Intel CEO talks soft data center sales amid cloud growth

Intel's CEO says that he sees as a big shift in the mix between normal and slower enterprise growth.
Written by Rachel King, Contributor

While things look too uneasy in the PC market for Intel's liking, the cloud segment is doing a lot better.

During the chipmaker's quarterly call with investors and analysts on Tuesday afternoon, Intel CEO and president Paul Otellini cited that the company's cloud unit is growing by 50 percent over last year with storage revenue growing by 27 percent to a new record.

Otellini did acknolwedge that the "market remains tough" and that Intel's data center business "saw the corporate server segment softening over the course of the quarter. But Intel's chief executive maintained a positive front by saying that he has "been encouraged to see a renewed appetite for innovation across the entire ecosystem."

When asked later during the call about the future of application service providers in regards to Intel's robust growth forecast for the cloud segment, Otellini responded -- albeit a bit cryptically:

Well, I think the better comparison for the data center is year-on-year, which is the ASP was up a bit, up 1 percent. The down bit was really a big shift in the mix between what would be normal enterprise growth and slowing of the enterprise growth.

In general, for storage, for networking, I think for some aspects of the Internet data center, the mix is actually quite good...They tend to buy a fairly high mix, and one of the fastest growing elements of the business is high performance computing, which buys the top of line of our skews. So as those product lines get flushed out more and more, I really don't see the mix shifting away from where it's been the first half of this year. I see the current mix being a bit of an anomaly as a result of the softness of corporate data center server purchases.

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