This is an exciting development for Intel and for me personally. Intel has been in the channel business for a number of years, but the creation of CPG as a corporate business unit reflects an increased commitment of Intel to the global distribution channel and to addressing specific emerging market needs.

This is the first time that Intel has headquartered a business unit of this size—about 1,500 employees—outside of the U.S. Yet while CPG will be based out of China, we are an international organization whose charter is to serve the needs of the channel worldwide.

In addition to providing platform building blocks and training support to the channel, we will also continue our active sponsorship of numerous government-assisted PC Programs (GAPP) designed to spur PC literacy and IT adoption in the emerging markets.

If you look at how IT products are sold in emerging countries, it's very different from the sales model in mature markets such as the U.S. and Western Europe. In the U.S., consumers are accustomed to buying IT products through what I call "organized retail"—large-scale physical outlets such as Best Buy, CompUSA and Circuit City; or through MNCs with major online presence, such as Dell. That infrastructure doesn't exist in the same form and magnitude in the developing countries. In many emerging markets such as China, IT sales are generally made through a fragmented network of very small dealers. These stores are viewed as the "trusted IT advisors" for their community, so it's important that we build relationships with them and provide the right level of support for them to grow their business.

We've been working very hard to develop training and marketing programs for our Intel dealer network (represents 160,000 dealers worldwide) so that they will be able to effectively convey our platform messages to their end-user customers. Our dealers welcome this type of support, as it gives them a competitive advantage in their home countries and keeps them on the cutting edge of technology.

The structure of the IT industry has become horizontal over time. Companies in each horizontal layer are experts in what they do. Intel's expertise is in chip design and fabrication, silicon technology, and more recently, the integration into platforms. Microsoft's expertise is in software, operating systems, applications, and so on. Other companies are experts in networking and manufacturing. This model has served our industry extremely well.

These horizontal layers need to work together to produce an end product. Imagine trying to orchestrate these horizontal layers to work together without the existence of standards. Developing a computer would prove to be a very slow and expensive process.

We believe that the horizontal structure of the IT industry and the adoption of global standards are the keys to growing our industry.

One recent innovation that illustrates the importance of global standards is Intel® Centrino® processor technology, which relies on the 802.11 or Wi-Fi* standard. The existence of that standard, and associated programs that ensure interoperability, is what enables you to have a wirelessly enabled notebook computer that you can access the Internet from wherever you are—be it the U.S, Europe, or Asia. In the absence of that standard, you would have to change your modem, Wi-Fi card, or other components—both hardware and software—in order to connect in different parts of the world. That would be extremely inconvenient for most users, and would compromise the utility of both the product and the technology. So you can see why it's important that standards be global.

Emerging markets benefit even more from global standards, because by adopting them, they can move up the learning curve very quickly. By adopting global standards, they can instantaneously become "world-class"—rather than trying to evolve their own country-specific standards, which would be both heavy lifting and require unnecessary work.

Historically, some people have viewed standards as a limiter to innovation, but exactly the opposite is true. If you look at the history of the IT industry—which itself is very much driven by standards—nobody can argue that standards have stifled innovation. As a matter of fact, the level of innovation over the years has been phenomenal.

Innovation comes from building new products on top of standard building blocks. In other words, standards enable manufacturers to develop innovative new products by combining standardized components in new and different ways.

Let me give you an example of how this can work. There is a new class of products that we refer to as "Mobile on Desktop." These products utilize technologies (e.g. CPUs) that are traditionally designed for notebook computers because of their small size and thermal characteristics. By incorporating standards-based notebook components onto our traditional desktop platforms, you can build a new type of PC that, due to much lower power consumption levels than an ordinary desktop, allows you to shrink the form factor to the size of a small lunchbox!

Standards will actually enable the channel to create unique new products to address the needs of their local markets, resulting in greater differentiation in the market and increased competitive advantage than they enjoy today. To that end, CPG will be working with local OEMs (original equipment manufacturers), ODMs (original device manufacturers), hardware vendors and software developers around the world to develop reference platforms that meet the unique needs of each market.

In fact, Intel has launched "platform definition centers" in Egypt, India, Brazil, and China. That underscores our commitment to understanding the needs of local markets throughout the world. Meeting the needs of those markets for innovative, specialized products would be difficult and expensive without the use of standardized components.

Some of the key issues in developing regions include unreliable electrical infrastructure and less sanitary environments, where you might even find frogs or mice living in your PC! In certain geographies, you also must deal with humidity, dust, extreme heat, and monsoons (which can also make consistent Wi-Fi connectivity a challenge). So we need to develop specific emerging market solutions that address needs for durability, reliability, and ruggedness.

One of the products we're developing for rural markets is a computer that is backed up by a car or truck battery, so that customers can continue to use their computers in the event of a power outage, which can occur up to several times a day. This new product is particularly important in farming communities, such as in India, where back-up generators or other power infrastructure may not be available.

