Intel’s Profit Falls 27% as PC Sales Drop

http://www.nytimes.com/2013/01/18/technology/intel-earnings-are-sharply-lower.html?src=recg

by clicks • 14 years ago

50 65 14 years ago

nytimes.com

vezycash2• 14 years ago

Profit or earnings?

adamt• 14 years ago

Profit === Earnings (http://www.investopedia.com/terms/e/earnings.asp)

From the article: "reported net income of $2.5 billion, or 48 cents a share, down 27 percent from $3.4 billion, or 64 cents a share, a year earlier"

Which is a 27% drop in total earnings or a 25% drop in EPS. The difference due to a share buy back improving the EPS by reducing the issued share capital.

vezycash2• 13 years ago

thanks

hkmurakami2• 14 years ago

profit == earnings != sales == revenues

mtgx• 14 years ago

This is something I've argued before, too. Even if Intel gets every bit as good as the ARM competition in mobile devices, that may be pretty irrelevant to them, as they will have a very hard time competing as "just another mobile chip maker with tiny profits per chip". It will be hard for Intel to adapt to that as a company. And that's besides having to defeat established incumbents in the mobile chip market. The end of the "normal" PC market is not good at all for Intel.

As the situation becomes worse for them, you'll see them adopt more desperate moves such as mandating every "ultrabook" (a trademark they own) manufacturers buys their McAffee antivirus, and other such moves, to try to increase their profits and revenues, but I don't think it will help them much in the end.

The ultrabook market is a dead-end, anyway. So far their ultrabook sales have been several times lower than initially predicted, and most PC buyers want to buy "cheap" Windows machines, not $1000 Windows machines. The people who want that kind of PC, usually go for a Mac instead, and the latest sales data shows that. And Macs are still a niche market in the grand scheme of things. It's about the best Intel can hope for as far as "ultrabooks" go. And they better hope Apple is not moving to 64-bit ARM chips for Macs in 2014.

Alterlife2• 14 years ago

Ultrabook prices are dropping every other month. I'm assuming that the expectation is that ultrabooks with higher processor speed, higher build quality, and possibly convertable to tablet factor will eventually be as cheap as or cheaper than netbooks are today.

wmf• 14 years ago

Intel keeps increasing the specs on ultrabooks (like mandatory touch) to keep prices high and sales low.

dangrossman2• 14 years ago

With full-power Intel Core chips rolling off the line today using <7W of power, we're almost at the point where you can have MacBook Pro computing power behind the glass of a tablet and still get 8+ hours of run time. Dock it to a hard keyboard with another battery to turn it into 12-16 hours. That's today, and it'll get better every year as the processors and batteries improve.

I think Microsoft is actually ahead of the curve here, and the tablets of the near-future will be more like the Surface Pro than the iPad. Your grandma can use hers to check e-mail and run pre-screened apps from an app store, while you can use yours to run Visual Studio or Photoshop. With full computing power in tablets, they could supplant not just Android/iOS but laptops, ultrabooks, netbooks and desktop towers.

xradionut2• 14 years ago

Except that Microsoft is failing on their OS marketing and can't rely on corporate adaptation of Windows 8. The RT version of Surface is a sales fail. Much of their new software push is cloud based, which wouldn't necessary require a full version of Windows. Heck, they even lease Linux VMs on Azure, just confusing the whole message. Why run Windows when every thing except for corporate servers can be done on Android or Linux?

pekk2• 14 years ago

When this marvelous device with processing power, large battery and keyboard comes to the market in a serious way, I propose we call it a "laptop".

j-g-faustus2• 14 years ago

Why would grandma want to buy a powerful $1000 tablet when a $200 tablet can do everything she wants to do perfectly fine?

The main issue is that the vast majority simply don't need all that much computing power, it was the lack of alternatives to the PC form factor that kept CPU power, prices and Intel's profit margins inflated.

I don't doubt that there will be a market for powerful tablets. But it's a small market; the grandmas of this world won't be buying them any more than they used to buy powerful workstations.

makomk• 14 years ago

That 7W isn't the maximum power consumption, it's the typical power consumption. Maximum is a less impressive 13W - and that's not counting the power used by the chipset, since this isn't a SoC.

justincormack• 14 years ago

No sorry. A very few Intel chips are coming off at 7W (really more). If they all were it would matter but just getting a few there does not help. I can't get a 7W macbook air...

jxdxbx2• 14 years ago

By the time this happens, ARM chips will be as powerful as Cores are today.

larrydag• 14 years ago

IBM had to evolve away from hardware into technology services. Intel would be wise to do the same.

revelation• 14 years ago

The only remaining competetive CPU maker out there will retire to technology services? It is getting hard to notice throughout the "lets run this tablet CPU as a server" but Intel has a huge advantage in process, performance and knowledge.

