On June 12, 2014, Intel® published a press release on its Investor Relations web site titled Intel Raises Second-Quarter and Full-Year Revenue and Gross Margin Expectations (http://files NULL.shareholder NULL.com/downloads/INTC/3242803767x0x761769/976260fd-0e22-4c06-b390-09e8a116cf6f/INTC_News_2014_6_12_Financial_News NULL.pdf).
The first sentence of the release specifically noted “stronger than expected demand for business PCs”. The guidance towards an improved gross margin attributes the improvement to “mostly higher PC unit volume” as the principal driver. Confidence level seems high based on a tighter “plus or minus $300 million” than the $500 million range included in earlier guidance.
If PC sales are better than expected, is it also safe to assume tablet sales are taking the hit, and fickle tablet consumers are making their way back to PCs? This explanation doesn’t look reasonable. As Microsoft made clear in the Surface Pro 3 debut event, best of breed tablets have been consumed for different objectives than would be the case for PCs. Certainly there is a segment of the PC market consuming tablets, but the majority of these sales (and I should say I think Microsoft’s notion is accurate) have been to consumers looking for a great book reader, or a movie player, or, perhaps for other casual purposes.
Perhaps a more helpful reading of why PC sales are up has more to do with much better price/performance than was the case earlier this year, or even since the release of Windows 8.0. In June, 2014, it is quite possible for consumers to acquire quad core powered PCs and laptops at an under $500.00 price point. Market sentiment on the O/S running on most of these systems, Windows 8.1, is now more favorable, for example, a review of Windows 8.1 on the techradar.pro site (http://www NULL.techradar NULL.com/us/reviews/pc-mac/software/operating-systems/windows-8-1-1161745/review) carries the title “Major Update to Windows 8 goes a long way to solve some of its original shortcomings”.
While PCs running Windows 8.1 have become more appealing to consumers, resellers are also closely managing how consumers approach alternatives for serious business computing, meaning Google Chromebooks. A visit to BestBuy.com and a search for “Chromebook” landed the writer on a web page with a bold header at the top: “Is a Chromebook Right for You?”. The paragraph of information just below this heading emphasized how dependent this computing device is on the Cloud.
So is BestBuy on to something potentially even more important than Intel’s improved guidance? Is the consumer finally starting to feel anxious about cloud computing, in general? A change in consumer sentiment about cloud, and a new appreciation of the threat represented by online hacking, would certainly be a big deal.
Disclaimer: I’m long Intel and Microsoft, and neither have an investment in Google, nor in BestBuy
Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)
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