Q&A: Intel Channel Executives Discuss Where Partners Fit Into The Company's Tightened Data Center, IoT Focus

What does Intel's stronger focus on IoT and data center mean for the channel?

CEO Brian Krzanich in April laid out the company's future as a cloud, data center and connectivity source as it moves away from dependence on the PC market to create lasting value for customers, partners and shareholders, and achieve its mission to lead in a smart, connected world.

Partners at the time applauded the massive changes as necessary for Intel and its partners to capitalize on areas of growth -- most notably data center and IoT -- but felt left in the dark about just where Intel's channel fits into the company's tightened focus on those market segments.

CRN talked to Intel Vice President Maurits Tichelman (far left), who oversees channel sales and marketing, and Intel Director of Reseller Channel Programs Todd Garrigues, about what goals they have for Intel's channel in the coming year. Here are excerpts from the conversation.

Where does the channel fit into Krzanich's vision of the company's future in cloud, data center and connectivity technology, as opposed to the more traditional view of Intel as a PC-focused company?

Tichelman: Intel remains … extremely committed and continues to invest in the channel. There should be absolutely no confusion in terms of Intel's strategy going forward. The role of the channel to me and to Intel is more important going forward than looking backward.

As in the old days we have very clear segmented markets. Looking at IoT and data center, there are many more new business models being developed where Intel technology can be at the core and heart of solutions. But we want to make sure that our channel stays close to us so we can learn from our channel and can keep developing great products, not only for today but for the future.

Talk about the role of channel partners for Intel at this point, particularly in the Internet of Things and data center segments.

Tichelman: If you look at the traditional compute segment, [partners] have been under pressure if they couldn't offer any specific value add or customization.

We have seen many partners evolving in looking at what else they can do with the IT knowledge that they have. We've seen a natural evolution of many of our customers expanding their capabilities and going into embedded compute areas, and embedded compute to IoT is a very natural evolution.

This is encouraging to us as a channel organization that this strategy will potentially boost and demonstrate the potential of the channel.

What opportunities are there for partners right now in Intel's data center segment?

Tichelman: In the data center segment… customization is an ever-growing need for partners deploying or installing data center solutions. Look at cloud service providers or HPC [high-performance computing]: Clearly that customization and optimization … continues to be a driving force, which is obviously a great play for us as channel advocates.

I think we have a wide variety of partners that are engaged. The partners who are building out network solutions and are selling servers have clearly evolved into becoming data center experts or are moving into areas like HPC or cloud expertise. That is the evolution we see in [partners whose] expertise has been growing exponentially.

Another part of Krzanich's vision for Intel's future is becoming more of a cloud-based company - what are you seeing with channel partners providing cloud capabilities and services?

Tichelman: In terms of channel partners providing cloud capabilities and services, we looked at the overall channel and what partners are doing, and the majority of those today – over 70 percent of our partners are offering managed services. That is one key indicator that strengthens the belief that the channel is essential to the overall data center build out. What is new, but unsurprising, is more than 65 percent of our partners are saying today that they are offering cloud capabilities to their customers. On the one hand it's not surprising, but on the other hand it's very encouraging that the majority of our partners continue to evolve and tap into those new opportunities.

One way partners are tapping into cloud and data center opportunities is through HPC and cloud specialty benefits, which Intel launched over the past year to give recognition to, and reward, partners who meet certain requirements in those segments.

Tichelman: [For] HPC specialty benefits, which we launched last year, we now have over 30 partners who have qualified as HPC specialists. They were already in this segment, and now they want to get to the next level and are hungry for our expertise.

At ISS [Intel Solutions Summit] we announced the cloud specialty benefits and we had around 25 to 30 partners who were hitting the criteria to become cloud specialists within weeks of the launch. We clearly tapped into an opportunity where our partner base was focused and we were adding more tools and benefits to make them more successful. For me, what's most important is the feedback we get from those partners - they appreciate getting more benefits from Intel.

The Internet of Things [IoT] is another large part of Intel's future – can you talk about partner opportunities in this segment?

Tichelman: If I look at all the partners we deal with across the globe, in our Intel Technology Provider program, we have roughly 150,000 partners. We did a survey at the end of last year and found that 25,000 of the partners stated that they are already involved in some shape or form in the IoT business.