Right now, they only lack the humility to apply that to low-cost energy saving chips. I'm sure lost profits will apply the necessary pressure.

seanmcdirmid• 14 years ago

Oh no, don't copy IBM! They've evolved away from technology into accounting gimmicks. What do they have to offer for the future at all? Intel should innovate its way out of this mess or die, not go into services, that would be pointless for society.

FredFredrickson• 14 years ago

There's never going to be an end to the "normal" PC market until people find a way to get work done on all the devices that will purportedly take the PC's place.

ableal2• 14 years ago

The interesting question is whether Intel is going to sell fab capacity to third parties.

Given the umpteen billions they have invested in semiconductor fabrication plants, and the lack of sales of their own chips ...

SkyMarshal• 14 years ago

And their lead in process technology. I would think that alone would drive some demand from third parties wanting to one-up their competition in a way that can't (easily) be countered.

caw2• 14 years ago

They already started doing it: http://arstechnica.com/business/2010/11/intel-shifts-strateg...

xradionut2• 14 years ago

In the consumer world, "Wintel" should be wary of the future.

Except for the one beefy laptop/workstation and my wifes gaming PC, (both which should be good for years), most of the devices we have bought or planning to buy don't require an expensive Intel CPU/chipset. And we don't need any new Windows software outside of the annual Quicken/TurboTax update. For portable use, there's smartphones and I'm thinking a good ARM based Linux laptop should be hitten the market soon enough.

pekk2• 14 years ago

Why are we still saying "Wintel" when Macs have been using Intel processors for years, and now non-Intel platforms are a much more significant part of Microsoft's strategy than ever?

mitchty2• 14 years ago

I think the distinction is the windows/intel portion of the market. Of which macs aren't at all a member. Basically the 90's/2000's are over for the Windows/Intel "sure thing".

Given Microsoft is now also looking at arm, Intel is going to have a harder go at the Windows side of things. And if the rumored Apple arm laptops pan out, they've lost a very high end vendor as well. But I'm deviating from my reply, enough squirrel banter.

blisterpeanuts2• 14 years ago

PC sales dropping? Dell talking about going private? HP losing money? Tough. Let them try harder to win business. Here are a few suggestions.

1. Eliminate the Windows tax. From now on, vendors should offer bare systems that can run Windows and/or some flavor of Linux, Chrome OS and maybe even Android. Give me a radio button for each, so that I can watch the price change as I toggle. Enough with the "comes with Windows 8, but we won't tell you how much that costs."

2. Offer multiple years warranty. A car typically is 3 years or 36,000 miles. So why can't a PC be guaranteed for 3 years or 10,000 operational hours? I've seen so many components fail after 91 days, and then we're into a painful customer assistance process with some guy in Bangalore reading scripts in some dialect that sounds like English.

3. By the way, offer real customer service, not some guy in Bangalore reading scripts in some dialect that sounds like English.

4. Work harder to shield the user from malware: build more security into the hardware, e.g. trusted certificates and low level trusted, signed checking of application binaries.

5. Touch screens.

6. Get more creative with the form factor. Mac Mini is a good example of an elegant, efficient unit that doesn't look and sound like an air conditioner sitting under your desk, yet is packed with useful ports and computing power.

7. Tout your products as the mother ship for mobile devices. Provide tablet connectivity and drivers out of the box, and include bluetooth rather than making me order a $10 dongle online just to have this basic feature.

Just some ideas; anyone got anything else?

tgpc• 14 years ago

re 1: free windows for personal use? the OS market is more competitive now, that should have an effect on price

jonursenbach2• 14 years ago

I still don't really why nobody else has tried to compete with the Mac Mini. Dell had their Zino, but it looks like they've since discontinued it. I would love to have a Mac Mini sitting on my desk running Linux, but I can't justify spending $600+ for it. Some other PC manufacturer needs to finally step up to the damn plate.

caw2• 14 years ago

Check out the Intel "Next Unit of Computing" http://www.intel.com/content/www/us/en/motherboards/desktop-...

sfont• 14 years ago

Intel has made a tepid offering with their Next Unit of Computing. But it is only being sold as a bare bones kit and you will easily exceed the price point of a Mac Mini once your start adding the components to it.

bhauer• 14 years ago

Good ideas. I am a Windows user but I fully agree with #1. No reason to assume that everyone wants Windows.

Of your ideas, I like #6 the most. People decry the death of the desktop PC, but for years now I have been of the opinion that none of the PC manufacturers are trying to do anything interesting on the desktop. Hence, no one feels any incentive to upgrade.

