Intel predicts rebounds for PC, datacenter units later this year

While the PC market looks like it's on a downward spiral, Intel executives are still predicting a comeback.
Written by Rachel King, Contributor on

With the PC market looking like it is in shambles, Intel is still predicting rebounds for both its PC and datacenter units -- at least by the end of 2013. For PCs, executives stressed lower prices matched with touch as key growth drivers this year.

See also: Intel's Q1: PCs, mobile, data center wild cards abound | Intel's Q1 good enough, company remains upbeat | Outgoing Intel CEO Otellini: Materials, manufacturing our foundation

During the earnings call on Tuesday, Intel chief financial officer Stacy Smith responded to analyst skepticism as why investors shouldn't expect a repeat of last year's second half.

Here's Smith's answer:

I think that as the OEMs start looking at new form factors that they can design around our new chips (Haswell in particular and maybe Baytrail) and Windows 8 enabling touch, the explosion and form factors and competitiveness of that platform is going to be substantially different at price points down into the [$300] or $400 range enabling touch. We didn't have that last year. So you go into the prime selling season with new products, new technologies, new form factors, and new capabilities that up to now [had] unapproachable price points.

Smith also outlined the chip maker’s forecasts for "double-digit" revenue growth for the datacenter group followed by growth for the PC group in the "low single digits."

To recall, first quarter revenue for Intel's PC Client Group was $8.0 billion, down 6.6 percent quarterly and down 6.0 percent annually (statement). The Data Center Group saw Q1 revenue of $2.6 billion, down 6.9 percent sequentially but up 7.5 percent year-over-year.

Intel's view on the PC market comes across as either patient and optimistic or foolhardy and in denial.

Just last week, IDC reported that global PC shipments plunged by 14 percent during the first quarter of 2013, which is the worst drop for the market in a generation.

Gartner's take on the PC market was a little less steep with a 11.2 percent decline.

It is important to note that the market intelligence firm defines PCs as "Desktops, Portables, Mini Notebooks and Workstations." That definition includes netbooks, but it excludes tablets with detachable keyboards.

Garnter's definition consists of "desk-based PCs and mobile PCs, including mini-notebooks but not media tablets such as the iPad."

Intel's definition appears to be all of the above.

Intel chief executive officer Paul Otellini asserted during the call that it is "no longer necessary to choose between a PC and a tablet."

Smith followed up later, stressing that Otellini's point was that the lines between traditional notebooks, convertibles, and tablets have blurred, giving way to a "market of computing."

He continued that analysts and investors should expect an improving economic environment to help out, describing that as "a reasonable assumption" and in line with "normal historical growth."

Smith added that the difference for the PC segment is that now it just consists of "a wider range of devices than previously supported," hinting that analysts should change their own ideas about what the PC market comprises.

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