Analysis: Intel fails to fix PC malaise

Intel's Gordon Moore and Robert NoyceIntel reported its financial first quarter results yesterday evening and as expected its PC business continued to decline.

But Intel consolidated its results making it hard to see how much money it’s losing on its really quite disastrous foray into the mobile and tablet markets.

PR executives spun the results by saying they were in line with previous estimates – but its previous estimates weren’t in line with the estimates it previously estimated.

Its revenues were flat and it expect its revenues to continue to be flat for the rest of the year. But with gross margins of 60.5 percent for the quarter, it still turned in a net profit of two billion dollars.

CEO Brian Krzanich said in a prepared statement that growth in data centres, the internet of things (IoT) and memory helped to keep its figures relatively not too bad.

The client computing group showed revenues of $7.4 billion, a fall of 16 percent compared to the previous quarter and a fall of eight percent compared to the same quarter in its last financial year.

And while the data centre group turned in revenues of $3.7 billion, that was down 10 percent sequentially but rose 19 percent year on year.

The internet of things group delivered revenues of $533 million – a fall of 10 percent compared to the previous quarter but up 11 percent year on year.

Its software and services operating division delivered revenues of $534 million, down four per cent sequentially and three per cent year on year.

It is hard to describe Intel’s results as stellar. Like Microsoft, it is showing signs of malaise and despite optimistic forecasts that PC sales are going to go through the roof because of the launch of Windows 10, that is a hope, not a promise.

Intel’s problem is, that like IBM in the 1990s, it resembles a big oil tanker and can’t be turned around quickly. The real question is that as it depended on its success in the PC business through sales of X86 chips, where does it actually go now?

Its mobile strategy has been all over the place for years now and phone manufacturers quite simply went for better and cheaper ARM processors. The Wintel hegemony is over and Intel’s board lacks a charitable nature. Krzanich is too newly fledged to dump yet, but the board will already be demanding answers.

The problem is, there are no easy answers to the Intel malaise and despite it being the 50th anniversary of Moore’s Law (pictured, left)  in just a few days time, that isn’t going to stop the slow and steady decline in the company’s fortunes. Like Microsoft, it is largely irrelevant to the changing nature of current technology and we doubt the internet of things is going to make any real difference in the long run. ♣