The personal computer is slowly dying. And Intel has almost no presence in the smartphones and tablets that are replacing PCs.
Intel may be a little complacent because its own PC business has been doing fine recently.
Intel’s last earnings report was way better than Wall Street expected. Revenue in Intel’s PC Client business was up 17% both for the quarter and the entire year, even as the total number of PCs sold was about flat year to year.
Intel was able to do this because people are demanding higher-powered PCs with more expensive processors, so its average revenue per unit is up.
But that’s today. There’s plenty of evidence that the PC is being eclipsed:
- In the last quarter, sales of smartphones outstripped sales of PCs for the first time. That trend is only going to accelerate as smartphones get cheaper and everybody replaces their old “dumb” phones.
- In less than two years, Apple’s iPad has captured quarterly sales equal to 17% of the traditional personal computer market. Last quarter, Apple sold more iPads than the total number of desktop computers, and sold more iPads than any single computer maker sold PCs.
- Gartner recently issued a report suggesting that the “personal cloud” will replace personal computers within two years, and that a lot of workers may not need a PC.
Intel has almost no presence in smartphones or tablets.
In fact, revenues for its Atom processor — the low-powered processor that Intel ships in cheap portable computers and some tablets today, and which it hopes to ship in volume in smartphones in 2012 — dropped 57% in the last quarter. It amounted to only $167 million of Intel’s total $13.9 billion in revenue last quarter.
Even long-time partner Microsoft has turned to ARM for its iPad competitors — it’s coming out with a special version of Windows for consumer tablets called Windows On ARM.
There have been numerous reports that Apple is considering switching from Intel to ARM on its Macbooks as well.
Intel shouldn’t be mucking around with “adjacent” businesses that aren’t really adjacent at all.
It should be on four-alarm alert, putting most of its resources toward building low-power microprocessors that can compete with ARM in tablets and smartphones, then marketing these chips like crazy to every company building portable devices.
Otherwise, Intel could end up like Research In Motion: blinded by what appeared to be great operating results even as its legacy business is slowly collapsing.
By the time the slow death of the PC hits Intel’s bottom line, it will be too late.