One of the reasons for this shift is the confusion over the customs duty for Intel's Pentium II and Celeron chips. Unlike Intel's earlier releases, both the Pentium II and Celeron look like Printed Circuit Boards (PCBs) which attract around 40 per cent duty. Competing chips from AMD and Cyrix, on the other hand, attract only the 23 per cent duty applicable for Integrated Circuits (ICs). This has given a greater edge to AMD and Cyrix, which are even otherwise priced lower than comparable Intel chips. For instance, an IBM 266 MHz (Cyrix) chip costs around Rs 2,700 and AMD K6 Rs 4,900, while the Pentium II 300 MHz costs Rs 15,000.

The increase in customs duty has narrowed the margin between abranded Intel PC (like Compaq or Acer) and an assembled Intel PC. "The GIDs function in the price-sensitive segment. So they are the ones affected the most," says Anish Shah, executive director, Compunics Information Systems, a GID. He feels the dealer has no choice but go in for cheaper processors. "Customers also expected something faster from Intel after the Pentium II. They feel let down by the Celeron," he adds.

Intel has always introduced faster, more powerful processors until it changed its strategy to address the lower end of the market with the Celeron. The Celeron 266 MHz and 300 Mhz are not rated very highly because of performance problems. The new improved Celeron 300A is available with OEMs but is yet to reach the GIDs.

George Eby Mathew, country manager of AIIMS Management Consultants, research partner of the Gartner group in India, says the Celeron 266 MHz and 300 MHz influenced sales of non-Intel chips. According to Mathew, buyers who would have normally opted for the low-cost Celeron wentin for other chips because of its performance problems. The Pentium II was too expensive to be an alternative. "Cyrix is selling like hot cakes -- AMD is also waiting in the wings," says Jay Kapadia of JK Research and Technologies, a consultancy which sources from a number of GIDs. He estimates nearly 50 per cent of GIDs are now also selling non-Intel boxes.

Although Intel has a much larger brand following and still enjoys a whopping 90 per cent market share according to International Data Corporation (India) estimates, GIDs and distributors are not willing to keep more than five days stock because of the higher duty. Most GIDs are also not aware if Intel is doing something to resolve the issue or when it will be finally resolved.

"We are dealers, not exclusive distributors," says Ram Bathija, another GID, "The Celeron 300A has not yet come to us. But it has been given to the OEMs." According to Bathija, advertising for GIDs has also become slack. Intel, which organised fairs where GIDs could showcasetheir PCs regularly, hasn't done any such event in over three months.

Some industry players hazard Intel is not being as aggressive because of the crisis in the Asian markets. "There has been a rationing CPUs in the last two months. The GIDs get the new processors only a month or half after the OEMs," says Shah of Compunics.

Intel, however, clarified there is no change of strategy towards GIDs. R Ravichandran, Channel Manager, South East Asia, says, "We are committed to the channel. And we will definitely try to push Intel products." Regarding non-availability of the Celeron 300A with the GIDs he says all products will be available within a week.

When Intel introduced the Celeron it phased out the Pentium MMX 200 MHz which was selling very well, creating an artificial shortage in the market. "The Pentium MMX 200 MHz was phased out in June. Within a couple of days the Pentium 233 MHz went out of stock. The Pentium II 233 MHz was there only for a week after that and the Pentium II 266 Mhz for two weeksmore," says Alok Nigam of Maruti Computers, a distributor of CPUs and PC components.

This resulted in supply problems to banks and corporates whose orders are typically for at least 15 systems. "The GIDs have been pushing Intel -- so their problems are bigger," adds Nigam, who started distributing IBM P 233 MHz, two months back.

Varun Bhargava, who handles finance and administration at Intel, admits availability of processors could have been affected to some extent because of customs problems. "Intel is pursuing the issue with the customs department. We expect a decision one way or the other (PCB or IC) by October end," he says. Currently, distributors can import the processors at the duty applicable for ICs provided they give a bank guarantee to cover the difference if the customs department takes a decision to treat them as PCBs.

A number of things, including the success of Intel's strategy in India, hinge on this final outcome. It will determine whether or not Intel will actually succeed in marketingthe Celeron as a low cost processor here. It will also determine to what extent it can bank on GIDs whose USP lies in their competitive pricing. The coming days hold the key to the whether the chip giant will continue with its well-laid out plans or whether it will change direction and mastermind a whole new marketing campaign.