Centrino's progress

How has Centrino fared in the Middle East since its high profile launch? While sales seem slow now, Intel insists the market will soon be Centrino-centric, with more and more vendors getting on board. Will it be Centrino to go?

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By  Peter Branton Published  August 3, 2003

Introduction|~||~||~|Every few years a technology comes along that promises to really revolutionise the industry. Think the World Wide Web, think Java, think Linux. This year, it could be the espresso machine.

Or at least, that would seem to be a reasonable assumption if you looked at the marketing campaign Intel has been conducting for its Centrino mobile technology. The last few months have seen the chip giant and various partners tying up with coffee houses, shopping malls and restaurants across the Middle East and around the globe to promote Centrino. If e-mail was the killer app that drove adoption of the internet, then a casual observer could be forgiven for thinking that Intel seems to see the killer app for Centrino to be coffee and shopping.

The reason for this marketing push is of course to highlight Centrino’s key appeal: the real killer app for Centrino is mobility, with the wireless connectivity features being seen by Intel as the drivers for its success.

Indeed, Centrino is not, as Intel has been at great pains to point out, a single product, but rather a combination of three distinct products: the Pentium M processor, the Intel 855 chipset, and the Intel PRO/Wireless 2100 Network Connection for 802.11b wireless connectivity. While vendors can take the products separately to be called a Centrino machine (and hence receive full marketing support from Intel), a notebook must contain all three elements.

While the Pentium M processor has a number of features which make it appealing for mobile usage, providing longer battery life and a lighter weight machine it’s the wireless connectivity features which are going to make Centrino fly.

Which is of course, where the coffee house and shopping mall promotions come in. Using Centrino allows you to connect wirelessly to the internet at Wi-Fi certified access points, or hot spots as they are more popularly known. Research house IDC is predicting that there will be over 118,000 of these hot spots by 2005. At Centrino’s launch in New York, Craig Barrett Intel’s chief executive officer, said “I think this is really it, after 20 years of hyping it, the most tangible evidence of the convergence of wireless and communications. Unwiring the PC will fundamentally change the way people use computers, allowing them to communicate, be productive or be entertained.”

While grabbing a brew and surfing the web may be enjoyable, its unlikely that too many people are going to pay the price premium Centrino demands to avoid having to bag that bagel. More likely to drive adoption is the trend for office warriors, people who want to be mobile in their workspace. Intel itself has made its offices in Dubai a wireless environment, with workers equipped with laptops based on either Centrino or its Pentium M mobile processor (and it is planning to upgrade all of them to Centrino in due course).

The Intel view of the future would thus be one of airports, hotels, shopping malls and offices all providing wireless access hot spots which users can seamlessly access as they travel around during their working day.

For the present though, it isn’t likely to happen without Intel and key notebook makers supporting the uptake of hot spots. Globally, Intel has signed deals with a number of partners. In the UAE, Etisalat has promised to provide 50 such hot spots by the end of the year, and Saudi Telecom Company (STC) is also committed to the technology.

In one of its most recent ventures, Intel teamed up with Virgin Megastore in Beirut to provide an in-store hot spot, allowing shoppers to surf the Web and find out more information about films, music and games before they buy. Notebooks were provided by Acer and local assemblers which incorporated Centrino technology. The local assemblers involved include Computer Echo, Comtek, Triple C and GET International.

“It is wonderful that customers at Virgin will see and experience the benefits that Intel Centrino mobile technology can bring,” enthused Gilbert Lacroix, general manager for Intel MEA. “We have found that Lebanese PC manufacturers and ISPs have enthusiastically engaged in producing state-of-the-art laptops powered by Intel Centrino mobile technology and wireless services.”

||**||Local support|~||~||~|The emphasis on local assemblers highlights an area Intel is sensitive to in this region: claims that it hasn’t won the support of enough local assemblers in the market. Recent press reports have focused on the slow uptake of Centrino in the Middle East, where 60% of the market is dominated by white box makers. This is something that Intel has been keen to refute, in a recent interview Lacroix pointed out that it now has three or four local assemblers in every market it has launched Centrino in.

It is also winning increasing support in the region from branded PC manufacturers, with BenQ being set this month to be the latest vendor to bring a Centrino notebook to the Middle East, when it launches its Joybook project, which it sees as being a major brand leader for itself in the region. Adrian Chang, managing director for BenQ Asia-Pacific (which is responsible for the Middle East), told Windows Middle East that the company saw it as winning it mind share in the consumer market.

And that’s another problem for Intel: it wants Centrino to be seen as a hot, groovy technology, one which it has promoted by associating it with fashionable cafes, and trendy stores, but it is also a product that it is aware has more appeal to the corporate market right now. Centrino generally isn’t doing especially well in the consumer market, and most vendors claim it is going more into the business segment.

“It was a bit difficult to get Centrino sales going in the beginning,” admits Tanguy La Horie, product marketing manager for Intel Middle East and North Africa. “We positioned the product as a corporate but what launches a product is the consumer pioneers.”

Key to Centrino’s success in the region will be increasing the uptake of hot spots, La Horie admits. “The launch was only the first whistle of the race,” he says bullishly. “Right now, I’m more interested in the uptake of mobility than of Centrino. Yes, Centrino is what is going to make my company money, but to the end user its what benefits it brings to him that counts.”

La Horie points out that Intel has sold more than one million Pentium M chips worldwide since it launched, and claims that while such sales are still small compared to more established processors, it is still very encouraging for a new product.

