Intel Admits A Big Mistake That Impacted PC Chip Demand

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Intel Admits A Big Mistake That Impacted PC Chip Demand
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Intel admitted that by skipping Broadwell for the desktop, it may have harmed desktop chip demand. Since desktop PC processors are the core for Intel, even a small fault affects the company.

Intel missed out on revenues

Speaking at a recent Citi Technology Conference, Intel’s head of its Client Computing Group, Kirk Skaugen, acknowledged that by not launching Broadwell-based chips for desktops, the chip maker’s revenue might have been negatively impacted.

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“We didn’t build a fifth-generation Core product for [desktop] towers,” Skaugen said. “We made an experiment and we said ‘maybe we’re putting technology into the market too fast, let’s not build a chip for the mainstream tower business.” And this, according to Skaugen, was a “mistake.”

Skaugen said that though skipping the Broadwell for PCs helped the firm to save on costs in terms of research and development, after the end of the Windows XP refresh, users had little or no incentive to upgrade their systems.

Skaugen did not detail the impact that skipping Broadwell had on Intel’s revenues, but he did say that it contributed to the slowdown in the desktop business this year. The unit volumes for the desktop processor dropped 16% year over year for the first quarter of 2015 and 22% in the second quarter.

Back to yearly refresh cycle

Skaugen also suggested that the firm will now be refreshing its desktop chip on a yearly basis. This hint from the executive follows a leaked Intel chip roadmap showing the company’s plan to roll-out “Skylake Refresh” chips for the PCs later in 2016. Another leak from BenchLife.info reveals Intel’s plan to unveil its next-generation Kaby Lake chip for tower desktops in 2016.

Intel has been vocal that in the long-term, it expects the PC business be flat to down, and therefore aims to keep its market “roughly flat.” But Skaugen wants to do more than that and aims to grow the segment at in the low- to mid-single digits. The executive will be having high hopes from the Kaby Lake chips expected next year to drive meaningful innovation to the company’s PC processors.

On Friday, Intel shares closed up 0.68% at $29.47. Year to date, the stock is down almost 20% while in the last year, shares are down almost 15%.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@wordpress-785388-2679526.cloudwaysapps.com
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