'Lack of innovation in the PC product cycle' spells problems for Intel: analyst

'Lack of innovation in the PC product cycle' spells problems for Intel: analyst

Summary: Being at the heart of the PC industry means that the shift from PCs to post-PC devices is putting considerable pressure on chip giant Intel.

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Intel may be one of the giants of the PC markets, but as desktops and notebooks give way to smartphones and tablets, the chip-maker faces increasing headwinds.

According to Stene Agee analyst Vijay Rakesh, neither the holiday season nor Windows 8 has helped to invigorate the PC industry much. To make matters worse, Intel's attempts to break into the mobile market are being thwarted by entrenched players.

In a note to clients, Rakesh points out that while Intel has introduced the Atom Z2420 32-nanometer dual-core processor which offers competitive battery life compared to previous generation Intel silicon, it will face challenges from the likes of Qualcomm and its latest Snapdragon hardware.

Servers are also no safe haven for Intel, as pressures from ARM 64-bit technology could erode the 60 percent server margin that Intel currently commands.

See alsoQualcomm makes play for high-end devices with Snapdragon 800 and 600

As far as tablets are concerned, Rakesh dismisses them as irrelevant. "We believe there is little excitement in the channel and the supply chain around WinRT or Win8 Pro tablets," he wrote.

Given this, Rakesh believes that Intel will report Q4 2012 revenues of $13.4 billion, or $0.44 per share, below analyst expectations of revenues of $13.5 billion, or $0.45 per share.

"While Intel has rebounded in the last month," writes Rakesh, it is primarily on near-term expectations of stable PCs and we believe the PC space remains challenged with increasing pricing pressures in servers from an ARM entry."

It doesn't get much better for Intel in the short term either. Rakesh believes that PC builds in Q1 2013 will continue to be slow, which will put a further drag on Intel's revenues.

In closing, Rakesh delivers damning condemnation of the PC industry. "A lack of a competitive ecosystem versus tablets and lack of innovation in the PC product cycle continue to be headwinds to driving upside."

Topics: Intel, Hardware, Processors

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39 comments
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  • Intel just has to get their low power chips into tablets and smartphones

    And haswell isnt enough. They need to light a fire under airmont and get it out in 2013. Intel has nothing to worry about from W8 sales or a shrinking PC market if they just get this done. Their chips are so far ahead of ARM on perf it's not even funny. If they get same or better on power usage they win. Simple. And they have the manufacturing process lead to do it.
    Johnny Vegas
    • Re: Intel just has to get their low power chips into tablets and smartphone

      More than that, they must do it at priced competitive with ARM.

      Which, unfortunately, they won't be able to do. They're using newer fab processes, which are inevitably more expensive. They have to use these because they're hampered by a more complex, power-hungry instruction set. And as a whole the company is simply unused to commodity-level profit margins, and the lack of ability to dictate what products are made with their chips.

      All in all, I see the whole Atom effort turning out like the Timna fiasco, only much, much more expensive.
      ldo17
      • You sound exactly like the naysayers back when XBox was first introduced,

        and many wanted MS to save their billions for other efforts.

        Now, you, the ultimate anti-MS "spurter" of nonsense, would like to have people believe that, your nonsense really makes sense.

        You have never had any credibility regarding anything Microsoft, so why do you keep making a fool of yourself?
        adornoe
        • Re: You sound exactly like the naysayers back when XBox was first introduce

          Which, funnily enough, lost billions in its first several years on the market, and has yet to recoup those losses.
          ldo17
        • The Xbox

          I have yet to see one Xbox live (I happen to not live in the US) -- while I have seen plenty of PS and other game consoles. About the only serious Xbox ad I saw was for a bundle of 40" LG HDTV with an Xbox 360 .. for 500 EUR.

          The Xbox is not really that popular.

          ldo17 is unfortunately right. Both Intel and Microsoft live in the imaginary world where the IBM franchise has put them. Intel has ignored modern CPU developments for so many years, because Microsoft was able to supply them with enough customers for desktop and power hungry server chips. Intel chips are traditionally designed around the shortcomings of mainstream Windows software (lack of multiprocessing) and so do score "better" on benchmarks that run those applications .. on Windows.

