Last week, market research firm IHS iSuppli forecast that PC sales would contract in 2012 for the first time since 2001. The PC slump is blamed in part on changing consumer preferences for new types of computers like smartphones and tablets that cost less and emphasize convenience and mobility.
Intel is pinning its hopes for stemming this tide largely on Ultrabooks and other types of ultrathin, low-power PCs that the chip company and its PC OEM customers will appeal to consumers by offering a blend of some of the capabilities popular in tablets with the performance advantage of a traditional PC.
"I don't think the tablet as we've seen it evolve over the last several years is the end state of computing," Otellini said Tuesday. He predicted that new innovations from OEMs would further and enhance and improve on the types of computing devices available.
"What I can't predict is what form factor is going to win here," Otellini said, adding that he believes devices like Ultrabooks that offer "the best of both worlds" will be some of the highest volume products. "But we won't know for 12 months," he said.
Otellini said Intel expects OEMs to bring out more than 140 Ultrabooks based on Intel's Core microprocessor, including more than 40 with touchscreen technology. Many will hit the $699 price point that Otellini has previously said would make Ultrabooks more appealing to mainstream consumers, he said.
IHS recently cut its forecast for Ultrabook sales in 2012 and 2013, but said it projects strong growth in Ultrabooks over the next fives years.
Intel's third quarter sales ended up coming close to the firm's original target for the quarter, about $13.6 billion. Advanced Micro Devices Inc., Intel's chief competitor in the PC processor space, warned last week that preliminary results indicate its third quarter sales came in lower than expected, declining about 10 percent sequentially.
"We are encouraged that Intel finally reset its expectations for PC demand and is lowering its utilization rates and inventory," said Christopher Danely, an analyst with JP Morgan.
For the fourth quarter, Intel said it expects sales to be between $13.1 billion and $14.1 billion, which would represent a 1 percent sequential increase at the midpoint. Stacy Smith, Intel's chief financial officer, said the slight increase in Intel's fourth quarter target reflects the caution Intel is seeing in customer order patterns amid concerns about the global economy, softness in mature markets and a slowing demand from enterprises.
Revenue from Intel's PC client group was $8.6 billion in the third quarter, down 1 percent from the second quarter and down 8 percent from the third quarter of 2011. The company's data center group had revenue of $2.7 billion, down 5 percent from the second quarter but up 6 percent compared to the third quarter of 2011.