Intel PC Business Falls, But Data Center, IoT Sales Climb
Krzanich said that the Xeon E5 v3 server processor, introduced last year, now accounts for more than half of the chips Intel sells into two-socket systems. In addition, Intel last month launched Xeon D, the first Xeon-based system-on-a-chip (SoC) aimed at systems like micro-servers, storage appliances, networking gear and IoT devices. Xeon D will be an important part for Intel, TBR's Belanger said. "By extending the Xeon processor into a 64-bit SoC, Intel will offer a dense, low-power processor," he wrote. "Intel is already gaining traction among several large-scale customers. For example, Facebook is one of the first users of the SoC on an Open Compute Project (OCP)-based server design. TBR believes the product line launch will complement Intel’s strong footprint and brand recognition in the global data center market, and will help the vendor drive DCG revenue as cloud and telecommunication service provider customers scale their infrastructure." Intel continues to push in a mobile market dominated by Qualcomm and other ARM-based SoC makers. Intel was slow to respond to the growth of smartphones and tablets, and its mobile business has sustained significant losses in recent years. Intel's Smith said that in the quarter, more than 7 million tablets powered by Intel chips shipped—a 45 percent increase over the same period last year. The company is on track to improve profitability in the mobile business by $800 million, though most of that will be seen in the second half of the year, he added.Belanger said the x3 helped narrow the technological gap between Intel and Qualcomm. "It is unlikely that Intel will be able to dominate the mobile and IoT markets as it has in the PC market," he wrote. "However, the vendor's core data center and PC businesses give Intel flexibility to take its time and carefully develop technology that aligns with customer demand. Intel will incrementally enhance its mobile and IoT offerings and become a viable alternative to ARM-based processors that are dominant in the mobile device market."
Krzanich indicated he is optimistic about strides the company is making, pointing to the release in March of the new Atom x5 and x7 chips, as well as the Atom x3. Formerly code-named SoFIA, the x3 Socks are aimed at entry-level devices, including smartphones, phablets and tablets. They also will expand into the IoT space and include integrated wireless modems.