Intel Says There's No Place Like Home

Intel wants to convince systems integrators, whose margins selling to commercial markets have been steadily shrinking, to focus more on the digital home in 2006. To do so, the No. 1 chipmaker is introducing a number of aggressive partner programs and associated marketing campaigns.

Intel's re-energized push to attract more integrators and VARs is timed with the release of its next-generation multimedia platform, called ViiV. Several systems makers will deliver desktop and notebook systems supporting ViiV's collection of technologies by the end of the first quarter. In concert with the delivery of those systems, company officials promise to make available a range of different services to help consumers and integrators better manage and share digital content.

Intel has already announced it has signed on 40 content- provider partners, which will reportedly make downloadable music, TV programs, games and services available for the upcoming ViiV-compatible systems.

Along with the new hardware, Intel officials also promise to provide engineering support and verification tools to content owners, distributors and device vendors to help deliver Internet-based content services and applications verified to work with PCs using ViiV technologies.

"Margins are getting pretty tight for many box-makers in the traditional business markets, but we think ViiV going into the channel gives them many more opportunities for things like integration services they didn't have before," says Frank Raimondi, strategic channel alliances manager at Intel.

The bare-bones desktop and notebook systems that a number of PC makers are expected to ship will start at roughly $1,500, although fully configured systems bundled with a variety of multimedia hardware could go as high as $7,000. Intel officials say some of its leading systems manufacturers are strongly considering servers aimed at the home market in 2006 as well.

"The ViiV systems at the higher end of the price range are not boxes that you get delivered over an 800 number and are ready to go," Raimondi says. "They will present systems builders with lots of opportunities to partner with home integrators they haven't worked with before."

There are specific and immediate opportunities for the channel to make money in the digital-home market, according to Raimondi. Those include providing services such as display calibration, DVD-filtering services, customized remotes, and software and services, such as voice and various home controls.

Chicago-based Ace Computers, a systems integrator that has sold to the government and education markets, appears to be having some success in making the transition over to the digital-home market.

"If you are a systems builder of PCs for schools, for instance, everything is price, price, price. If you are selling precanned Intel boxes, you are lucky to make $5 a box," says John Samborski, president of Ace Computers. "But with things like home theater, you can do some pretty cool things and offer value-add just through the installation alone."

Ace is presently offering a desktop system configured with 6 TB of memory and anywhere from one to four TV tuners that carry a channel price starting at less than $2,000 up to $7,000, according to Samborski. Despite having little experience in the digital-home market, Samborski says his first engagements have yielded significantly improved profit margins.

Some systems integrators believe the digital-home market holds promise, but the immediate opportunities are tailored to only a select few. To be successful, integrators believe, they need to offer seamlessly bundled solutions right out of the box, something many are not ready to do.

"The home-sales market for a lot of resellers is tough--they aren't oriented to that," says William Carr, president of B3 Computers, a Gwinn, Mich.-based systems builder that sells exclusively through VARs. "Unless you can offer a completely converged solution, which I think ViiV is trying to offer, most integrators do not have enough of a value proposition."

The first ViiV systems coming to market will be fueled by an Intel dual-core processor, containing the company's 945 chip set with built-in Ethernet and wireless support, 5.1 surround sound and Microsoft's Windows XP Media Center Edition. All systems will ship with a remote control and media software that lets users operate the system much like they do a television, according to an Intel spokesman.

Intel officials say the vendor is working hard to ensure that all systems supporting the core ViiV technologies will be compatible with Microsoft's upcoming Vista operating system, the desktop version of which is due out later this year.

More than 230 hardware designs housing ViiV technologies will be delivered by the end of 2006, Intel officials say, ranging from traditional desktop PCs, to PCs that can slide into racks, to notebooks and subnotebooks.

Intel will launch a new home technology-integration certification program by the end of this quarter, and the company hopes to have resellers qualified by the end of next quarter.