When you start delivering and implementing IoT, there is a lot of customization required to put the nuts and bolts together to the configuration for that smart building, for that transportation solution, for that home security solution. That's why the channel is perfectly suited for IoT – that implementation is going to require the channel's local knowledge, service and support [capabilities].

Intel's first-quarter earnings report revealed that the company's Internet of Things segment grew 22 percent year-over-year – but would you call it an area of growth for channel partners?

Tichelman: When people ask what IoT means for the channel, I think it's a tremendous opportunity for growth. The more building blocks and solutions we can offer for our partners, the more channel partners will start working with Intel with more depth than just looking at Intel as a key provider of components.

Do you want more channel partners to get involved in the Internet of Things?

Tichelman: Our objective is to make sure we are activating the partners in the IoT space with Intel-based technology. Does that mean I need a [specific] number of [partners] who need to sell IoT? Not necessarily. We clearly have our revenue goals for the channel, and we are forecasting growth versus last year in our channel across all these segments.

Do we quantify how many customers are currently buying IoT and will buy it next year? We know that customer base is expanding but we can't define the number of customers buying IoT because a lot are buying products from us that aren't necessarily qualified as IoT products. I care more about whether partners are capable of selling IoT and if we can get them [better] trained in the specialty track, and [whether] they continue to value what we are offering to them.

So what would you say your specific goal is for IoT in terms of Intel's channel?

Garrigues: We've been talking locally about what our next steps are around IoT. For North America, one thing on my mind as a goal is to make sure we are enabling more of our IT channel partners to pursue these opportunities. We believe they have a near-term opportunity. Most of our resellers in North America are providing IT services, whether it's data center or client [compute] centric, as they've evolved over the years to embrace the cloud and offer a broader spectrum of services. So the near term opportunity is that they look at the operational side of those enterprises … and look at new opportunities IoT provides for their customers.

My goal is to expose more partners to those opportunities, help match-make where appropriate, and see what those opportunities are. We believe this is a real opportunity for our IT reseller-centric channel.

What about the client compute segment? Are there still areas where partners can profit, despite the stagnant PC market forecast?

Tichelman: We launched our latest Broadwell Extreme Edition [processor] last month… that is another great ignition for inspiring the enthusiast segment [within the client compute market]. The feedback from the gaming community is always exciting.

I wouldn't say I'm bullish, but I am always very optimistic about this segment, where the need for more power used to always be a necessity. In that segment, we've got high expectations of solid growth, and the majority of this segment is very channel-oriented, so customization is a big deal and the refresh rate is an area of excitement. It's a very healthy, great growth-potential segment where a lot of things are happening.

A survey revealed during Intel's Solutions Summit that more than 70 percent of Intel partners today offer managed services. What does this mean for the future of Intel's channel program?

Garrigues: If you go back a year or more, when Intel started getting more articulate around managed services, until that point we'd had a focus on managed services in helping enable client-based solutions. So we had a good relationship with ISVs that called into that market [such as Kaseya and Continuum].

So we were engaged with one part of our business for managed services, but it really wasn't mainstream with our partner-facing effort and that was a gap on our side in North America. We brought those things together the past two years and continue to make them more efficient.

What is the spectrum of partners who offer managed services – are these partners also involved in traditional client compute services, or are they more data center focused?

Garrigues: From an Intel perspective, I want to make sure we showcase our technology where it makes sense, and on our revenue and margin opportunities where it makes sense. But if you look at the channel, it's a diverse base. A certain percentage of the channel [that offers] managed services are dedicated custom [system] builders. Whether they are in the data center or custom building for the gaming/enthusiast segment, managed services are their primary business. Some partners are managing not just client, but data center and managed infrastructure, or digital signage to manage retail environments. So there is overlap in building and reselling, and offering IT service breaks, hosting services, and other managed services.

Talk about software defined infrastructure [SDI] and the opportunities there for channel partners right now.

Garrigues: We're spending a lot of time talking about SDI and the opportunities that presents for our partners to expand their businesses. As a growth opportunity we think it will continue driving data center growth with the partners that are already engaged and have a business [that is] focused on [the] data center. The ability to then move beyond virtualizing the servers to get into the networking and storage aspects of the enterprise is a very good opportunity for the channel to continue driving growth in the SMB and mid-tier enterprise. We're excited about the opportunity there.