Complying with Intel's wishes sets up manufacturers to receive cash that can be used for advertising or even instant cash rebates on processors to reduce upfront costs. "The way the money used to flow, Intel would offer pure rebates back to us through direct payments or price reductions ... we would see reduced compensation in regards to marketing events," said an Intel PC partner that wished to remain anonymous (for obvious reasons) in an interview with CRN. "Bigger partners would get a big chunk of compensation for bigger consumers, and many big gaming guys are heavily dependent on 'Intel Inside' dollars to promote the brand."
However, the days of Intel throwing cash around willy-nilly could be coming to an end. As customer priorities shift with regards to interacting with computing devices (it doesn't take a rocket scientist to figure that many everyday Americans interact more with their smartphones than their personal computers), Intel is also adjusting how it doles out compensation. In this case, Intel is expected to cut its payouts by as must as 60 percent for major OEMs. Boutique enthusiast PC builders could see their marketing payments cut by as much as 20 percent.
In this cutthroat PC business, this could be a day of reckoning; especially for partners that have remained Intel-exclusive. If Intel is no longer sweetening the pot [as much], it could lead system builders to adopt processors from rival AMD, which has always offered a value proposition with regards to its processors. However, with the Ryzen and Threadripper family of Zen-based processors, AMD provides value and performance that can't be ignored.
"It was a great program, but with all the changes in the systems builder and OEM community it doesn’t shock me," said a second, unnamed partner. "Like everyone else, they're trying to figure out a way to offer services and software while the pure hardware model is tougher."
Intel confirmed the program would see changes, but failed to elaborate on the rumored percentage cuts. "While we are evolving how we co-market with our OEM customers, the Intel Inside brand continues to be an important symbol of performance and quality," added an Intel spokesperson. "The changes we are making are intended to help customers more efficiently and effectively market with Intel, while helping us market with more precision in alignment with Intel's business priorities."
While system builders are likely to be hit hard by Intel's cuts, we all will likely be affected in the aftermath of the decision with higher PC prices to compensate.