We stabilized product prices to combat slowdown

Dallman has seen the channel grow from box pushers to organizations that

now build futuristic systems. He talks about why Intel continues to invest in

channels

Has there been a dip in partner membership in your network?



We roughly have two lakh partners in our channel membership programs

currently. Of this number, over 55,000 individual partners have been buying from

us regularly and consistently, over the past few years. Due to the slowdown, on

a global level, the purchases of a couple of thousand partners from us dipped.

This could also be because they were selling off their existing inventory to

save cash and keep their business profitable.

How has Intel helped its channel during the recent economic slowdown?



Q4 2008-09 was when the market underwent a panic mode and there was a

phenomenal amount of negativity. It came down to a level where channel purchases

began drying up.

At that time, we stepped in to stabilize the situation by stabilizing the

prices of our products in the market. We came out with credit programs for our

distributors so that they could continue to offer credit to the channel, which

was really successful. We have been very sensitive to the needs of the channel

and our sales figures indicate that we have established a baseline and are

starting on top of that baseline. The channel is responding very favorably to

that.

Have these steps been taken only because of the slowdown?



We work in steps to help the channel ecosystem depending on the need of the

market. On a regular basis, when we announce a new product line, we ensure that

our distributors have inventory to quickly push it into the market. So with the

Xeon 5500, before we sold a single unit, we had over 25,000 of these CPUs with

our distribution channel in the main countries.

This aside, we also ensure that it's easier to get our products into the

market. Our Enterprise Product System Division ensures that there are at least

five to seven motherboards ready in the distribution inventory, all set to be

shipped when the product is launched.

We also put together technical solution training programs where we usually

focus on the top technologies in each location and fly them in to give our

partners hands-on training. We give them the chassis, board, CPU and sometimes

even software. Then the partners are trained on how to integrate it, and how to

get maximum performance from the system.

We are probably the only company in the world which does not build systems

but still goes to that level of training for the channel.

What are some of the larger initiatives undertaken by Intel in the past

few years?



In the past couple of years, there have been three very large initiatives

undertaken at Intel. One was to convert our business over to the 45 nanometer

technology. One of the goals we had was to see how quickly we could take this

product to the market as it improved our competitiveness.

The next big initiative was the QuadCore, and here too the channel sale is

much higher than the direct accounts. This is because partners sell face-to-face

and talk about the features and advantages, and are able to demonstrate the

benefits of these products.

How does the channel sale compare to your direct customer account

business?



We've noticed that the channel could make the transition to the new products

and technologies faster. The percentage of 45nm units sold by the channel is

larger than that of our direct OEM sales, which is very significant.

And our partners are not selling just desktops. They are selling servers as

well. The total number of servers sold by the channel is much higher than our

biggest server vendor customer.

Even with the Nehalem processor, the channel not only shipped a higher

percentage of the products than all our direct customers put together, but they

shipped a higher number of units as well. In fact, during this technology

transition over the first six months, the channel shipped almost twice the

number of units as our direct customers.

Vinita Bhatia



vinitavs@cybermedia.co.in