Promising better margins for partners and a chance to build their brand and develop closer relationships with their customers, Intel (NASDAQ: INTC ) is set to launch a new build to order (BTO) notebook program for the channel that will look to succeed where past programs, such as Verified by Intel, could not.
A key difference this time is that Intel will be building, supporting and warrantying its own motherboard, Rich Creek 2 (RC2). Standard components are also being sourced from North American manufacturers to ensure timely availability, a key consideration given past programs have faltered as the first priority of overseas manufacturers was the needs of the tier vendors, such as HP and Dell.
One of Intel’s launch partners for RC2 is value-added distributor ASI Computer Technologies (Canada) Corp. Speaking at ASI’s recent Tech Expo 2008 in Richmond Hill, Ont., Todd Garrigues, North American channel manager for Intel, said the vendor has big plans for RC2.
“We’re moving slower than we did with previous generations because we want to get this right,” said Garrigues. “We take this very seriously. We want builders to be successful building notebooks and in the mobile space.”
The program is expected to be available to Canadian partners through ASI later this month as either a bare-bones or a fully integrated product. The look will be generic with a black, gray and silver design and the ability to add customized panels, similar to past BTO designs.
Ken Tibbils, vice-president of marketing for ASI, said RC2 offers a good opportunity for partners to move deeper into the mobile space, and develop a higher-margin services business.
In the past, developing a strong services model and value proposition for BTO notebooks has been difficult due to the uncertainty of the availability of replacement components. To address this, RC2 includes component standards so any standard-compliant component from any manufacturer can be swapped-in.
“It’s a channel product, warrantied and supported by the channel,” said Tibbils.
He added RC2 is the only BTO solution with Intel’s vPro technology, offering additional support opportunities for partners, and also comes with a warranty on the motherboard, a three-year warranty option, and extended warranties from ASI.
“You can wrap your services and support around it, because you know you can get the parts to do the repairs,” said Tibbils. “I have to have the parts to put the bare bones together, so I have to have the spare parts available.”
Newman Ho, sales manager with ASI Canada in Markham, Ont., said partners should keep tier one notebooks as part of their portfolio, but BTOs can form a key part of their solution mix.
“The BTOs will allow them to promote their brand names, their own corporate identities, rather than promoting a brand your customers can buy from their competition,” said Ho. “If someone is looking for a $699 solution, don’t even bother looking at the BTO solution.”
Where BTOs can play a role is in the $1,500 category, for businesses looking for a robust and customized notebook solution with strong local support. While a partner might only make $5 on a $699 tier one notebook, Ho said partners can realize 10 to 25 points of margin through accessory sales and by integrating services and warranty support into a BTO sale.
Not only can a partner offer warranty support at a better margin than an HP or a Dell, Ho says in many regional markets partners can also offer a higher level of service that customers will appreciate. And each support call is an opportunity for the partner to extend their trusted relationship with the customer, and look for additional sales opportunities.
A solution provider in Cavan, Ont., Computer Solutions “Plus” sells tier one notebooks today, said Wayne Blaby, and while they’re not in the BTO space currently they will be looking at RC2.
“We’d like to get into the build your own, but the programs in the past, like Verified by Intel, just didn’t have product that I was comfortable selling,” said Blaby, nothing that past shells just looked “cheap.”
Another problem with past programs, Blaby said, is that the warranty began the day he bought the product. It could sit on his shelf for two months, and that’s lost warranty time for the customer, whereas with an Acer or Toshiba notebook the warranty doesn’t start until he registers the customer.
“The fact that Intel is going to manufacture their own motherboards is a big thing, the three-year warranty on the motherboard is a big thing, and advanced product replacement for any of the Intel product dealers is a big thing,” said Blaby.
It’s still clearly going to be a pricer solution than an entry-level HP or Acer notebook, noted Blaby, so it will have to be targeted to a business customer. He’s still looking for more information on how he can monetize on BTO and what he can add, noting when he sells a tier one notebook he doesn’t just ship the box, but does a lot of customization and software instillation.
His key concern though, he said, is if replacement parts will still be available two to three years down the road.
“We don’t want this program to fail like the Verified by Intel and the previous ones, because if it fails and we’ve put these (notebooks) into the marketplace, is there going to be a motherboard available in four years?” said Blaby. “I think there will be. We’ve had no problems with the Intel guys, but we’ll have to see.”