Most of Intel’s income in 2014 was a result of selling PC chips to computer manufacturers all over the world, one reason why Intel keeps abreast of trends in the PC market.
Unfortunately for Intel, that market has been declining lately (and the company has not made much of an impact on the mobile chip industry either). In Q1 2015, global PC shipments fell 5.2% compared with the previous year, according to Gartner.
PC market declines, Windows 10 won’t help
The biggest decline in the PC industry came from the desktop PC segment, which has long been Intel’s core customer base. As a result, Intel cut almost a billion dollars off its forecasted revenue in March due to weak demand for Windows XP upgrades and desktop PCs.
Intel doesn’t expect anything to change soon, even with Microsoft’s much-hyped Windows 10 operating system set to be released later this year.
“We are going through another transition, Windows 10 upgrades…We’re seeing some quarter-to-quarter pushing, but we continue to take a view of our long-term forecast…the PC market should be flat to slightly down mid single-digits over the long-term”, Intel’s CEO Brian Krzanich said on Thursday’s annual shareholders meeting.
However, Krzanich didn’t sound worried about the impact on Intel’s growth, as he said the data centre business and other segments should help to offset losses in PC sales. The company’s data centre business grew a healthy 18% last year and is expected to become a $14 billion business this year.
“We look at it as our next big growth engine for the company”, Krzanich said.
Unfortunately it’s almost impossible to determine exactly how the slowing market for PCs will impact on Intel’s chip sales, as from the last quarter Intel is reporting PC and mobile sales in a single business unit called Client Computing Group, in essence to hide the more than $4 billion in losses accrued by its mobile unit, which faces tough competition from the likes of Qualcomm.
In any case, Intel has stressed the size of its burgeoning data centre business – the Data Centre Group’s $1.7 billion in operating income last quarter outpaced every other Intel business segment, and made up around 65% of the total.
SOURCE: Business Insider
Larry Banks is a keen follower of technology and finance. He has worked for a variety of online publications, writing about a diverse range of topics including mobile networks, patents, and Internet video delivery technologies.