Intel, AMD See Opportunity in Entry-Level, Mainstream PCs

By Jeffrey Burt  |  Posted 2013-07-19

Intel, AMD See Opportunity in Entry-Level, Mainstream PCs

Intel and Advanced Micro Devices continue to be hit hard by declining worldwide sales of PCs, and both chip makers are looking to aggressively expand into new growth areas and lessen their reliance on the PC market.

However, neither vendor is pulling away from the PC industry. Instead, executives with each company this week said consumers are moving toward lower-priced mobile systems, and they are confident their product road maps put them in good positions to meet that demand.

Intel CEO Brian Krzanich, speaking to analysts and reporters July 17 after releasing the company's second-quarter financial numbers, said the new Core "Haswell" chips that are beginning to roll out will address the need for greater performance and power efficiency in PCs and other form factors, including tablets and convertible systems. At the same time, the upcoming Atom "Bay Trail" system-on-a-chip (SoC) will span both PCs and tablets, and will help Intel play in sections of the PC space that the company could not before.

"What [Bay Trail] really does is allows us to get into these markets that we're not in, in a big way today," Krzanich said. "Bay Trail really, first and foremost ... gives solid performance, solid battery life relative to the competition in price points and markets that we're simply not in. At the end of the day, the market will go where the market goes, and better to have a product like Bay Trail that we can play no matter where it goes rather than miss that market."

These markets include PCs priced below $400, touch-enable clamshell systems at less than $300 and tablets at less than $199, he said. And those prices will continue to fall going into 2014, the CEO said. Haswell and Bay Trail will enable Intel to address those trends.

"So the fact that PCs, especially with Bay Trail, are going to move down into this, let's call it $200-to-$400 range, is going to shift that market we believe as well and that's different than what's been out over the last few years," Krzanich said. "So you've got fan-less Haswell. You've got Bay Trail coming in. All of those things allowing devices that haven't been allowed in the past with our designs."

That shifting focus on the lower end of the PC pricing range dovetails with Intel's new efforts to bring its low-power Atom platform on par—in terms of focus, money and production processes—with the more expensive Core chips. Bay Trail—based on the new "Silvermont" architecture—will offer performance capabilities that are competitive with more mainstream PC chips.

"We will move Atom even faster to our leading-edge silicon technology and focus on the SoC integration of key components like graphics, communications and other devices," Krzanich said. "This does not mean we will lessen the value or leadership of our Core product family, but rather make Atom an equal player in technology leadership for the ultra-mobile space. Both product lines will be driving Intel's future."

For his part, AMD CEO Rory Read is seeing the market moving in an area that his company has always been strong in, and the launch in May of new accelerated processing units (APUs)—code-named "Kabini" and "Temash"—will continue the trend. In a conference call with analysts and journalists July 18 to discuss the company's second-quarter earnings, Read said he expects a range of new products from such system makers as Dell, Hewlett-Packard, Lenovo and Samsung powered by the APUs to begin hitting the market in the second half of the year.

Those products will range from PCs and ultrathin systems to tablets and convertibles, AMD officials have said.

"The 300 million-plus-unit traditional PC market remains an important part of our core business, especially as the mainstream $300-to-$600 system price points that have been traditionally been our sweet spot become an even larger portion of the overall PC market," Read said. "Clearly, the market is moving down into the entry and mainstream price points, where we've played very well."

Intel, AMD See Opportunity in Entry-Level, Mainstream PCs

Devinder Kumar, AMD's senior vice president and CFO, said that in the second quarter, the company's Computing Solutions unit saw revenues grow 12 percent over the first quarter, "due to significantly higher notebook and higher server and desktop unit shipments primarily driven by demand for our new Kabini and Temash offerings as well as our latest Opteron 6300 series of products."

Intel moving more aggressively into the lower-priced PC space means closer competition with AMD in this area—as well as with ARM and its partners, who are looking to move their low-power chips found in smartphones and tablets into the entry-level PC market. Getting Kabini and Temash into the market before Intel's Bay Trail is launched will help give AMD an early edge, according to Lisa Su, senior vice president and general manager of AMD's Global Business Unit.

"We do have the time-to-market advantage, and that proves good when you look at the systems that will be on the shelf both starting this quarter and into the summer," Su said. "And as we go forward, we think we are well-positioned versus Bay Trail as well. So, I think this is an important segment for us to continue to grow in."

The PC market will continue to be difficult. Stacy Smith, Intel's executive vice president and CFO, said he expects the overall PC market to be weaker in 2013 than the company forecast at the beginning of the year. Revenues for Intel's PC Client Group in the second quarter were 8.1 percent, a 7.5 percent decline over the same period in 2012.

IDC analysts said that in the second quarter, PC shipments worldwide fell 11.7 percent over the same three months last year, though shipments in the United States stabilized and there should be growth in the industry in the second half of the year. However, there is a lot of work to be done by OEMs to help slow the downward trend in PC sales, according to Jay Chou, an IDC senior analyst.

"While efforts by the PC ecosystem to bring down price points and embrace touch computing should make PCs more attractive, a lot still needs to be done in launching attractive products and addressing competition from devices like tablets," Chou said in a statement.

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