Whistling Past the Graveyard? Intel Says PCs' Demise Greatly Exaggerated

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Intel has benefited greatly from its 30-plus year association with the personal computer. Its 'Wintel' (Windows and Intel) partnership defined the new age of commercial collaboration. Its CEOs, like Andy Grove, were considered sages of their era, lionized by the business press, consulted by government and industrial leaders, and the recipients of handsome compensation packages. And it generated profits, lots of them. 

So it is not surprising to hear the company's current - and considerably less well known - leadership assuring all and sundry that the pc's sales latter day freefall is vastly overstated, a mere speed-bump on the super highway to the technological future.

But the reality is that success, especially in tech, can be a trap. Intel was so busy reaping the benefits of dominant position in pcs that it dismissed the looming threats from mobile. One hopes for the sake of those whose livelihoods are dependent on the company's existence that this bloviating rhetoric masks a more serious effort to address its disconnect with the forces driving its markets.

Sarah Mishkin reports in the Financial Times:

Intel, is fighting to reinvent the microchip-making group as its key market is shaken to its core by the rise of smartphones and tablet computers.
The PC is dead – long live the PC, says Renée James, president of Intel.With consumers switching to ever-more-powerful mobile devices, many industry analysts have called, if not the end of the PC, then at least its near obsolescence.
That, she argues, is not exactly the kind of revolution going on now in the hardware industry and the challenge that Intel has before it.

Instead of dying, she says, the PC is just changing. Traditional PC-focused companies from Lenovo to Microsoft have started churning out laptops that fold into tablets, tablets with laptop-like keyboards, and many forms in between.

“In five years’ time I don’t think we’ll be talking about PCs versus tablets, what we’re going to see is a blending between [them],” said Ms James, who has spent more than 25 years at Intel. “In the end [that] will look like significant growth, if not a doubling, of what was just known as the PC business.”

For Intel, the challenge is making sure it supplies the chips for those new devices.
So far its record on making chips for mobile products is weaker than its competitors, notably the UK-based Arm. Intel chief executive Brian Krzanich has said he wants to quadruple the number of tablet chips it sells this year to 40m.
Last week, the company announced a plan to develop chips alongside an unusual partner, Fuzhou Rockchip Electronics, a Chinese chip designer known for its work with the cheap tablets that sell in China and other emerging markets.

Analysts have warned that competing to supply chips to entry-level devices could erode Intel’s profit margins – 63 per cent last quarter – but Mr Krzanich emphasised on a recent trip to China’s manufacturing hub of Shenzhen the importance of Chinese computer designs to Intel’s ability to meet its goals for tablets and smartphones.

The other challenge is ensuring that new devices are popular with consumers, who have been slow to pick up so-called convertible tablet-laptop hybrids.
Intel’s chips have been inside Microsoft’s Windows-based tablet, the Surface. Microsoft pitched the device as easier to get work done on than an iPad – it has a keyboard and software like Word and Excel – but they have not sold well.

The company is pushing in areas like wearable technology and robotics. Intel’s chief executive this week demonstrated a shirt with embedded electronics to measure biometrics such as heart rate, and the company says it will start selling kits for people to make their own 3D-printed robots.

But Ms James cautions that such new product lines will take time to develop.
“Consumer is harder, that one is really hard,” she said, citing consumers’ fickleness and fast-changing preferences.

One help in expanding the beyond-PC market, she says, will be Apple. It is expected at a developers’ conference in San Francisco this week to announce a new platform for electronics that can control homes. It is also widely rumoured to be working on a smart watch.

“If history is any indicator of the future, that tends to be a catalysing event,” said Ms James. When Apple launches new categories of products, from smartphones to tablets, “the whole industry moves around it”.