Intel restructuring process - no worry for channels

NEW DELHI

SEPTEMBER 9, 2006

With Intel announcing curtailing of 10,500 jobs of its employees worldwide the
Indian channel fraternity is speculating that the good days are ahead for the
brand, which has been losing market share to near archrival AMD. Partners
believe that the job layoffs declaration by Intel will rather prove beneficial
for the company that is already cluttered with so many people at the same job.

As per the statement released by Santa Clara-based company most of the job
cuts will happen in management, marketing and information technology ranks.
Intel's employee population will decline to approximately 95,000 by the end of
this year, resulting from workforce reductions, attrition and previously
announced actions.

In an official statement Paul Otellini, Intel president and chief executive
officer said, "These actions, while difficult, are essential to Intel
becoming a more agile and efficient company, not just for this year or the next,
but for years to come."

As a result of this restructuring process, Intel expects to generate savings
in costs and operating expenses of approximately $2 billion in 2007.  In
2008 the company expects savings from this restructuring to grow to
approximately $3 billion annually.  Intel witnessed a lull phase ever since
it announced reduction of its processor prices by 40 % in July this year, since
Intel's fast moving, low configuration skews were missing from the market that
the company has decided to phase out completely.

On the other hand job layoffs decision by the chipmaker has percolated down
the channel community with a positive sentiment. "I doubt if Intel's
decision to reduce staff will have any impact on our business or vendor's
business in particular. Moreover, this decision will cut down the unnecessary
flab of the company since the job cuts will be in the development group and not
precisely in the sales and marketing team. Intel's poor performance on the stock
market during the last couple of weeks might have pressurized the top management
of the company to take this unexpected step," said one of the Intel's Delhi
based reseller not willing to be named.

Vikas Bhatia, Intel's Premier partner from Jaipur said, "Jobs layoff
announcement by Intel will not only eliminate non performing units from the
company but will send a signal to existing staff to do well. I believe this
decision by Intel will motivate its employees to do well to retain their
positions that is very much in company's own favour."

Replicating the similar belief Saket Kapur one of the Intel Premium partners
said, "This step by Intel is perhaps an effort to wipe out bureaucracy from
company's operations that will certainly bring in more efficiency in its
systems. By cutting off the unnecessary flab the company is trying to pull up
its socks to reserve its sinking profits and market share." Kapur added,
"After cola war we are witnessing microprocessors war in the country in
which the ultimate profit would be of end customer who will get best of the
breed products in affordable prices."

Consequently, it could be concluded that channels are not afraid of such
announcements by vendor companies that have very miniscule effect on their
businesses. Rather partners are in full agreement with Intel's belief that
non-performing units will not be promoted and deserve to be wiped out.