My highest-ranked idea for breathing life into the desktop PC is ultra high-definition very-large displays. Everything else falls into place from there. Ultra high-definition requires new GPU technology, potentially higher storage capacity, higher bandwidth, etc.

I've written about that here: http://tiamat.tsotech.com/displays-are-the-key

ars2• 14 years ago

None of that will help.

1. People don't want barebones systems - they want a fully working computer they turn on and use. People who want a barebones system do it themself, and are not a large market.

2. That just increases costs, and will not increase sales. You want it, obviously. But it won't help the seller.

3. Same as #2 - that doesn't increase sales, and does increase costs.

4. Good luck with that. Microsoft is trying that with secure boot (with hardware support), and people are screaming about it.

5. Gorilla Arm. Assuming you are talking about a PC, it's not practical to use a vertical touch screen.

6. A good suggestion. Market computers the way kitchen appliances are marketed: By how they look, with some discussion of functionality, but looks are paramount.

7. It's nice I guess, but I'm not sure it'll help all that much.

blisterpeanuts2• 14 years ago

Ars - re #1, I am not saying make Grandma install Win/Lin/*os, but rather make it an option during the buying process.

I'm pricing new cars right now and the makers are doing these interactive build-your-car websites where you select every single accessory and option and watch the price go up or down accordingly. Admittedly, Dell has had such a service for years, but preinstalled Windows is usually non-negotiable. Just automate the OS install process (if it isn't already) and let the user shave the $80 off the price if he prefers a free OS rather than a paid OS.

bad_user2• 14 years ago

2. There's a big market of people that actually have to get work done, from freelancers of all kinds to big businesses, people that get drowned into a sea of crapware and consumer-related nonsense.

This market is seriously under-served and unappreciated. And in fact it's why Windows 8 will be seen as Microsoft's biggest disaster.

4. I agree and in fact it's why I think today's walled gardens will fail, while the PC will prevail, just like in the console wars of a couple of years ago.

DigitalSea6• 14 years ago

I refuse to believe the PC is dying, evolving perhaps but not dying. People have been saying PC's are dying for the last 10 or so years and yet here we are, commenting on HN using our PC's and Mac's (which are PC's at the end of the day). Tablets in my mind will never work for programming or designing. I will always need a large screen and peripherals like a keyboard at the very least to do my job. Could anyone else here imagine developing on a tablet screen? I couldn't.

jarcoal• 14 years ago

It doesn't need to die for Intel to bleed.

Power users (developers, designers, etc) are such a small fraction of overall users we might as well be 0%.

hkmurakami2• 14 years ago

The key distinction of "creation" vs "consumption" of computing and media.

For creators, PCs are indispensable. Like you, I couldn't fathom using an iPad to write code or prose.

However, consumers don't need the creative powers and capabilities of a PC. In this paradigm, phones and tablets are a simpler, more portable consumption terminal.

Creators, both business and otherwise, will need machines that let them design, code, write, and analyze. Consumers never needed these capabilities, and now that there are compelling devices that offer an arguably superior media consumption experience, creation machines will be put on the margin.

A significant minority of non-professional users of computing devices are consumers, rather than creators of content. But the defection of this significant minority is enough to impact the bottom line of companies like Intel.

xoail• 14 years ago

I agree with other commenters here. But regarding PC being required for creators to do their job will also go down as technology progresses. It wont be too long until developers and designers will hook up their tablets to external screens and keyboards and start creating. One great concept could be to AirPlay onto an external screen while your tablet's screen acts as a touchpad, plus a bluetooth keyboard. Tablets could very well become a terminal to consume as well as a platform to create.

DigitalSea6• 14 years ago

I think a lot of creators will need PC's for the foreseeable future. Could you imagine a motion designer editing and colour grading 5tb of raw video footage on a tablet? The problem with tablets is storage. There's no doubt tablets will be as powerful as an i7 PC, but because of their small form factor and current storage technology there is no way to cram 3tb of storage into a tablet without the size of it being blown way out of proportion. The perception of tablets is they have to be smaller than laptops, lighter and fast. With current storage technology a tablet would be indistinguishable from a laptop because of weight, cooling and size factors.

rayiner2• 14 years ago

It's not that people no longer need their PC's with their big screens and keyboards to do their work, it's that only a small fraction of those people need more CPU power. Heck, my mid-2010 MBA still makes a perfectly good developer machine, and it's only got a 1.86 GHz Core 2 Duo. Indeed, Apple was lambasted by the press at the time for putting a two and a half year old chip into the machine. And really it's just a ULV die-shrink of the Conroe core.

I'm excited about Haswell, but only because it's supposed to come in under 10W. I feel like MBA battery life took a step back with Sandy Bridge/Ivy Bridge (the mid-2010 model lasts forever on a charge).

