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PCs drive Intel's earnings, but 'Bay Trail' Android tablets are on the horizon

Mark Hachman | Jan. 20, 2014
In a twist, processors designed for consumer PCs outperform Intel's expectations, while the usually reliable Xeon chips fall short.

Notebook PC sales were "pretty much in line with expectation," Krzanich added. 

A torrent of tablets?
Krzanich also said that Intel enters 2014 with the goal of selling 40 million Intel-based tablets. Intel's Smith said that Intel saw "strong tablet growth in the back of the year," and that the combined unit growth of tablets and PCs during the fourth quarter was up almost 10 percent versus a year ago.

All told, Krzanich said, Intel exited 2013 with 10 million tablet sales under its belt--and with expectations of more to come. Intel's first "Bay Trail" chips were designed for Windows, he said, but OEMs are readying a new wave of Android tablets. "Most of the Bay Trail Android tablets really start showing up more in Q2 than in Q1," Krzanich said.

The goal, Krzanich said, was to put those value Android tablets in the market before the back-to-school season hits--which, incidentally, would be when the next wave of PCs, using Intel's delayed Broadwell chip, are due to be released. (Broadwell samples should be shipped to Intel's hardware partners this quarter.)

The disappointing data center
Intel can usually depend on its Xeon chips funding most of its business; after all, Intel's making a push to put "Intel Inside" into the cloud. But Intel's data center business only grew 8 percent to $3 billion, not quite the double-digit growth Wall Street was hoping for. In part, Intel executives implied, enterprise spending slowed as a result of the government shutdown and debt concerns.

Intel's share price fell about 4.7 percent in after-hours trading Thursday, as Wall Street digested the narrative shift--PCs might not be so bad after all, and the enterprise could be weaker than expected. As always, Intel usually is a bellwether for the PC market, with AMD's earnings historically providing a more bearish counterpoint. 

Still, Intel has yet to break free of the admittedly lucrative desktop/notebook/server hegemony, and crack the mobile space. Until it can do that, Wall Street will be wary. But what is this disturbing new trend of a successful PC? An anomaly, or something more? If nothing else, it will provide an intriguing framework as the rest of the industry prepares its own earnings reports.


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