Intel log off Prion channel

After less than a year, Intel and Prion Technology have ended their networking products distribution arrangement, and while they both say it was a "mutual decision," it was clearly initiated by the vendor.

Intel Australia national sales manager Archie Wilson confirmed to ARN that in accordance with the distribution agreement, the company has given three months notice to terminate Prion as a distributor.

"The process from here is under negotiation," Wilson said, "but it is clear to us that their business model was not in line with our requirements for a distributor."

Prion general manager Michael Bosnar claimed that Intel required that it make significant investment in its distribution system, which would have meant a substantial increase in the scale of its Intel business to justify. He indicated that the Intel networking business was not worth it to them.

"Instead of competing for the Intel distribution business, we are committing ourselves to the white box server program, in which we expect to do between three and four million dollars."

Playing down the significance of its Intel distribution, Bosnar revealed that it represented a third of the networking business it is doing with Hewlett-Packard.

Indicating the nature of Intel's concerns about Prion, Wilson said that it does not have a "networking component business" rather a "branded networking solution business".Typical products range from network adapters to hubs, switches and routers.

Prion's termination means there are now four total Intel product line distributors and only one specialist networking distributor - Express Data.

In related news, Intel announced last week it is merging its worldwide server and networking business into the one communication products group. Wilson said the units are the highest growth product areas in the company.