Intel is aiming to put its powerful "Intel Inside" branding stamp on cloud services the same way the chip giant uses its marketing muscle in the PC client space.
Last September, Intel announced a deal with Amazon to attach the "Intel Inside" brand to the online retailer's Amazon Web Services (AWS) offerings exclusively using Intel Xeon processors. That move didn't grab a ton of headlines but it did turn a few heads, with Information Week noting that Intel "scored a marketing coup" by getting consumer-facing brand placement in the traditionally "processor anonymous" realm of cloud computing.
NowIntel is set to announce a slew of new deals to stick its branding smack in the middle of cloud services provided by a dozen or more major players around the world, according to a source close to the matter.
"It's big news," the source said, adding that the providers involved represent a "big chunk" of the worldwide cloud services market. Intel has successfully trained consumers to look for its logo when buying a laptop. Soon, individuals and small businesses looking for hosted IT services may also find themselves humming Intel's catchy, five-note jingle as they shop.
Intel did not confirm any new branding partnerships but did inform us that the company "will be making a very interesting cloud-related announcement this Wednesday."
Intel famously carved out consumer mindshare for itself with its "Intel Inside" campaign beginning in the early 1990s. It's difficult to remember this now, but at the time, it was a pretty radical move for an "ingredient maker" like Intel to advertise directly to consumers of finished products like PCs.
The story goes that Intel was tired of being an unknown, back-channel player in the PC industry while computer makers and operating system vendors exercised more power over the market. Looking back, it's hard to argue with the "Intel Inside" campaign directed by then-marketing manager Dennis Carter—if it didn't solely usher in the golden age of Wintel and record earnings for the chip giant, it certainly helped.
What's unclear still is how Intel's cloud partners plan to package services branded "Intel Inside." Amazon puts the label on AWS customer instances exclusively using Intel chips. According to the source, that effectively means that customers can pick an Intel AWS package over services using systems with chipsets from another vendor, like Advanced Micro Devices.
The vast majority of the systems behind AWS reportedly use Intel's chips anyway, so this may not be as big a deal as it seems. But it will be interesting to see if some of Intel's new cloud branding partners are not such overwhelmingly Intel shops, and if their customers will soon face the choice between an "Intel Inside" service or a generic service. Will there be a premium charged for "Intel Inside" cloud services? How will they be marketed beyond the Intel branding?
"Intel is clearly setting up for a bigger range of services that can be offered directly or through partners," said Rob Enderle, principal for the Enderle Group. "Intel is recognizing that they need to broaden their revenue sources and the company appears to be executing a strategy to do exactly that. They know they are an ingredient brand and are shifting focus to provide a broader array of ingredients. Watch this space as this is likely only the beginning."
The Xeons, Opterons, Atoms, et. al. powering the servers in cloud data centers are "ingredients," just like the processors inside PCs. But some industry watchers are looking askance at Intel's move to elevate server chips in the public eye. Customers of cloud service providers have a much less direct connection to the chipsets in faraway server racks than PC users do to the processors in their laptops.
Not everybody who buys a PC does so with the idea of upgrading its parts, but they can do so if they wish. And it makes sense to know what's inside a system you're going to be interfacing with directly. But to the end user of computing services supplied by a cloud provider, there's no such connection to the hardware running the show or even to a lot of the software underpinning it either.
So what's Intel's end game here? One source at an Intel competitor suggested it was a "desperation move" on the chip giant's part. That source said the coming challenge in the cloud space from microserver offerings like AMD's and the rollout of 64-bit-enabled processors using the ARM architecture may have Intel worried enough to throw branding at the problem in lieu of technology.
Jack Gold, principal analyst at J. Gold Associates, suggested something simpler—a sensible move by a powerful company to use all the tools in its tool belt to win business.
"I'd say almost everyone these days wants a piece of the cloud action. It's a booming market and everyone wants to jump on the train, Intel included," Gold said. "My take is that Intel ultimately can make much more as a cloud infrastructure provider than with direct-to-companies cloud services—they tried doing data services several years ago ad it didn't work out for them. 'Cloud Powered by Intel' could be a good brand no matter who delivered the services ultimately."