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Intel's bad news could translate into bad news for Microsoft and Windows 7?

Intel, following an upbeat assessment a few weeks ago, is now cutting outlook for the third quarter following weaker than expected demand from consumers.

Intel, following an upbeat assessment a few weeks ago, is now cutting outlook for the third quarter following weaker than expected demand from consumers.

Intel Corporation today announced that third-quarter revenue will be below the company's previous outlook. The company now expects third-quarter revenue to be $11.0 billion, plus or minus $200 million, compared to the previous expectation of between $11.2 and $12.0 billion. Revenue is being affected by weaker than expected demand for consumer PCs in mature markets. Inventories across the supply chain appear to be in-line with the company's revised expectations.

Weaker than expected consumer demand for silicon from Intel (and AMD) means less demand for Windows 7. So far, Microsoft has enjoyed considerable success with its new OS, but this could be the first sign that the good times are coming to an end.

Which leads us to the obvious question - what was driving PC and Windows 7 sales in the first place? Was it Windows 7's excellence? Was it the feeling that the economy was improving so it was safe to spend money? Was it part of a normal cycle of obsolescence? Whatever the reason, declining consumer CPU sales will translate directly into declining Windows 7 license sales, which is bad news for Microsoft.

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