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Intel sees 'no holiday cheer for PCs', says analyst

Intel sees 'no holiday cheer for PCs', says analyst

Summary: A weak back-to-school offering and looking ahead to a dismal fourth-quarter, Sterne Agee warns of "no holiday cheer" for Intel, and lowers its guidance on the chipmaker.

TOPICS: Hardware, Laptops
(Image: CNET)

Things aren't looking so great for the PC market, and much of the same can be said about the chipmaker and PC hardware sector. 

Sterne Agee analyst Vijay Rakesh warned in a note to analysts on Monday that Intel's fourth quarter likely won't look so hot compared to the same quarter a year ago, when the PC decline was gathering momentum for a full-blown collapse.

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Rakesh warned that pre-holiday sales during the once-seen as lucrative "back to school" season, typically during August and September, didn't garner the payout the chipmaker was expecting.

"We believe back to school PC demand has been virtually absent," Rakesh said in the note.

With this, higher channel inventories and "lackluster demand" now suggests a flat fourth-quarter, compared to a typical seasonal bump of between 5-7 percent quarter-over-quarter. Worryingly, supply chain checks suggest a flat December holiday season for PC sales, where typically many would expect a significant rise — current market conditions notwithstanding.

As a result, the analyst is lowering his end-of-year PC growth estimates down from a 9.6 percent loss to a 10.7 percent loss year-over-year.

He remains concerned about Intel's lack of progress on the mobile stage. While Windows-powered tablets are on the most part the driving mobile force of the firm's mobile efforts, the chipmaker has yet to make any meaningful share in the smartphone space. 

According to Rakesh: "We believe PCs continue to be challenging combined with potentially weaker Intel handset-mobile segment post the Nokia-Microsoft merger."

There is an upshot for the chipmaker, however.

During the second half, Rakesh said Intel was expecting a datacenter bounce with enterprise rebound, which falls in line with Sterne Agee's 10-15 percent datacenter growth estimate. Rakesh said this was in spite of the flat second-quarter datacenter spending across the industry, as well as the flat year-over-year federal spending.

Topics: Hardware, Laptops



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  • Upshot

    I believe your usage of the term "upshot" is incorrect. I think maybe you meant "upside". "Upshot" means the end-result of something, the ultimate outcome.
  • Haswell

    I'm thinking Haswell has the potential to breathe new life into things, and Windows 8.1 may make Windows 8 more palatable to users. This could result in people who have been holding off on replacing old machines finally biting the bullet and doing so.

    Time will tell.
  • Sales were artificially inflated a few years ago.

    You want to see PC sales flourish like they did a few years ago? We need another faulty mainstream motherboard chipset make the rounds again. NVIDIA caused much of the PC replacement market during the Windows Vista and early Windows 7 era. Motherboard makers (especially those making laptop boards) were also at fault due to the switch to unleaded solder and the inability for those boards to withstand the heat coming off of the CPU's at the time. NVIDIA's chips just got too hot for the boards to withstand the temperatures. Don't believe me? Ask anyone that had an HP DV6000 or DV6 and see if it's still working... Go ahead. I'll wait. And what else did we have failing left and right during that period? That's right! The Xbox 360 (and to a lesser extent, the PS3 with it's YLOD problem).

    So what's different now? PC's are lasting longer. Maybe the motherboard makers got the message and figured out how to keep the solder joints from cracking on their boards. Or maybe it's just the energy-efficiency of modern chips not producing as much heat. Remember that when Windows Vista shipped, every computer company started going green on hazardous materials. It only took them several years and several billion replaced computers to figure out how to manufacture them to be more stable.
    • This is completely true

      Many people were forced to buy new machiens because their laptops and desktops burned out! But since PC's are more of appliances these days (even laptops), people dont buy new ones all the time. Because the fact of the matter is that unless you are a power user that runs heavy applications all the time, and happen to have them time sensitive, basically any decent machine from the last 4-5 years can run almost everything with no issues.
      So its really only the gaming market and high end graphics/video editing market that drives the sales of any new PC tech at all. And even in the gaming world there are alot of people using machines that are years older, especially in the world market.
      • Decline in Sales

        This news really doesn't come as a big surprise since Intel announced they will no longer make Desktop motherboards but concentrate on Server boards and becoming more involved in the mobile market.
        • Wrong

          Intel never announced it was no longer making MB's for PC's
  • Misleading headline

    What we have here is a summary of Vijay Rakesh's opinion, which is highly likely to be correct, but has nothing whatever to do with Intel's own assessment of the situation.
    John L. Ries
  • Power Users

    Being a Power User and running a High End Video card to do Scientific work Tablet's and Smart Phones just will NOT cut it.
    The PC market will shrink to a point BUT Gamers and Power Users Still need their PC's for High End Applications/Programs.

