Long known for its highly successful microchip business, Intel Corp. wants to expand its control of other markets. One of its prime targets is networking hardware.

To this end, Intel recently unveiled two new networking products: the 6000 Series switch and the Express 9500 router.

The 6000 Series switch is a modular Layer 3 gigabit ethernet switch, offering 96 fast ethernet ports and 32 gigabit ethernet ports. The Express 9500 product family is aimed at regional sites and branch offices and supports many WAN protocols.

"This switch is really aimed at the data centre in the medium enterprise, so we're not going at the large scale enterprise," says David Allen, Intel Corp.'s distribution sales manager for North America. "This product brings us up into what we describe as the medium enterprise. Several thousand seats is how we would define that.

"The strategy for Intel networking has been to focus on the medium enterprise," he adds. "Our switch lineup, which is pretty fleshed out right now, goes from simple standalone switches that can support small work groups or even a small business, all the way up to this high-capacity gigabit solution. It is, I think, a very nice spread of products that our resellers can offer."

Intel will be relying on Intel product dealers, networking communication providers and Intel Authorized Solution Providers (IASPs) to distribute the new products.

"We have a large number of certified individuals, and any dealership that has two certified individuals on staff can apply to become an Intel authorized solution provider," says Allen. "We give them a lot of things — lead referrals, advertising support, as well as what we call margin enhancements or what a lot of people would call back-end rebates."

What benefits will IASPs reap in selling the new products?

"We have two different enhancements that will make it very profitable for them," explains Allen, describing the situation with the 6000 Series switch. "Number one, on the chassis themselves, which are basically about $14,000 or $15,000 products, we have a $2,000 per chassis rebate available to the IASPs only. Right off the mark that helps them in terms of the margin side. Secondly, if you are not an Intel authorized solution provider, you may purchase (the switches), but you need to purchase a service pack as well. That service pack includes on-site installation and a two-incident support and that basically has a Canadian price of around $3,000.

"So putting those two things together, we definitely believe that this makes a very profitable opportunity for those resellers who have become IASPs."

Dan McLean is an analyst in the Toronto office of International Data Corp. (Canada) Ltd. He believes the release of these new products is indicative of Intel's desire to push farther into the networking market.

"They've been moving more deeply into this whole space for the last little while," he says, referring to the midrange networking market. "They see this as an area of evolution for them."

He says Intel has its sights set on the small to mid-sized business networking market rather than the enterprise market. "In terms of a company that they may be directly competing with, I would hazard that the likes of a 3Com, for instance, is probably their major competitor in terms of the space that they're intending to occupy."

McLean sees the low price of Intel's products as an advantage in the midrange market.

"What's always a factor in that space is price. It's an extremely price-conscious market, more so certainly than larger-scale customers. These types of customers would rather be able to do it themselves than bring in all sorts of professionals to get the systems up and running."

McLean says the networking market could prove quite lucrative for Intel.

"More and more customers are building networks if they don't have them already or are looking to build them, and people are simply doing more and more collaboratively, which drives this whole need for more networking gear," he says.

But McLean says he believes Intel will remain on the second rung of the ladder. "Intel is sort of coming in among the competitors that are trying to grab what's left after what the top-tier players have. I don't think they're going to have much success in luring customers away from the folks that currently are getting their equipment from the big players," he says.

"But in terms of folks that are underneath that, that may be new customers to networking or (those who) are simply looking to make new purchases, and their current suppliers are these smaller companies," he adds. "That's where Intel, I think, is going to fit."

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