Re: "Essentially they are going to sell direct as I understood it and bypass the traditional disti who in the CPU side does no design in but simply takes orders. Cut out the middleman and let Intel and the reseller make more money."
Kash,
Could you post the article?
If I could have input into Intel's disty sales channel, here's what I would offer:
1. Target the small/mid-size manufacturers.
2. Be sales/marketing friendly to them, not just the "TOP-TENs"
2. Do so by adding headcount to walk the sidewalks, i.e.increase contact with distys to spread the new image. Maybe the distys aren't promoting Intel products? Gain their mindshare.
2. Have marketing create collateral material for this initiative. Get known as a friendly component supplier in the low-end market space. Create collateral to convey this image.
3. Shrink the booth sizes at tradeshows. Just add headcount (which nearly costs the same!) to reach out to the distys. This will have more impact - reach them.
3. Modify pricing structure which currently is anti-competitive and unfair for the smaller/mid-size firms (i.e. stop making the small firms pay incredibly high premiums.) This not only backfires/hurts Intel's image as being not sales friendly to small/mid-size firms, but puts Intel at risk in the low-end market, as new entrants take force. Increase focus beyond the Top-Tens (i.e. start to focus on eMachines of the world, etc.)
4. Create a channel program, "TopOne," which targets the many smaller/mid-size manufacturers. Encourage them to use Intel parts: give a one-time discount to small/mid-size firms (which is the SAME discount as Compaq/larger firms get) for a first-time only order of up to 10,000 parts, with a minimum order of 500.
AFTER this quota is used, then put the firm back on the traditional pricing schedule, but not before. By charging the mid-size firms extremely high premiums, which is what currently happens, Intel creates an unfair new entrant barrior (i.e. volume). At the end of the day, this unfair new entrant barrior which Intel creates, actually hurts Intel, as these firms go elsewhere. By creating a "TopOne" program, this gives a "window of opportunity" for mid-size firms to use Intel parts at the SAME prices Compaq gets. This program would encourage small/mid-size manufacturers to transition to Intel parts, and would encourage new entrants to use Intel parts. The result: Intel would sell MORE chips and earn MORE revenue at the SAME GM% (after the 10,000 quota is used up.) Enforce program (i.e. to ensure the same company doesn't exceed 10,000) via Corporate Federal Tax ID, which is a unique identifier per corporation.
5. Do joint marketing with the small/mid-size firms, like others do.
6. Consider adding engineering headcount to support disty engineers. A disty engineer might promote the firm which supports him/her best.
7. Lastly, consider the following question:
How could a mid-size firm transition to Intel parts without significantly increasing COGS (due to traditional industry pricing schedules based upon volume)?
Here's the math:
Company ABC buys X parts at a pricing schedule of P. If the firm decides to transition to Intel in steps, it would buy 1/2 X parts from Intel, resulting in a pricing schedule which is kP, where kP >> P.
Just something to consider,
Amy J |
