Intel, AMD ramp up chip game

As for the performance of Atom products in 2010, Steve Brown, vice president of sales and business development at Blue Hawk Networks, a Campbell, Calif.-based system builder, said he does not expect that particular trend to continue.

“Intel has learned from the lack of success in last year’s go-around,” he said. “Considering both they should fare much better with Sandy Bridge.”

Intel’s partners have noticed the shift in Intel’s strategy toward original design manufacturers. Stromquist said Sandy Bridge has a much better chance at doing well in the microprocessor market compared to previous generations of Intel processors.

“Intel has done a lot of heavy lifting to improve the ODM ecosystem and address the price gap between Tier 1 and channel OEMs,” Stromquist said. “The burden really lies on the channel to innovate and offer competitive solutions to meet the changing market needs.

It’s more than the processor that makes the price. It’s a whole eco- system with the chassis and a whole environment.”

Others see this shift in strategy as a potential source of channel conflict as resellers look to find ways to continue to add value to Intel’s solutions. Todd Swank, vice president of marketing at Nor-Tech,  said that with this new approach, Intel may no longer consider the reseller channel to be relevant.

“What you’re seeing in the marketplace is a switch toward mobile, smaller form-factor devices, so it makes sense to shift toward ODMs,” Swank said.

“The days of guys creating solutions in their shops, and the days of system builders building thousands of client-based PCs in the US are already numbered. It’s over and done with.

Most system builders have had to change their strategy toward providing managed services, cloud solutions or reselling to Tier 1s but selling mobile solutions through the channel? That seems like a dead conversation at this point.”

Swank referred to the events of CES 2011 earlier this month, and the excitement surrounding Android devices. He said Microsoft must feel threatened by the presence of another OS, just as Intel must feel the looming threat of British chip design firm ARM, whose Cortex CPU core architecture is the basis for Apple’s A4 processor as well as Nvidia’s Tegra 2 mobile chipset. Meanwhile, he said channel resellers are feeling the most pressure of anyone in the supply chain.

“You have new players in the arena,” Swank said. “Verizon and Motorola are doing tablets. Nontraditional PC manufacturers are in a space where system builders were just competing with HP, IBM and Dell before. Now they compete with telephone companies and with new solutions. There are opportunities for system builders in this space, absolutely, but the things we’re selling today are very different from five years ago.”

Furthermore, Intel’s Atom-based products may offer system builders and end users additional flexibility, especially the con- figurable Atom processors Intel launched last year, but Dallman said he sees the system builder channel steering away from components and moving more toward designing PC-based solutions.