Intel Quarterly Results May Not Be Good News for PC Sector

By Kevin Parrish
published

Intel's PC Client Group is down 1.5-percent compared to the last quarter, and down 6-percent compared to the same quarter a year ago.

On Thursday Intel posted its latest quarterly results, and it may leave some PC makers a little nervous.

The chip giant revealed that its PC Client Group generated revenue of $8.5 billion USD during the fourth fiscal quarter, down 1.5-percent sequentially and down 6-percent year-over-year. On a yearly basis, the PC Client Group had revenue of $34.3 billion, down 3-percent from fiscal 2011.

"The fourth quarter played out largely as expected as we continued to execute through a challenging environment," said Paul Otellini, Intel president and CEO. "We made tremendous progress across the business in 2012 as we entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation and growth in the data center."

The drop in Intel's PC Client Group shouldn't come as a surprise given the consumer market's growing focus on tablets supplied by Apple, Google, and Samsung among others. There are also the new hybrids that blur the lines between tablets and notebooks, and those "phablet" devices that merge tablet and phone into one form factor.

Does this drop in sales mean we're truly entering the Post-PC era? That remains to be seen. At CES 2013, the big theme seemed to be the connected home, as many companies showcased a slew of tablets, smartphones, networking hardware and Wi-Fi capable HDTVs sharing the same space and content. While there will always be a place for the desktop form factor, the show clearly made it obvious the industry's focus is on mobilized computing and content sharing.

With its x86-based partners jumping into the tablet and smartphone pool, it only made sense that Intel followed suit and challenge mobile industry leaders Qualcomm, Texas Instruments and Samsung. Like its desktop and notebook partners, Intel needed to find an additional stream of revenue as consumer tastes continue to switch over to thin, high-performance mobile products.

"As we enter 2013, our strong product pipeline has us well positioned to bring a new wave of Intel innovations across the spectrum of computing," Otellini added.

Despite its PC Client Group's decline, the quarter wasn't exactly gloomy for Intel. Its Data Center Group had revenue of $10.7 billion, up 6-percent from 2011. On a quarterly basis, the Data Center Group generated revenue of $2.8 billion, up 7-percent sequentially and up 4-percent year-over-year. The company also saw an overall gross margin of 58-percent, 1.0-percentage point above the midpoint of the company's expectation of 57-percent.

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Kevin Parrish
18 Comments Comment from the forums
  • friskiest
    I'm 21 y.o, and I intend to build PC gaming rigs for my future children- heck, even grandchildren. Whats with this post-PC BS?
    Reply
  • MichaelSP
    I don't think you can ever replace PCs. Sure, current software may not need the most powerful stuff or be able to address all of it but that will change. The software will get bigger and stronger and PCs will have to as well. And that cutting edge technology will likely always be desktop material. PCs may change into quantum devices with technology we cannot conceptualise right now but they too will still likely have 'PCs' for the best stuff and for people. Even if you don't need one, they may become, at the worst, enthusiast equipment. And I agree with friskiest; I intend to build PCs for my future family.
    Reply
  • g00fysmiley
    peopl ehave limited bugets, when you decide you want a tablet instead of upgrading a laptop or desktop puching that upgrade back you end up with losses somewhere. I am on an every other year upgrade path, 3 year upgrade path, one year my pc next year my wife's pc then next year our laptops, with the addition of possibly adding tablets in there i have to consider when to do it. the desktops ar emore expensive so it would make sense to add them with the laptops but at the same time upgrading both portables at the same time seems... kind of pointless i am sure people are questionging having a laptop and a tablet and tablets seem smaller and can be held for use vs most laptops. honestly i think intel should concentrat more on convertable and laptops/ultrabooks that can be used for both purposes if they did that i wouldn't bother with actual tablets and would prefer a x86 hybrid system that works as both but something reasonably priced compared to what is out there now
    Reply
  • Windows 8 is only part of the reason. I've upgraded a couple of computers to windows 8 and actually quite like it - it's faster than 7 and has newer features beyond the interface. I've gotten used to the new interface and also like it.

    Most desktop users don't need to upgrade as often given the power of CPUs over the last 5 years. I used to upgrade every 2-3 years. I have a old CPU/MB (AMD 600e II x4 ) which is about 4 years old. Runs windows 8 fine. Even on older core 2 duo could probably do fine with windows 8. Wont run the latest games well but for email/internet/accounting it does just fine. Most computer users aren't hard core gamers. My dad runs an Athlon 4850e quite happily and doesn't feel the need to buy a new computer.

    I think tablets have taken away some market. They can't do what desktop/laptop can, but if you were looking for a 2nd device in the home, I can see people buying a tablet or 2 instead of another desktop. Most peoples computer use is surfing, email and internet browsing. You don't need a desktop for this.

