Intel: Time Is Right To Be Our Partner

Intel wants its solution provider partners to be part of that former group, says Tom Kilroy, vice president of Intel's reseller channel operations, and it's prepared to increase the support they need to get them there.

"Whether you believe we are coming out of [a recession or we are already out of it or how fast we come out of it, don't worry about it. Use it as an opportunity to get ahead of your competition that is worrying about it, that is staying back on their heels and is being cautious," said Kilroy during a keynote address to several hundred premiere partners who attended the Intel Solutions Summit event in Phoenix. "I guarantee you it's those guys who are going to be caught flat-footed when it upticks. You guys have invested and moved ahead during what I think is a significant transition from an economic standpoint."

Kilroy spent a good portion of the opening of his keynote trying to impress upon partners the importance the channel plays to Intel's corporate strategy, noting that it goes all the way up to the company's highest offices. Two of the examples he cited to demonstrate Intel's commitment to channel partners were Intel CEO Craig Barrett's participation in VARBusiness' March 4 "Craig Barrett And You" cover story and president and COO Paul Otellini's decision to open the Solutions Summit event in person.

"I think it's a pretty interesting scenario that our session this morning was kicked off by Intel president and chief operating officer and our CEO is on the cover of VARBusiness," said Kilroy. "That is a pretty significant message there. The channel is big at Intel."

Kilroy noted that while 2001 was a bad year for the IT industry as a whole, it was also a breakthrough year for Intel's channel partners, who drove record sales in all areas of Intel's business. Their continued performance will ultimately be a deciding factor in the company's success as the market rebounds. "We believe that market segment share as a vendor is won or lost in technology transitions," said Kilroy. "Obviously we are an engineering company, so you guys are our sales force. We need to be joined at the hip here, we need understand what we see, and you need to tell us what you need."

Kilroy outlined a number of key technology areas for Intel and its solution provider partners, including the Internet as the main growth driver; the PC as the centerpiece of the digital world and on-ramp to the Internet; the continued emergence of the mobile and wireless economy; increased growth in servers, particularly for entry- and mid-level solutions; and the increased reliance on connectivity and networking.

"We talked a lot last year about the usage model change where the PC was going to be the center of the digital world, and when you see that channel sales out had unbelievable growth (in 2001), it was only a matter of living up to the expectations that the channel would lead the way in the Pentium 4 ramp," said Kilroy. "The P4 did become the centerpiece of the digital world, and a lot of the digital devices around that accelerate not just device sales for you guys but also services."

And when looking at desktop CPUs, Kilroy said the channel made up just under 40 percent of Intel's revenue in that space last year, up significantly from 28 percent in 2000.

Kilroy also cited VARBusiness' recent State Of The Market 2002 study, which showed that 91 percent of solution providers surveyed are still deploying things like desktops, notebooks and servers, revealing that hardware platforms are still a big business, despite so many reports to the contrary. "The largest component of revenue is still the platform -- 40 percent. That's ahead of networking and software," he said. "It's that platform itself that still makes up a big chunk of revenue and a nice chunk of gross profits. That's another indication that while building a solution and delivering a service is critical, so is the platform, because it is going to enable you to deliver that solution."

While most people consider emerging markets like Latin America and Eastern Europe as the hot spots for growth, Kilroy noted that there is still a lot of business to be had in North America, particularly around Internet buildout. For instance he said research has shown that 40 percent of SMBs in North America still don't have Internet access and of those, close to 90 percent still don't have broadband capability. "The opportunity is in your backyard," he said. "Yes we are investing big in emerging markets because the growth there is going like crazy, but the opportunity right here in your own backyard is very significant."

Looking forward he said the company is going to continue most of the programs it already has to provide tools and support to partners, including things like the popular product reservation tool, cooperative advertising programs, seed kits to get technology into partners' hands, market development funds and expanded technology solutions training. In addition this year the company will take a number of new steps, including enhancing its CCAP program to better fit partners' needs, new initiatives around the government and education vertical solutions, expanded vendor alliance programs and the creation of solutions blueprints for partners.