel also hopes to bring its partner channel along for the ride, says Steve Dallman, vice president of Intel's Sales and Marketing Group and general manager of its Worldwide Reseller Channel Organization. Channelweb.com caught up with Dallman following his organization's Intel Solutions Summit held last month in Las Vegas, where the company hosted a stimulus panel for the purpose of educating partners on opportunities and strategies for participating in a big new round of public sector IT spending.

We wanted to talk to you about Intel's strategy for the stimulus spending that's starting to shake loose, because at last month's Intel Solution Summit in Las Vegas, your organization put on a panel of experts, including Paul Thomas, Intel's chief economist, to specifically talk about the stimulus and what your channel partners can to do to take advantage of it.

Well, it was early in the game, getting some ideas and directions to look at.

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So how did that panel go? The partners I've talked to say they really got a lot out of it. I also talked to one of the guys you had on it, Paul Taylor from the Center for Digital Government. He's an expert in the field of procurement processes and about exactly where this stimulus money is going to be going, and he had some very interesting things to say, but let me just ask you, how do you think Intel partners can take advantage of this stuff?

I think the panel went really, really well. The Intel economist was pretty interesting in that he was able to talk more toward the kinds of products that the premier providers build. He was also global in his talk and he was a little more encompassing to Latin America. We had a lot of Latin American guys there.

Paul [Taylor] was very much more focused on [Washington] D.C. and what was being done there, and on all the pushing and pulling among the groups there to get this thing going right. And he said, whether it's the right way to spend the money or the wrong way to spend the money, they're going to spend it and the result's going to be that at some point in time it's going to pick up the economy. So we need to take this opportunity to spend it wisely and do things that can build on our future.

And that's kind of where I am and where our company, Intel, is on this kind of thing. For the last decade, Intel's been talking about productivity. I think our look at this is that there are some things in this stimulus package that can really build a long-lasting infrastructure. So if this is something the country needs to do and something the country has decided to do, let's go do it the right way and take care of education and take care of broadband. Let's try to figure out a way that we can use things like smart servers to reduce the power consumption of the country and have something long-lasting.

But we're definitely trying to stay away from the 'head-in-the-trough' attitude that you might see some people having. Because there could be some real long-lasting good that goes beyond just fixing a current billing issue. We'd love to see education flourish. We think education flourishing will help our business and our partners' businesses. Gosh, we're just praying that we see more engineers coming out of our universities.

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Clearly there's the aspect to the stimulus that's about "shovel-ready" projects and getting some jobs going, stimulate the economy in the short-term, all that stuff. But as you say, there's the need for long-term infrastructure improvements and in education. There's also some scientific research aspects to the stimulus package. And sort of selfishly from the channel perspective, I see the scientific research stuff and I think, "High-end workstations, you should be building them." Are there specific areas like that where Intel sees its partner channel, working with its partner channel to put together bids and win them and then deliver on those bids?

So that's a great question. I was in [Washington] D.C. for a week a couple of weeks ago. And it was interesting to hear the table talk around there. One of the things that I think our partners are really going to be able to take advantage of, whether they're integrating and building systems or just reselling systems like a historic solution provider -- the first thing, and I think Paul brought this up in his talk, is that this money is not going to be spent in a new way here. It's going to be spent in the ways that are already in place.

So the first benefactors of some of the spending are going to be people who are already doing businesses with states and local governments and are already plugged in. If we had to recreate a whole new way of doing things, it would take two years before the dollars started making their way into the economy and creating jobs and solving problems. So a tremendous number of our partners who integrate and also resell our [validated] machines are very plugged into the state and local governments, not so much into federal.

And state and local has a long list of projects that they'd like to spend money on but that they've cut back. A great example is in some of the Midwestern states that I've been visiting, that when oil was hitting $100 a barrel, a lot of schools postponed bringing computers in for the kids, or getting new software or making the school wireless, because they had to divert that money to pay for fuel. But now they'll be able to get back to this, and do what they had planned to do originally.

I think our channel partners are in a terrific position, this summer, which is usually the installing period for schools, to really take advantage of that.

Another area where our partners are already plugged into, that seems to be fast tracking, is health care, a lot of it in electronic health-care records. There's some things they're doing with Medicare, with $30 billion in Medicare and Medicaid in incentive payments where if you're the doctor you have to have electronic records. If Medicare does that -- and I'm getting close to the point in time where I'm going to rely on Medicare for health -- a lot of that $30 billion is going to go into development to get that productivity and into the equipment and hardware to make it happen in an automated fashion.

I think there will just be staggering change in how health records are managed and put in place. It would be a tremendous savings. This could be the first real, true productivity innovation that's come to the medical industry in as long as any of us can remember. That industry's been growing at two or three times inflation for I don't know how long. And I think our channel partners are in a terrific position to help with that.

And to touch on Nehalem and the latest technology from Intel and your partners as well, the energy-efficiency improvements, there's a whole green IT aspect to these government IT projects as well. There's certain environmental standards that have to be met. Do you see Intel and your partners maybe being able to sell more of the very newest technology in the process of doing these stimulus projects?

Yeah, this seems to happen every few years. We kind of got the world caught up on computers when Y2K showed up, right? And I'm not sure that the current energy situation and finally the focus that American industry has on it, and that politicians have on it and what people are willing to pay for, that we're not going into maybe "Y-Green-K," or something like that.

When we came out with Nehalem, because of the smart server that we're using, you can take a quad core and it can bring on or shut down those cores or throttle down the frequency rate depending on the workload that's put on there, and it has a tremendously reduced idle state. So you can look at the number of servers that you can retire and replace with one of these new products. And then you don't need as much software licensing because you're running it on one machine instead of nine.

So with the power you're saving, the ROI to industry is running about eight months or so. Now, I kind of looked at that and thought that was a fairly aggressive statement. But it's been my experience seeing some of the customers go talk to large corporations about these servers and what they can do, and the IT managers aren't arguing with any of these points. They're kind of saying, "Absolutely."