As a leading provider of foundational technology, Intel is a good source of insight into new IT industry trends. The company prides itself on its role as market educator, and its website serves as veritable trove of expert information on products, architectures, and implementation best practices served up through technical resources for developers and IT operations managers, who can also access community-based peer networking for collaboration on IT challenges and opportunities. But the Intel educational aspiration extends beyond these user groups to include the IT distribution channel, a key asset for an organization that builds R&D for future applications and executes marketing through an extensive and complex array of OEMs, distributors, VARs and integrators.
So what does Intel think the channel needs to know? In a recent “fireside” chat with InsightaaS, David Allen, director of distribution and DMR sales for North America outlined Intel’s vision for the future, a playlist designed to empower the success of this important market conduit, and, by implication, that of Intel itself.
At a very high level, Allen pointed to “The Third Industrial Revolution,” a construct first articulated by Jeremy Rifkin, who argued that the merging of Internet technology and distributed energy generation alone has potential to forestall impending economic collapse. In the Intel schema, this third productive wave (after steam power, after electrification) is narrowed to focus on digital transformation reflected in disruptive trends such as the shared economy (Airbnb, Lyft, etc.) that are driven by “access to” rather than the “buying” of products. Access is key here, as a stand in for the XaaS model, an innovation which Allen argued was a harbinger of new social sharing that will become pervasive in a business context. “Do customers buy new SSD drives, or do they now contract with a service provider for storage?” he asked. “You may not see the level of discrete product purchases that there once was, but what you will see are more options or opportunities that will fit into this new model.”
According to Allen, it’s critical that the channel understand bigger trends like the service delivery model, or changes in the workforce (ex. Gen Y predilection towards startup activity, and millennials that are “born connected”) in order to service demand with new technologies. He defined these as “the SMAC stack”: Social, which is democratizing traditional communications hierarchies; Mobility, which enables work anywhere/anytime and powers new sensored connectivity; Analytics, which allow the filtering of information to enable predictions and support real-time decision-making; and Cloud, which offers access to information for ubiquitous collaboration, and that syncs data and devices. And underpinning this all is the need for security and trust, prerequisites for users to take advantage of these new technologies.
Businesses that ignore these trends do so at their peril, Allen added. Even the IT marketplace is feeling change: Intel research into the performance of traditional and disruptive IT vendors shows that on a revenue basis, these are roughly at par ($460 B in combined annual revenue for IBM, Microsoft, Oracle and SAP and $428 B for disrupters including Amazon, Google and Facebook).
Closely related to SMAC in Intel’s vision is IoT, a concept that relies on analytics and cloud as well as multiple non-personal device connections to the Internet. “In 2013,” Allen explained, “there were 500 million non-personal devices added to the world live network,” an indication of a growth curve that Intel believes is substantial. Allen described IoT as a huge, multi-billion dollar opportunity that the channel must evolve to support as “this is where the money is going” – explaining that a medium-sized VAR may understand where their customers can obtain benefit from IoT and how to create connected device solutions that fit into their customer base, with the support of with case study research and other market materials provided by Intel. “Companies are trying to figure out how to do this, and they are seeking out their technology provider partners for help - this is where that future mode, that future-looking aspect of [Intel’s] business becomes key from the partner’s point of view,” he added. Other “business imperatives” or opportunity areas the channel must understand are cloud, analytics, workplace transformation and the very tangible need for security.
If these elements of “SMAC” are not revolutionary, Intel’s call out of these technologies is a signal to channel providers to get skilled up and develop business models that will allow them to derive revenue from these areas. To facilitate not only education but a partner’s ability “to make this tangible and real,” Intel pursues multiple strategies: it invests in companies that are developing new capabilities, supports sales and marketing innovation by researching market players in order to introduce and facilitate relationships (for example, between an analytics provider and a channel business) and provides programs to help partners develop competencies in emerging technology areas. “In 2015,” Allen noted, “one of the big things we will be driving is what we are calling a ‘knowledge transfer’ initiative, where we can help the channel understand how to grow and become competent in areas like analytics.” Analytics is hard and partners are not yet seeing the demand; however, Allen argued, it becomes a more substantial force in the IT market each year, and channel partners who are “trying to figure out the next big wave” absolutely have to look here as approaches used for Big Data in enterprise accounts increasingly can be applied to “small data” in the SMB space.
Of course the vendor/channel relationship is two way. While Intel is looking to inform channel success, the company is also looking for partners that adopt a winning approach to capitalizing on emerging trends. Described as the “five S’s” - strategy, specialty, skills, solutions and services - this approach may serve as a roadmap for partners as they build presence in cloud, analytics, IoT, etc. “While [resellers] won’t necessarily move away from their traditional generalist business,” Allen explained, “more and more you are going to see people specialize.... We now have so many options, it’s that specialization that will differentiate the partner, who will need to be very good at what they do.” So far, this trend has been more pronounced in the larger US market, though Allen expects to see this emerge soon in Canada as well, as annualized IT growth in specialized or vertical solutions is expected to be much more rapid than in generalized IT (as outlined, for example, in Techaisle’s “15 predictions for 2015” outlook for the SMB channel in 2015).
From an Intel perspective, this kind of channel development is critical: according to Allen, “one of the ways we grow at Intel is by moving the market faster than it would have grown if we were not involved. We help to drive ramps to sell products and services - to help make those imperatives move faster. If we can make analytics more accessible, more deployable, that’s going to move more technology.” Vehicles for this market acceleration include marketing support, the knowledge transfer initiative noted above, and the Technology Provider Partner program, Intel’s primary mechanism for delivering technology and partner training. This consists of three levels - registration, gold and platinum - through which a partner advances based on achievement of training credits as opposed to the purchase of Intel technology, a fact that Allen believes speaks to Intel’s commitment to channel development. But the partner has obligations as well, to wrap local services around the technology solutions (a market level that Intel cannot reach), and to skill up. “If you want to get into education and sell to the local school board,” Allen noted, “you need to know the difference between Chrome-based and Windows-based solutions. You need to know the management console opportunities there. You need to know what professional development tools are there for curriculum management. If you don’t know those aspects, you can’t sell into your local school board.”
Partners that are not able to adapt to the service model – and/or who are not able to develop specializations in an area like IoT – will fall victim to consolidation in the partner community. Intel has witnessed a decline of 10 to 20 percent over the past decade, due in part broad-based market maturity and in part to partner failure to evolve. At the same time, businesses that can develop new competencies, Allen explained, will be acquired and supported by Intel: “Taking it from the esoteric, high level and translating that into actionable, deployable solutions that our channel partners can deliver for us is job number one for Intel.”