According to a preliminary
estimate by market research firm IHS, PC sales declined by the highest
amount in at least 10 years in the first quarter. Mobile PC shipments
declined 13.4 percent compared to the fourth quarter, IHS said. While
sales typically decline in the first quarter following the peak season
in the fourth quarter, the drop this year appears to be abnormally
sharp, even exceeding the 10.3 percent plunge during first quarter of
2009, when the financial and economic crises were at their peak.
PC Industry is facing major challenges as it struggles to find a place
in the consumer’s budget amid the rising popularity of the lower-priced
media tablet,” said Craig Stice, senior principal analyst for compute
platforms at IHS.
IHS expects PC market conditions to improve in
the second half of 2013 as new mobile products drive market growth.
Global shipments of ultrathin and Ultrabook PCs are expected to nearly
triple in 2013, mostly driven by increased sales in the second half of
For the second quarter, Intel said to expects sales of between $12.4 billion and $13.4 billion.
the full year 2013, Intel said it continues to expect revenue to
increase by a low single-digit percentage compared to 2012 sales of
$53.3 billion. The company cut its 2013 capital spending estimate by
about $1 billion, saying it now expects to allocate between $11.5
billion and $12.5 billion to capital spending.
challenging PC market and the notion that PC sales may have peaked,
Otellini said the future for Intel looks bright. "I am excited about
what lies ahead for Intel," Otellini said.
Intel's CEO search
"remains on track" with the goal of naming a successor when Otellini
retires next month, a spokesman for the company said. Executives did not
discuss the CEO search during the analyst call.
Intel's problems are a result of being largely tied to and identified with the PC market, and the PC market is withering.
I think the decline of the PC is largely inevitable, and don't really blame tablets. The market is saturated, and pretty much everyone who can use a PC likely has one. While there's a substantial market, it's for upgrades and replacements, not new sales. The financial markets like growth, and that market isn't growing.
I don't really see Ultrabooks becoming hugely successful. They fall into the upgrade and replacement category. If you buy an Ultrabook, you are probably replacing and existing laptop, notebook, or netbook with a faster and more powerful device.
I'm not counting Intel out. They have enormous resources and a huge technology portfolio. Their challenge is successfully competing in markets other than the PC, and their biggest current problem is addressing the perceived advantage in power efficiency held by ARM.
As we seem to be rapidly approaching the point where the microprocessor architecture no longer matters (except for maximum efficiency), maybe it's time for Intel to start over with a clean sheet approach to a new, non X86, non ARM, microprocessor. Maybe they could inlist Apple as a partner since Apple could use some hardware differentiation as well, to form the start of a new duoply for both personal computers and especially mobile devices.
I do not agree that the difference between gross margin and ASP is "semantics". As far as whether Intel will be able to compete successfully against ARM vendors: we shall see. Whatever you want to believe about Intel and its people they are not exactly dumb and see the same market shifts as you see. So far Intel managed to not only survive but thrive over market inflections, and they have been thorough many of them over the past decades. I certainly would not bet against Intel.
Revenue per wafer is directly related to ASP. I don't see how Intel could manage low margin based on their business model. Although Intel is one generation ahead, TSMC and Samsung are catching up fast. I think Intel is doomed. It's high expenditure fab will kill itself in long term.
I think lack of innovation is killing the PC. While hardware keeps incrementally improving, software to take advantage of this microproessor power is lagging. Software resources are being diverted to apps for smartphones and tablets.
I should have said gross margin instead of ASP, although we are kind of quibbling semantics here. Intel supports huge design, process development, test, marketing, and legal costs. There is NO WAY they can support these costs with the gross margin of an ARM vendor. Why is there such aggressive denial of the financial reality? I want Intel to survive, but I can see the way this story is headed.