Intel's enthusiasm about the PC market as well as its smartphone prospects can arguably boil down to one word: China. For Microsoft, China's PC market may not be the savior it is for the other half of Wintel.
As noted, Intel is upbeat about its 2012 outlook and product roadmap. That roadmap has a few question marks based on slowing PC sales and an unproven smartphone effort. However, Intel CEO Paul Otellini sees things differently. He's all about the emerging markets---notably China.
Otellini laid it out on Intel's fourth quarter earnings conference call. He said:
Emerging markets now account for two out of every three incremental units of the PC demand. A shift that is rewarding Intel and the PC companies that have a long standing committee presence in these markets. Looking back at the last 12 months of recorded data, emerging markets like India and Indonesia grew 22% and 37% respectively. China, now the largest PC market in the world, represents 20% of all PC demand, and grew a remarkable 15%. Even with that, China has a household penetration rate of just 35%, versus almost 90% in the U.S. China is the world's largest market for mobile phones. With more than 950 million subscribers. It's also at the forefront of the smartphone boom and will be the home of the world's first 32 nanometer smartphone. Last week at CES, Lenovo announced the K800 based on Medfield. The K800 will be available on the China Unicom network in Q2, and will showcase very competitive battery life and outstanding performance.
The translation: The demise of PC growth is greatly exaggerated given that emerging markets have plenty of headroom and white box manufacturers---which are significant players in fledgling markets---may not turn up in IDC and Gartner data.
In other words, Intel could become a huge smartphone player and benefit from PC sales only if it dominates China somehow.
The other side of the Wintel equation doesn't look as bright. Microsoft has been struggling with software piracy for years in China. The software giant has made some headway, but PC revenue in China doesn't necessarily flow to Microsoft. Also: Microsoft's Ballmer: Piracy killing our China revenue
Add it up and Intel's gain in China may still be Microsoft's pain.