Intel reported Q3 2013 earnings today, October 15, 2013, after the market close. Despite earning an impressive $3.0 Billion in net income, sales of key chips for desktop and mobile PC computing reflected year over year declines from the same fiscal period of fy 2012.
But the declines, in my opinion, are comparatively minor, given the declines, year over year, from previous quarters. Intel sold approximately 5% fewer desktop PC chips than it did in Q3 2012, and approximately 3% fewer mobile PC chips for the same time period. If this trend continues, for another couple of quarters, it may be safe to say we’re approaching a bottom in the market for these devices.
If we are approaching a bottom, then sales of small, smart, mobile devices (including tablet computers and smart phones) may have already peaked. I think this is likely the case given two big moves on Apple’s part:
- The new iPhone 5S and 5C models do not address the mass market represented by emerging economies. Apple is making its satisfaction with top rank clear. Instead of developing more affordable products for these larger markets, they appear to be fortifying their position as the number one brand
- The recent executive change at the top of the Apple retail store apparatus reinforces the likely veracity of pt 1). Hiring the former head of the ultra chic woman’s fashion Burberry brand is likely to mean a lot more branding at the top of the market and not much attention to what’s below
Turning back to Intel’s quarterly performance, if their chips start to cut into ARM Holding’s dominance of the tablet markets, and, at the same time, they start to power a lot of Google Chromebooks, then it might be safe to project a resurgence for Intel, and, in all likelihood, its principal competitor — AMD.
PCs will always be in demand for a proportion of the market that needs more than simply a portable entertainment device.
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