This is one example of a novel product that's built on standards, but combined in a new way. Essentially, it's a standard PC that integrates a standardized power supply and battery to create a specialty product.

We've also developed manageability solutions for Internet cafes in China. I-cafés are a huge business in China, with a typical i-café maintaining an installed base of 100 to 500 PCs. As an i-café owner/operator, you want to ensure that your full fleet of PCs is continuously up and running, because they are your main revenue generators. In the past, when a machine went down, i-café operators would have to send a technician out with a CD to try to rebuild the machine. Obviously that takes time, impacts productivity, and reduces revenues.

To address these issues, Intel China developed an integrated platform solution that combines both hardware (standard Intel® motherboard) plus manageability software to allow for centralized monitoring and repair. This product has been very well received, and we are in the process of scaling the deployment in China, and looking at expansion opportunities to markets such as Southeast Asia and Latin America.

One of the ways we learn about what a market needs is by conducting ethnographic research in specific regions, with the help of Intel's People and Practices Research group. This is a team of social scientists, designers and engineers within the company that focuses on the human side of technology.

Based on one of their research projects, we created a "learning PC," launched in China earlier this year. The researchers spent a great deal of time understanding firsthand why Chinese families do or don't adopt PCs in the home. They found that children's education is of paramount importance to the Chinese family and parents want to provide the best tools possible for their children to succeed. However, the parents held mixed feelings about computers—they saw the value of a computing device for homework and additional learning, but they also viewed computers as a potential distraction to their studies as well as other non-parental approved activities (for example, if used for gaming, chat, surfing malicious Web sites).

The product we developed integrates a physical lock and key to allow the parents to switch the computer into a "learning mode" so that only educational software is accessible to their children. Then, if the parents want to use the PC for other applications, they can turn the key back and easily toggle into the "general purpose" mode. This provides the parents with an added feeling of security, as they know they have control over the usage when the key to the PC resides in their own pocket!

That brings up a good point: many of the products we're defining and developing to meet the specific needs of various emerging markets could in fact be scaled to other countries with similar needs. Children's education is certainly a need that resonates with parents worldwide, so despite the fact that this PC was tailored to the Chinese market, with a bit of tweaking, it is easily transferable to other markets. Just as mature market products today migrate to emerging markets as they develop, technology innovation can in fact be created in our emerging markets and moved in the other direction as well.

The most important challenge we face is in the area of mobile technology standards. One of the trends in the computing industry is the fast adoption of mobile technology. We think this is a wonderful trend. Mobile technology enables you to do your work or access your information anytime, anywhere. The advent of Intel Centrino processor technology certainly accelerated this trend.

But one of the challenges facing the industry, and the channel in particular is that unlike desktop technology which is highly standardized, mobile technologies are not standardized at this point. The component-level building blocks are much more customized and vary from OEM to OEM. Because of this lack of standardization, building and integrating mobile PCs is much more difficult and expensive for small channel players who are not able to command the same level of volume pricing as the larger MNCs (multinational corporations).

So Intel is playing a leadership role in establishing standard building blocks for mobile computers. We believe this will further accelerate the growth of mobile computing while lowering costs.

For the channel in the developing world, one of the most exciting emerging standards is WiMAX. Think of it as the high-bandwidth, long-distance version of Wi-Fi. We believe that this capability will accelerate the adoption of broadband connectivity and therefore computers, in the same way that cellular telephones led to the widespread adoption of telephony worldwide.

I also think we're going to see a continuing evolution of new computing form factors. In the industrialized world, computers are evolving from the nondescript beige box to more of a fashion statement. Increasingly, computers will be found in your living room or den as well as your office. So standards have begun to focus not just on the technical functionality of the product but also on how well it integrates with people's lifestyles.

Intel set the standard for the last generation of computing form factors by developing ATX, which targets ease of use and better support for our current and future processors. We brought that standard to market more than 10 years ago, and it has been the gold standard for both the desktop motherboard and chassis designs.

Intel is now in the process of introducing BTX [PDF 43KB] (Balanced Technology Extended). This is a new interface specification that will enable developers to build a range of innovative desktop systems, including smaller-form-factor PCs. It provides for high performance while managing power, thermal and other key system requirements. We believe that BTX will set the stage for the next generation of computing, perhaps for the next decade.

Of course, Intel will continue to play a leadership role in developing and adopting other standards in our domestic market as well as internationally, working with governments and standards bodies worldwide. We believe this will create new growth opportunities—not just for Intel but for the entire IT industry as a whole.

William M. Siu is an Intel vice president and the general manager of the Channel Platforms Group. He leads an organization whose charter is to expand Intel's worldwide presence by accelerating global channel growth through innovative business models and platform solutions tailored to meet local market needs. Prior to this position, Siu was vice president and general manager of the Desktop Platforms Group, responsible for the design, development, and market development of Intel's desktop platform solutions, including processors, chipsets, motherboards, software, and services. Siu was appointed an Intel vice president in 1995 and elected a corporate vice president in 2001.