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Intel vows mobile push following revenue slip

Intel vows mobile push following revenue slip

Intel's new chief executive Brian Krzanich plans to counter a slip in profits with a renewed push into the mobile market.

Intel has backtracked on claims that it would easily weather the global slump in PC sales, admitting in its most recent financial forecast that projected growth has turned into a small but noticeable shrinkage in revenue.

In an earnings call with press, investors and analysts, Intel was forced to admit that its previously-projected growth has not come to pass. Instead, its quarterly revenue stood at $12.8 billion - down five per cent year-on-year - thanks to the continuing slowdown in the market for traditional desktop and laptop PCs. That revenue - around $100 million away from analysts' average predictions for the company - has resulted in a profit of $2 billion, and while that's nothing to be sniffed at it's still down 29 per cent year-on-year.

During the call, new Intel chief executive Brian Krzanich explained how his company is looking to other areas - for which you should read 'mobile' - for future growth in what some are hyperbolically calling the post-PC era. 'In my first two months as CEO, I have listened to a wide variety of views about Intel and our industry from customers, employees and my leadership team and I am more confident than ever about our opportunity as a company,' he claimed.

'Looking ahead, the market will continue buying a wide range of computing products. Intel Atom and Core processors and increased SoC integration will be Intel's future. We will leave no computing opportunity untapped. To embrace these opportunities, I've made it Intel's highest priority to create the best products for the fast growing ultra-mobile market segment.'

Intel's desire to break into mobile, where its small Cambridge-based rival ARM rules the roost, is placed in stark clarity when divisional earnings are broken down. In the second financial quarter of the year, Intel's PC Client Group - responsible for the chips that go into desktops, laptops and all-in-ones - saw revenue drop 7.5 per cent to $8.1 billion. The Data Centre Group, meanwhile, saw revenue from the server market sit flat year-on-year at $2.7 billion. Finally, the 'Other Intel Architecture Group' - into which mobile currently sits - dropped a whopping 15 per cent year-on-year to $942 million.

Those are figures Intel is hoping to grow: its projections for the next quarter show a revenue of $13.5 billion at a gross margin of 61 per cent - three points higher than its actual Q2 performance. For the year, the company is hoping to finish on a level standing with last year - a distinct contrast to the company's previous projection of low single-digit growth.

With little sign that the PC market will grow in the near future, and Intel's attempts at breaking into mobile having fallen somewhat flat thus far, it's clear that Krzanich is going to have his work cut out if he wants Intel to grow under his auspice as it did under those of his predecessor Paul Otellini.

8 Comments

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rollo 18th July 2013, 12:28 Quote
Bet AMD wishes it could make 2bil in profit. Intel may have to start selling fab space to make cash been rumours for months that it would do so.
r3loaded 18th July 2013, 15:41 Quote
Quote:
Originally Posted by rollo
Bet AMD wishes it could make 2bil in revenue.
FTFY ;)
kenco_uk 18th July 2013, 17:07 Quote
More affordable, plentiful Haswell laptops plskthx.
maverik-sg1 18th July 2013, 17:46 Quote
Lackluster new products for the PC since Sandy Bridge burst onto the scene with rapturous applause, one reason why PC market is stale is that there's not enough performance jump from Sandy Bridge to Haswell to make enthusiasts want to upgrade.

Leaving any chance of growth in system sales, which of course isn't a growth area - most business PC's get replaced in 5 year cycles now and the mass market is choosing to buy portable devices over PC's.

The focus on FinFet processes and power reduction are both long term investment for future releases and die shrinks, Intel probably knew this and accept the short term pain in terms of these developments.

Although it's proven that the TIM they use between the die and IHS is exaggerating the heat issue in an overlcocked state, I hoped they would of at least fixed this.

$2bn is still $2bn - I'd like to know more about their future plans for the desktop, this switch to the mobile market is all well and good, but that market is saturated and it will take years to take market share unless they and their partners innovate beyond the products available today.
Nexxo 18th July 2013, 18:14 Quote
Quote:
Originally Posted by maverik-sg1
$2bn is still $2bn - I'd like to know more about their future plans for the desktop, this switch to the mobile market is all well and good, but that market is saturated and it will take years to take market share unless they and their partners innovate beyond the products available today.

Future plans for the desktop are irrelevant. There are not enough ehthusiasts to warrant investment in developing an uber-CPU, and the current ones are crazy powerful for most people's needs, and then some.

The PC market is sliding down; mobile devices are going up. Where does it make more sense to focus Intel's efforts?
Corky42 18th July 2013, 18:38 Quote
Quote:
Originally Posted by maverik-sg1
$2bn is still $2bn - I'd like to know more about their future plans for the desktop, this switch to the mobile market is all well and good, but that market is saturated and it will take years to take market share unless they and their partners innovate beyond the products available today.

Future plans are Skylake
maverik-sg1 18th July 2013, 20:15 Quote
Nexxo maybe right - desktop users are fast becoming relics of the old republic, the processing power requirements of a gaming PC will be governed by consoles which as we know for the next 4-7 years are not even as powerful as todays sandy bridge systems....maybe deves will work on doing more with more cores in future.

I guess the mhz wars are over :(

Intel are only a challenger in the mobile sector, to succeed in their ascension they need to align themselves with the next big innovation (ARM with it's relationship with Apple and Android have this arena well and truly sewn up) - google glasses and smart watches are novel but they are essentially extensions of existing innovation (ie smartphones) - they need to be the engine behind whatever comes after smartphones and smart watches and google glasses - Intel putting more effort into this market place makes some sense based on the sheer volume.

However, due to the saturation of the technologies in that sector until that next big idea, the mobile arena is hardly going to be the high margin cash cow the desktop and server computing remains to be.....would not be so bad but to make Haswell better than it is, all they needed was different TIM between die and IHS.
Corky42 19th July 2013, 00:56 Quote
I don't agree with everyone who see the demise of desktops, the market is shifting towards mobile computing and Intel would be wise to do all they can to address the needs of computing on low power, that is if they are not to late to the party.

In the past if you wanted a computer the only choice you had was a desktop. Now people have a choice on what suits their needs best, so in time i believe the market will find its own level.

Its just a matter of what percentage of the market will be made up of low power (mobile) processors and what percentage will be made up of faster processors (desktop,server)
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