Intel CEO: 5 PC Market Precautions For Partners

A Rough Quarter For PCs

All analyst eyes were on the PC market Wednesday as Intel reported its earnings for the second quarter ended June 27.

Despite beating analyst expectations for the second quarter, the Santa Clara, Calif.-based company has been struggling to make up for a slow PC market through its booming data center and Internet of Things business.

Analysts asked Intel CEO Brian Krzanich about the Intel's role in the state of the PC market for 2015. The imminent release of Intel's microarchitecture platform, Skylake, along with Microsoft's Windows 10 OS this year have OEMs and PC chip manufacturers hopeful for a boost in the struggling market.

Here's what Krzanich had to say about the PC market in 2015 and the future of Intel's Client Computing group.

5. Weaker-Than-Expected PC Market

Krzanich said that Intel's outlook for the PC market in 2015 has once again slumped, down from the mid-single digits predicted last quarter to the high-single digits.

Krzanich said he has brought down his expectations of the PC market overall for the year, but the company is still seeing a bit of "inventory lumpiness." Meanwhile, customers are waiting to see what's going to be offered in terms of new form factors and the acceptance of Windows 10, he said.

"So I think when you put all these together, 2015 will be weaker on the PC than we had anticipated," Krzanich said.

4. Trepidation In The PC Market

One analyst asked Krzanich why PC shipments were so weak in 2015, and if he thinks the market will continue declining 5 percent to 10 percent every year in the future.

Krzanich stressed that the slowness in the PC market stems in part from customers waiting for new products like Windows 10 and Skylake to be released.

"There's always a little bit of a stall right before a new product like Skylake," he said. "But when you have a new product like Skylake combined with a new OS like Windows 10, which the majority of these devices will run on, that tends to have people waiting to see what those products are going to be."

3. Windows 10: Enterprises Will Be Wary

One point of momentum for the PC market is the combination of Windows 10, Microsoft's operating system set to be released July 29, coupled with Skylake, Intel's sixth-generation 14-nanometer microarchitecture platform.

However, Krzanich said enterprises will take longer to adapt to Windows 10, which may not make the PC market boost as large for the second half of the year.

"Some of the enterprise guys will take a little bit longer because enterprises always have to check everything they've got on the new OS," he said. "And that's why we didn't really build it into the forecast as a big plus for the second half of this year. I think if you look long term, it's going be a positive."

2. Form Factors Key For PC Market

Krzanich pointed to new innovations, such as form factors and wireless charging, as alternate drivers for the PC market.

Intel has long been touting new solutions for jump-starting PC sales, such as its RealSense technology, which allows for voice and gesture control.

"I still think [we have] great form factors coming, we're going to be talking about all-day battery lives, no wires," he said. "We've got some great thin form factors. The fact [is] there's very little difference between a two-in-one device and a tablet and the ability to take back that volume onto the PC."

1. Hopeful For Data Center, Internet Of Things

Krzanich stressed that Intel was continuing to transform its business to rely on platforms other than its Client Computing business.

For instance, the company's Big Data and Internet of Things groups gained momentum in the second quarter, with sales up 10 percent year over year and 4 percent year over year, respectively.

’Second-quarter results demonstrate the transformation of our business as growth in data center, memory and [Internet of Things] accounted for more than 70 percent of our operating profit and helped offset a challenging PC market," said Krzanich.