    Desktops wont go away, but there are other competing products now which are cheaper that do what people used to buy a desktop/laptop for.
    Reply
  • A few problems:
    1.) People just don't do anythig on a computer beyong browsing the web these days. They just want to know what is happening on their social networks. This has put more people in the hands of technology than ever before, but the need for a 'geeky' computer has decreased as all those people need is mobile internet.

    2.) The industry shift altogether. Microsoft's OS is tailored toward mobility, not usability on the desktop. It is a HORRIBLE interface for traditional mouse+keyboard. This has effectively pushed consumers towards the mobile segment along with what Apple has already done with the IPAD and the Android tablets, nooks, etc. Intel hasn't helped this by pushing its products towards mobility as well, but Intel is following and not leading here.

    What is a traditional PC user supposed to do now? Windows 8 doesn't work for many of us. So, we are stuck wth Windows 7 or just using Linux. Using Linux works, but drivers don't support the top features that you can get on PCs these days. Virtu doesn't work under Linux. Heck, Intel just open sourced QuickSync. Video drivers are never as good as they are under Windows. Printing drivers aren't as good, etc. You are forced back in basic technology many years to fully use Linux, or you just bite the bullet and use Microsoft's Windows 8 even though it is difficult to use for traditional desktop uses.

    All this likely means people buying less desktop hardware and more mobile devices that all the companies are pushing towards anyway.
    Reply
  • newbie_mcnoob
    In my opinion, Intel is hurting themselves by releasing their mainstream chips first and their enthusiast chips much later. Ivy Bridge-E will not be out until a year after Ivy Bridge, and by then their next mainstream chip Haswell will already be out.

    They should release the enthusiast chips first, then the mainstream chips later. That way anyone who wants the fastest CPU will be buying the more expensive enthusiast chips instead of settling for the cheaper mainstream chips just because the mainstream chips were released first.

    More revenue for Intel and more bragging rights for the early adopters.
    Reply
  • DRosencraft
    You can't blame Win 8 for this. This is hardware. The choice not to upgrade to Win 8 doesn't stop anyone building a PC from buying Win 7. This is simply the reality that is repeatedly being stressed every time a similar article comes up - most people don't do enough computing to care about a full desktop computer. They need a relative lightweight in terms of device performance, and tablets are the new sexy tech, so they're jumping ship over to that instead of upgrading their existing PC or buying a new PC.

    No OS will change this, and a CPU that's simply faster or smaller or more energy efficient will change this. You need a combination of hardware that is ONLY possible with a desktop, and software that makes using that hardware exciting. Some can say it's a gimmick, but right now that is what the PC industry needs to do - try gimmicks until the catch on to something that has more staying power. Continuing to double-down of the strategy for desktop computing from the past, and trying simply to emulate the always more mobile tech of phones and tablets, isn't going to solve the problem.
    Reply
  • ojas
    "The fourth quarter played out largely as expected as we continued to execute through a challenging environment," said Paul Otellini
    Exactly. They HAD said this before, we heard the saying "PC IS DYING" crap then as well.

    I think the next one year at least will see things go back into positive growth for the PC part of Intel.
    x86 of course, should see a huge increase in general, as they move to ultramobile devices.

    Does this drop in sales mean we're truly entering the Post-PC era?
    Alright. STOP IT. It's sick. You just love saying that, without much ground for saying it. POST PC ERA MEANS "AFTER THE PC ERA". With one billion active PCs, and more being sold every day, you can't make that statement, it doesn't make sense.
    Reply
  • ojas
    It's not about desktops either. If people are using notebooks, their using PCs. So even if people have really old desktops in their homes that aren't being used, because they have a more recent laptop, THEY'RE STILL USING PCs.

    Even these convertibles will count as PCs, or tablet PCs, and unless they use Atoms they'll continue to count as full PCs or tablet PCs in terms of Intel's processor sales at least.

    And then people keep saying that Mac OS X market share is on the rise. ALL Intel Macs are PCs FFS!

    Consider this: My college has made laptops from this semester onward. Their recommended spec is a Core i5, 6GB of RAM, a 2GB GPU and a 750GB HDD.

    It's excessive for the intended purpose (online tests and assignments), but the point is, it's not doable on a tablet or phone.

    Tomorrow, I'm going to pick up an old Intel MacBook from a family friend who's had it lying around unused (BECAUSE HE BOUGHT A NEW ONE), i'll throw in an SSD, Install mountain lion, add more RAM, and i'll be set till graduation.

    If i need heavy computing (i'm in engineering college), or for playing games and stuff, i have my Windows 7 based desktop (WHICH I'LL UPGRADE TO HASWELL THIS YEAR).

    We're also moving to a new home, where i may set up a media file server...

    So what post PC era? Stop talking about it untill it comes. Or until the ipad plays Crysis.
    Reply
  • mortsmi7
    I have an i7 920, it works great I don't see the need to upgrade right now. If I do upgrade it will be for MB features.
    Reply