Last week, the headlines shrieked more doom for the PC industry in the form of weak financial reports from microprocessor kingpins Intel and AMD. Intel reported its second-quarter profit was down 29 percent compared with the previous year -- the fourth straight quarter of decline. The news was less gloomy at AMD, which Thursday reported a drop in revenue for its second quarter to $1.16 billion from $1.41 billion in the second quarter last year.
AMD and Intel's woes didn't surprise anyone paying attention to the beleaguered PC industry. Intel's PC Client Group, which makes chips for desktops and laptops, reported sales were down 7.5 percent from the same period last year. AMD's PC chip business was down 20 percent compared with the previous year. Those numbers are in sync with IDC and Gartner, which both released numbers earlier this month that show roughly an 11 percent decline in worldwide PC units shipped in the last three months, compared with the same time last year.
Despite stagnant PC sales that have been hurting companies from Dell to Microsoft, however, there are some bright spots. PC shipments shipments sunk roughly 11 percent in the second quarter of 2013, but that's a lot better than the 14 percent the quarter before that. Gartner, meanwhile, noted that in the U.S., HP, Dell and Lenovo reported better-than-average U.S. growth rate for the recent quarters.
AMD CEO Rory Read and Intel CEO Brian Krzanich each has trumpeted being able to diversify into new markets as key to growth in the third quarter and more.
AMD and Intel, however, are betting on pent-up demand for PCs. Intel cited figures that about one-third of the nation's PCs are at least four years old and that Intel's new upcoming Atom and Haswell chips will power computers capable of running three times faster and that have twice the battery life of earlier models.
Joe Hackman, owner of Managed Solutions, a Danville, Calif.-based Lenovo partner, blames Microsoft in part for the PC industry's doldrums. He said that there is still reluctance by his business customers to upgrade to Windows 8 and it modern user interface as well as Office 2013 and its new licensing scheme.
"New chips running three times faster with twice the battery life will get people's attention," Hackman said. But, he added, his customers don't want to give up their standard desktops and laptops running Windows 7 and Office 2010.
Hackman said if AMD and Intel want to boost their client PC sales, Microsoft is going to have to get back to its roots with an OS do-over.
"Microsoft needs to stop trying to compete with Apple and Android in the tablet race and get back to pleasing its bread-and-butter desktop and notebook customers. Right now they are feeling abandoned." His customers are waiting for Windows 9, not Windows 8.1.
Analysts and PC channel partners also say Intel and AMD are suffering because of their own success. "Businesses are using the same PCs for years," Hackman said. "They don't just run out when Intel and AMD comes out with newer faster processors. Intel's chips are too good. Even chips that are five years old are good enough for most businesses," he said.
PUBLISHED JULY 22, 2013