DigitalSea6• 14 years ago

I agree on the CPU power front. My core i7 machine will easily last another 5 years without needing to upgrade, because in my opinion Intel have reached a point where they can't better themselves at this point in time. But what about storage? An iPad for a 64gb model is super expensive, about as expensive as a laptop with at least 500gb, sometimes 750gb of space and a decent screen + CPU. Sure not everyone needs space, but we are living in a day and age where more people are downloading than ever. A 64gb tablet vs my 3.5tb of PC storage with option of buying another $70 1tb drive and adding it in when I need more, tablets can't quite compete on that scale.

yk• 14 years ago

Technically a tablet can be powered by an Intel processor, as well as a development platform can be powered by non x64 architectures. So the need for a large screen and a keyboard does not mean that the PC will survive, since you could just hook up a TV and a bluetooth keyboard to an tablet. ( Actually one of the underexplored possibilities of UI design.)

sleepydog• 14 years ago

I would like to see the rise of the home server. Cloud services have latency and privacy issues. Imagine a small, powerful and energy efficient server that you could tuck away in a closet and connect to your gigabit or faster network.

This server would provide all the horsepower, centralized storage, and session management (think IRC chat etc) that you need -- and you can access it on any device in your house.

Imagine a keyboard running a tiny OS that could detect the nearest registered display. You could write code on the TV for a few hours, walk over to a desk and pick up where you left off. That's what I would eventually like to turn my home into (by setting up a Plan 9 network and writing terminal clients for android set-top boxes), but it's hard to find the perfect home server.

DigitalSea6• 14 years ago

I've been dreaming of a home server revolution for years myself, but sadly due to the fact in Australia the Internet is slow and we're only just now rolling out a national 100mb fibre network which won't be finished for quite a few years and will be expensive with little guarantee of a decent data allowance doesn't give me much hope. Cloud storage is definitely not ready for the prime-time yet, I don't trust it and as Amazon has proven even they haven't even quite worked out how to reliably provide cloud services.

vor_• 14 years ago

> People have been saying PC's are dying for the last 10 or so years

And they have been, losing sales first to consoles and then to smartphones and tablets. Children are growing up on Xboxes and iPads, not PCs.

Desktop PCs will be like pickup trucks, to reference Steve Jobs's famous analogy. Someone will always need them, but most people won't have them.

DigitalSea6• 14 years ago

A pretty slow death in my opinion. It's not the massive coronary rupture we've been told it is, more like an untreated paper cut very slowly but surely bleeding. I might not be in the majority then, but the thought of using a tablet tethered to a screen doesn't feel like it'll ever be a decent alternative (well at least not an Apple tablet). Tablets as they stand aren't going to kill anything, much like phones and consoles because they're so heavily restricted in what you can do as well as what storage capacity they have and storage capacity as an avid Bittorrent user is important to me.

The day that providers start releasing tablets with 1TB of storage and ability to add-on additional storage with ease is the day a tablet can compete with a computer. We live in the day and age of extreme data consumption, tablets with their minuscule 64gb of storage aren't enough to store the modern day PC users information. Cloud storage might eventually fill that gap one day, but the Internet even in some of the most developed countries is still unbelievably behind and bandwidth still expensive (and I would know, I live in Australia and people in New Zealand pay even more for less) not to mention cloud storage as proven by Amazon's constant downtime isn't reliable enough to store information that is guaranteed to be accessible all of the time nor can you access cloud data without an Internet connection and wireless Internet connection options like 3G or 4G are very expensive for so little in data allowances.

redwood• 14 years ago

Anyone know what % of Intel chips go to the datacenter/server market? It must be higher and higher all the time. Perhaps it'll eventually be the majority!

ritonlajoie• 14 years ago

And AMD's stock price got it worse than Intel's. http://finance.yahoo.com/q/bc?t=5d&s=INTC&l=on&z...

georgeott• 14 years ago

CPU's have reached the inevitable point where 90% of users simply do not need that kind of speed.

You can build a car that goes 200mph, but there are not going to be many buyers.

jxdxbx2• 14 years ago

I think most OEMS would rather do without the very real technical advantages that Intel brings, than be stuck with Intel. If they could switch to ARM for PCs easily they would, and there's no way they're going to sign up for Intel chips on mobile devices, at least not unless it starts making ARM itself.

Say Intel is a process generation ahead of everyone and has fancy tri-gate transistors and what have you first. Is it really worth abandoning all that ARM gets you--the ability to design custom silicon, bid different foundries against each other, etc?

Intel’s Profit Falls 27% as PC Sales Drop

Related Stories