    Jim Scott
  • Two Ailments, Hand-in-Hand

    Two PC ailments are walking hand-in-hand. The first: people still remember the days when a new PC's power (CPU performance) doubled every 18 months, while the prices went down. Well, with PC components now enjoying commodity pricing, there's not much more price reduction to enjoy. And CPU performance is not increasing much, year over year. They're just getting more energy efficient (a good thing for notebooks and tablets).

    The second ailment is the OS. Let's face it, few people actually *want* Windows 8. It's a flop, as big on scale as was Vista (actually, even worse, as measured by adoption rate vs launch date). The vast majority of people buying Windows 8 are the ones who don't know how to get a Windows 7 alternative; they just buy what the big box store is selling. Meanwhile, enterprises are either staying on Windows 7 or upgrading to it, but avoiding Windows 8, for the most part. Windows 8 tablet sales are similarly dismal.

    Combine these two factors, (1) a new PC that is not significantly faster than your 3-year-old model, and (2) the unintuitive, alien, inelegant, unattractive, and massively unpopular Windows 8 as the prospect of a new OS, and you start seeing why PC sales are way off.

    Add to that the fact that for many casual computer users -- those who do some light web browsing, occasional email, listen to some tune and play some games -- an iPad or Android tablet gives them what they want without the historic problematic Windows computing experience they've known. It's the proverbial nail in the coffin.
  • Two Factors fro Back to School Flop

    First most students do not need a New PC every time for Back to school, blame tablets and smart phone or the family PC is still good enough.

    Second: the Pc mark has existed well over 2 decades This leave a very good and large used but still able PC and laptops. I wonder is the used market cutting into the new pc/ Laptop market.
    • Both You and Stevemac make good points

      As My Computers AGE as I have...I have been switching My old Boxes to Linux as I'm now on a Fixed Income. I Do Try to keep at least 1 Windows box up to date but Win 8 is CRAP and I won't run IT!
  • Your last paragraph is perhaps the most telling.

    Datacenter growth. As consumers turn to tablets (and consumption devices in general), their dependence on the cloud is increasing. The handheld device is passing off computer cycles to the cloud. Those cycles are being delivered, by-and-large, by Intel x64 processors running in the enterprise machine room. Whether they are running Windows servers or Linux servers, Intel processors are delivering those cycles. Datacenters don't buy hardware during the holiday season. They buy their hardware in line with their fiscal year - which often begins during the spring or summer.
    M Wagner
    • Datacenters

      It is not only the operating system, but also the CPU architecture that is irrelevant in the datacenter. For most workloads, especially not running on Windows, any of ARM, SPARC or POWER CPUs are much more efficient than x86/x64. Small scale data centers might still have mostly x86 CPUs, often because of older server installs, but "the cloud" infrastructure is not tied much to that architecture.
  • Windows 8 "Metro" killed the PC market

    Thousands of people still do not own a computer and when they walk up to a new PC with the win8 metro interface they spend about 60 seconds trying to get some kind of response from the PC then walk away never to return. People used to hover around the computer isles messing with the PCs before win8 now it's a ghost isle, entry level buyer leave in total frustration. Trying to make a PC into a tablet was incredibly stupid, tablets are toys for the easily amused and simple minded, software (that means apps for you tablet-oids) that can be run by a 3-year-old is actually written for a 3-year-old mentality.

    Real technical work and creativity requires a PC or server workstation. The PC makers should revolt against the fools in Redmond and offer whatever OS version you want, I define my desktop universe not some MBA corporate moron. If the PC consumer market is dead lay the corpse on the Microsoft door step at Redmond.
    Makes Things