“We always face the same pressures when we launch a new product: its too expensive, people don’t understand it, they don’t want to take the risk on it,” he says. “We’ve faced the same problem with previous products and they always do well.”

||**||Tougher sell|~||~||~|However, it has to be said that Centrino may prove a trickier sell than Intel is used to. Another problem for Intel is that Centrino represents a change in its policy of promoting its processors purely on clock speed. The Pentium M processor at the heart of Centrino, uses a very different chip architecture to previous mobile chips made by Intel, such as the Pentium 4-M. Although slower than the Pentium 4-M, Intel claims it actually can deliver higher performance. For instance, a 1.4GHz Pentium M actually outperforms a 2.4GHz Pentium 4M.
Intel has also highlighted from early on that the Pentium M, which was originally called Banias, will offer other performance benefits such as improved battery life and will help to make notebooks lighter and so more portable.

Which is all well and good, but Intel is still stuck with the fact that a company that has used clock speed as a major marketing tool now has to go into the market and tell people that clock speed doesn’t count so much.

This mixed marketing message has caused some concern with notebook vendors in the region, who have to go to their channel and win them over on the merits of Centrino.

Michael Collins, regional general manager for Dell, said he had expressed such concerns to Intel at industry events. “Intel has done a very good job in promoting the idea that Centrino is three separate products and not just one,” he says. “What I’d like to see more explanation on is the speed issue, it’s a very tough sell for us. Personally I think Centrino is a great bundle of tools, but it is a tough sell, we do need to explain a lot to the customer.”

Dell chose initially not to go with a full Centrino solution, but instead offered its customers a choice of wireless solutions. While its Latitude D800 system used the Pentium M processor and the 855 chipset, it offered a choice of wireless solutions between Intel’s connection and its own TrueMobile wireless product. “Looking at the Pentium M alone I think it will do very well in this region,” says
Collins.

Rivals have of course been quick to attack Intel’s bundling strategy for Centrino. “With the Centrino approach, you’re obliged to use what they tell you to use. We don’t believe in forcing people to buy a product they don’t want so we give them a choice,” says Pierre Brunswick, regional sales manager for AMD’s Eastern Europe, Middle East and Africa region. “And I believe in terms of raw performance the we are definitely beating them.”

La Horie counters the arguments about choice by pointing out that Intel is working with all the leading suppliers in the Wi-Fi space to offer users a more “seamless” wireless networking solution. “If you look at a hot spot, there’s actually quite a lot that goes in to the infrastructure of each solution,” he says. “With Centrino you know that every time a new player comes out with a new antenna that we’re going to work to do the integration. With another solution you face the risk that you may not be able to get it to work everywhere that you want.”

While this may be true, it highlights one key point that Craig Barrett’s enthusiastic speech glossed over: Centrino is not in itself offering something radically different, it is just offering a different approach. While Intel would like to pitch Centrino as the cutting edge of technology, it doesn’t do anything that can’t be done using other products, although it is arguably true that it makes it easier and quicker to do so.

Also, while Intel is describing Centrino as a step up in technology terms, it certainly isn’t a quick step. The 802.11b connection only allows it to access older wireless networks (and ones that are backward-compatible), capable of data transmission rates at a stately 11Mbits/sec, rather than the zippier 802.11a and g standards both of which provide 54M bit/sec data speeds. Intel’s original plan was to introduce dual band a and b support from the beginning, it was then set for the second quarter of this year, Intel is now saying it will come in the second half of the year.

Yet another embarrassment for Intel has been performance concerns associated with the product. One of the big probable stumbling blocks to Wi-Fi adoption is perceived security risks of wireless, an issue Intel understandably has been keen to play down.

However, the security solution it has been advocating in the region, a Virtual Private Network (VPN) solution, can cause problems when using certain VPN clients. Nortel Networks said some VPN applications could be incompatible with Centrino, causing notebooks to malfunction.

||**||Going for it|~||~||~|All of the above has not stopped vendors from supporting Centrino. Indeed research house IDC believes that most major notebook vendors will be promoting Centrino heavily in the second half of this year, and it believes that vendors are currently clearing the decks by selling off non-Centrino based models at a cheaper price.

According to Ahmed Khalil, Middle East regional manager for Toshiba, Centrino sales are going well in the region. “Centrino does well in a number of factors, mobility, weight, wireless capability and battery life,” he says. “The first stage was educating the market about those benefits, the next stage was to go into our key accounts and show them how these benefits will help them improve their working performance. We are now in the sales phase and in the last couple of months we’ve seen 70% of our professional sales coming from Centrino. Hopefully by the end of Q3 we will be seeing 100% of sales coming from Centrino,” he claims.

Khalil admits that at the retail level sales are much lower. “We’re seeing very slight demand at the moment, but it is growing,” he claims. “The more awareness there is in the market about the benefits of Centrino the more it will help demand.”

In the UAE, Toshiba has been promoting Centrino through a tie-in with retail chain Plug-ins. “That was the first step for us into the SOHO market,” Khalil claims.

Other vendors are also promoting Centrino heavily. Acer for instance has just released its first Tablet PC with Centrino, the TravelMate C110, into the region.
Krishna Murty, general manager for Acer in the Middle East, said the company was enjoying good sales in both the corporate and mid-range sector. “We’re trying to offer something different to anybody else on the market right now, we’re providing a strong service package and that is helping us with sales,” he says.
Prices also look set to come down for Centrino in the near future. Intel reduced processor prices in June, and as competition increases, La Horie expects to see prices fall.

“By Gitex time you should expect to see prices drop,” he says. “Right now, in terms of sales it may be small quantities, but it is selling. The infrastructure is not fully in place yet, but that will change. At a certain point demand is just going to explode for Centrino. We’re making a tremendous effort to make the Centrino brand visible and not only visible, Centrino is going to be the logo that people associate with integrated Wi-Fi.
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