Tech circles are buzzing about a pilot project Intel is trying out atselect Best Buy stores, initially brought to light by Engadget. Intel is apparently marketing a US$50 “upgrade” card for the PentiumG6951 dual-core LGA1156 Clarkdale processor that powers the GatewaySX2841-09e.
The card offers the consumer a chance to boost the PC’sperformance from 2- to 4-way multi-task processing as well as activate a largermemory cache. The point is to speed “data-heavy applications,” theupgrade card says.
Users who purchase the card are directed to a Web page to redeem the offer and install software that unlocks the CPU’s more robust capabilities.
Intel did not immediately respond to the E-CommerceTimes’ request for comment on this story, and Best Buy was unable to arrange aninterview in time for deadline.
The pilot is takingplace in a limited number of stores and will focus on one Pentiumprocessor, according to comments Intel has made in press reports.
The point of the pilot is to save theconsumer the trouble of buying a new system or taking in a computerfor a physical upgrade in order to step up its processing power, Intel reportedly said.
It is easy to see what is motivating Intel to try out this approach,Charles King, principal of Pund-IT, told the E-Commerce Times. “Fiftydollars is not an onerous amount of money, especially if the system isalready sub $1,000, as Gateway systems often are.”
This model could be helpful to Intel’s channel partners, he added.”This gives them the flexibility to target customers that may bein between systems in terms of performance and want to upgrade, butdon’t want to outlay money for a new system or physical upgrade.”
That said, this approach does have the potential for backlash,if Intel doesn’t position it correctly, continued King.
Intel could be seen as nickel-and-diming its customers — or worse,charging them a fee for a product they’ve already purchased –if it isn’t upfront about what consumers are buying with the $50 card andwhy they are not already getting it as part of the systems’package, he said.
“Many consumers aren’t clear on system capabilities in the first place,and giving them an opt-in performance boost could potentially confusethem more than it would benefit them,” King pointed out.
Certainly there would be a benefit to Intel, Laura DiDio, principal ofITIC, told the E-Commerce Times.
“The margins on microprocessor chips are higher than on D-RAMs so thiscould be a profitable offer for them if it is widely deployed,” she noted.
Intel is in business to make money, and they want to give shareholdersa good return on investment, added DiDio. That said, “I don’t see afull-press effort on their part to add fee after fee to squeeze moreout of their customers.”
Computing costs have become too commoditized for that, she said –also, unless the competition were to adopt similar tactics, Intel would losemarket share quickly.
Other chip vendors could follow suit if the offer doesprove to be profitable for Intel, but “I don’t think thatis going to happen,” DiDio said. “I think a lot of users on the consumer side willprobably ignore it. The likely users will be those businesses thatwant to prolong the life of their system without having to buy a wholenew desktop.”
Intel might find that the offer is less profitable than it hadexpected, Dan Olds, principal of Gabriel Consulting, told theE-Commerce Times.
“What Intel is doing is giving hackers a puzzle to figure out how tobest break and get around the security features it put in,” he said. “As soon asthe code is hacked and it gets out in circulation, there won’t be muchof a revenue benefit.”