TAMPA BAY, Fla. — The number of system builders at the semi-annual System Builder Summit may have declined since the PC market slowdown last year, but the opportunities for this community of resellers are increasing.

According to Tom Kilroy, vice-president, Reseller Channel Operation for Intel Americas Inc., the system builder market will be driven by the Internet and include the “”on ramp”” to the Web, back office support, networking and Web services.


“”The Internet is No. 1. It will enable us. We would be in a much different position right now if the Internet was not enabling our industry,”” Kilroy said during his keynote presentation at the System Builder Summit.

Content on machines is growing with photos from digital cameras and the whole digital jukebox concept. And the content, Kilroy said, will drive server sales and more specifically rack-mounted servers and appliances, which he said is a more complex solution to build.

“”The backbone to the Internet in terms of servers is a great opportunity for revenue, margins and most importantly services,”” Kilroy added.

With Web services there are the applications that will interact with each other sitting on top of standards such as XML and Microsoft’s .Net platform.

“”They say the Internet is close to the end with the demise of the dot-coms. There was fourfold growth in Internet traffic last year in a horrible year. That means the Internet is alive and well and important to build on. But this is scratching the surface,”” Kilroy said.

Michael T. Simmons, production manager for Qsystem Computers, a system builder based in Carencro, La., said the best short-term opportunity from Kilroy’s list will be in networking.

“”(With) the PC being the piece that everybody connects to the Internet, using digital cameras to send a picture to grandma — that is the dream today,”” Simmons said. “”What is going to happen five-years down the road if we don’t get broadband across America will be a different story.””

Kilroy urged system builders to look outside their borders. The market has matured in major cities in North America. However, 50 per cent of North American adults don’t have Web access and 39 per cent of small and mid-sized business are still on online. And, in Latin America the opportunity is even greater, Kilroy said. In Brazil, for example, 89 per cent of the population does have Web access, while in Mexico that number reached 87 per cent last year.

As a result of the efficiencies made by system builders last year and the fact they are building more solutions rather than competing on price has grown Intel’s indirect business. More than 40 per cent of Intel’s business is going through the channel, he said.

According to Kilroy’s data, system builders in 2002 are adding four applications on the average PC they build.

“”The channel is winning,”” Kilroy said. “”The channel delivered for us last year. The channel grew 24 per cent in units and we had positive revenue growth in a year where the company was down 20 per cent overall.””

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