Why Intel's more-of-the-same processors aren't enough

Intel's alleged ultracheap holiday season offerings aren't likely to make a dent in the decline of the Wintel empire

Despite Intel announcing flat earnings earlier in the week, the venerable chipmaker is pinning its client-side hopes on what amounts to the same strategy it's always pursued: bring out a fresh raft of processors with more speed and less power.

For consumers, this means a slew of cheap new devices: the $99 tablets, $299 Haswell-powered notebooks, and $349 dockables that have been bruited for the holidays. But there's little about these offerings, apart from their prices -- and maybe not even that -- to get consumers or investors excited, as their attention is already elsewhere.

Slumping Wintel PC sales notwitstanding, the majority of Intel's revenue stream is still coming from the desktop market: $8.38 billion for the quarter, down 3.5 percent year-over-year. It's a large market, but a stagnant one, as many PC users continue to keep their existing devices or opt for Android or iOS devices to complement them instead of new Wintel ones.

Nor has the back-to-school season, the worst for PCs in five years, made a dent in that decline. Neither, it seems, has Windows XP's death march. A low-end user who hasn't upgraded since XP might well ditch that system for iOS or Android, not Wintel, and feel like he's getting more for his money.

Why the same old thing won't do
In the face of such normative changes, it's hard to see how the usual cycle of offering another round of cheaper, faster devices with better power consumption will affect anything. The competition is offering something more valuable than any of those things alone -- or together: a genuinely new style of computing that the legacy Windows world simply hasn't been able to deliver, including in its Windows 8 makeover. Even the vaunted 50 percent improvements in battery life and doubled graphics performance promised by the Haswell processor (and later the Broadwell) aren't sufficient temptation anymore.

What's more, the supercheap machines could blow off the shelves, but it'd hard to see Intel turning much of a profit given the already razor-thin margins in the hardware world. And Intel's mobile ambitions are still a big blank, in part because its most interesting parts aren't even out yet: the Quark processors for wearable and embedded computing. The company did hint that an LTE-enabled processor line should be available by the end of 2013, with a next-generation version out by the first half of 2014.

Perhaps Intel's real long-term play is to move all the more over to the server side, where the content for those smartwatches and tablets is being crunched. The data center is where growth appears to be; such sales reaped $2.9 billion for Intel in Q3, a tidy 12.2 percent hike over last year's Q3 results. (Cloud and storage revenue were also up.) But Intel has a long way to go before its data center, storage, and services numbers can replace its PC sales.

In the meantime, investors remain unimpressed with the consumer side. And it sounds like come Christmastime, consumers will be equally indifferent.

This story, "Why Intel's more-of-the-same processors aren't enough," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.

Copyright © 2013 IDG Communications, Inc.

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