          Of course, Intel is a company with a lot of expertise, not only in CPUs and they could survive this and come out stronger -- only if they didn't invest improperly -- those high tech plants that give them the current advantages are pretty expensive -- and if there are no customers, might just drag down the entire company. Which would be really sad.

          As I see it, Intel's only proper way out is to stop considering Windows in their designs.

          By the way, ironically, the device you quoted, the Xbox actually does not use an Intel CPU. Why, one would ask....
          danbi
  • We can dismiss these claims due to a basic lack of understanding

    "As far as tablets are concerned, Rakesh dismisses them as irrelevant. "We believe there is little excitement in the channel and the supply chain around WinRT"

    Intel is doomed because no one wants an ARM based Windows RT device?

    Yeah. Okay.
    toddbottom3
    • And you dismiss the analyst ......

      claiming a "basic lack of understanding", with "Yeah. Okay."

      Dismissing you is like shooting fish in a barrel.
      D.T.Long
      • And yet

        You can't refute what he said.
        Michael Alan Goff
        • And yet

          You can't prove he's wrong either (on the scale of the populous; due to the surface being hard to come by).

          That's the great thing about opinions though, sometimes neither side is wrong due to the inability to prove either.
          icyrock
          • Oftentimes, it's not opinions that are being made, like with the

            analyst mentioned in the article, who, like a lot of other so-called analysts who don't want to see MS succeed, will make negative comments, hoping to derail any kind of success from MS. It's not opinion which is blurted out; it's mostly wishful thinking from some analysts, with the intent of making their wishes come true by trying to get others to believe them.

            Opinions are a dime a dozen; wishful thinking is many times below the most nonsensical of opinions.
            adornoe
          • The problem is

            that people are paying this analyst massive money for his opinion.
            Michael Alan Goff
    • Re: Intel is doomed because no one wants an ARM based Windows RT device?

      He was talking about WinRT, not Windows RT.

      That you failed to appreciate the difference is not your fault, the blames lies squarely with Microsoft's chronic fragmentation problem.
      ldo17
      • Obviously not

        He said there was no interest around "WinRT or WinPro tablets" as if they're different products.
        Michael Alan Goff
    • comprehension is vital

      Apparently, the guy was talking about Intel CPU based tablets.

      Remember, those exotic computers, running Windows that try to gain some market for the past decade or so.

      By the way, what could really save Intel on the desktop arena is if they pay more attention to the non-Microsoft platforms. Funny enough, those platforms are more forgiving and easier to work with. Same on the server front and on the desktop front.

      Intel already has several in-house projects to support open source platforms, with some really good staff there. They should just improve on that.
      danbi
  • Another 'Analyst' , another super idiotic story

    This 'Analyst' claims that he can read the writings on the wall, he should resign his 'analyst' job and start trading in stock market. This guys seems to have no clue about technology, and he is talking about innovation, does this moron understand what innovation is?
    Owlll1net
    • Tweedledum and Tweedledee

      AKA toddbottom3 and Owlll1net froth at the mouth while having absolutely nothing to say. They shoot the messenger but have no counter point, facts or reasoned responses. And then they vote for each others nonsense.

      It must be a tough time to be MS shills, with only pathetic blabber in your arsenal.
      D.T.Long
      • When the analysts start making good predictions, I'll start believing them.

        When the "analysts" start making good predictions, I'll start believing them.

        Simple as that.

        There's no "messenger" here, because there's really no message. Just wild guesses about the future.
        CobraA1
        • Isn't that exactly what the opposing side is doing though?

          Wildly guessing the future both positive and negative, guessing what people are going to want to buy Ect?
          icyrock
      • Actually he has a point

        the "analysts" tradtionally have been a joke from IT back to "wall street" so we will see but statistically he's correct anal sphincter hole in the ground - they can't tell the difference.
        ScanBack
  • "As far as tablets are concerned, Rakesh dismisses them as irrelevant"

    He obviously agrees with Loverock, then ("tablets are just a fad").
    Smalahove