Intel's PC Business Grows in Q4, but Server Chip Sales Still Lag

By Jeff Burt  |  Posted 2014-01-16 Print this article Print

Meanwhile, Intel's Data Center Group saw fourth-quarter revenues jump 8 percent over the same period last year, and 7 percent for all of 2013. Cloud computing revenues grew 35 percent, storage 24 percent and high-performance computing (HPC) 18 percent, Krzanich said.

However, the enterprise business—including chips for data center servers—produced little to no growth over the first three quarters last year and continued to struggle in the fourth quarter. Revenues grew 8 percent, though shipments increased only 1 percent.

Krzanich and Stacy noted that they had expected the enterprise business to grow faster in the fourth quarter after a fairly strong Q3, but that never materialized. They placed part of the blame on the partial government shutdown in October and the inability last year of Congress to reach any sort of budget accord. Smith said Intel expects the enterprise business to fare better this year.

"[In] the first half of the year, we saw an enterprise market that was declining and [as] we got into the back half of the year, it was growing," he said. "It was just growing a little less fast than we thought [in the fourth quarter] and the recovery was a little less fast than we thought. My expectation is we will see that segment kind of pop back to the normal rate. I would also think that we were just a bit ahead of ourselves in terms of how fast the enterprise market was going to recover and grow, so we have a little bit more of a cautious view of that as we progressed through 2014."

He and Krzanich noted the refresh of the Xeon E3 and E5 server chips last year, and the introduction of the Atom C2000 chips for low-power servers. In addition, the company this quarter will release the latest generation of its high-end Xeon E7 processors.

In a report in December, TheInfoPro analysts said spending on IT infrastructure—particularly servers—will slow over the next two years. Enterprises that had gone on a spending spree on x86-based servers and other hardware to get their infrastructures ready for virtualization have largely completed the job, and are turning their focus now to software. In addition, more virtualization means fewer servers, Peter ffoulkes, research director for servers and virtualization at TheInfoPro, told eWEEK.

Krzanich was asked during the Jan. 16 conference call whether the virtualization curve was done, which would impact servers sales in the future.

"I think we would say there is some impact," the CEO said. "To answer, we are showing a kind of long-term growth rate in enterprise that’s less than what it was three years ago. I think as you said there was some impact associated with the virtualization curve having played out, but that doesn’t stop the fact that we think that there is growth in the enterprise segment. We have just changed our view for 2014. We think the recovery just plays out a bit slower than we would have thought a quarter ago."

Overall, Intel saw revenues in the fourth quarter hit $13.8 billion, up 3 percent over the same period in 2012, and income reach $2.6 billion, a 6 percent increase. For the year, revenues fell 1 percent, to $52.7 billion, and income decreased 13 percent, to $9.6 billion.

For the first quarter, Intel officials said they expect revenues to come in at about $12.8 billion, with revenues for the whole year being flat.


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