Intel CEO Forecasts PC Sales Dropoff In 2015

Intel CEO Brian Krzanich on Tuesday told Wall Street analysts that the PC market will decline at a mid-single-digit rate for 2015 even with the prospect of Windows 10 shipping this summer.

"We expect the PC market to remain challenging, leading to a mid-single-digit decline in the overall full year PC [total available market]," said Krzanich during the first-quarter earnings call.

As a result, Intel readjusted sales guidance for the full year, saying it now expects revenue to be flat for 2015, at $55.9 billion.

[Related: As Intel Q1 Earnings Approach, Partners Warily Eye Weak PC Demand ]

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For the first fiscal quarter ended March 31, however, Intel reported earnings in line with revised Wall Street expectations of 41 cents per share on flat sales of $12.8 billion.

In the year-ago quarter, Intel reported 38 cents per share on sales of $12.8 billion. Intel shares were up 3 percent, or $1, in after-hours trading, to $32.49.

Client Computing Group sales in the first quarter were down 8 percent from the year-ago period, to $7.4 billion. What's more, operating profit for the client group plummeted 24 percent, to $1.4 billion.

Intel said it sees weak small- to medium-business demand for its PCs in part because of the lingering effects of the Windows XP end-of-life upgrade last summer.

The mid-single-digit decline in 2015 PC shipments will mark the fourth consecutive year with overall PC volumes declining. In 2014, worldwide PC shipments totaled 308.6 million units, down 2.1 percent compared with 2013, according to research firm IDC.

One of the underlying reasons for that decline is that PC users are continuing to use older systems. In fact, Krzanich said, the length of time users are holding on to older systems is continuing to grow. There are about 600 million PCs on the market that are more than 4 years old, said Krzanich.

But at some point, Windows 10 and Skylake -- Intel's sixth-generation desktop platform, due in the second half of 2015 -- will provide an opportunity to drive PC upgrades, said Krzanich. "We still believe at some point, those systems will flip over," he said.

Partners also hope the release of Windows 10, slated for an unspecified date in 2015, will boost the stagnant PC market and create an incentive for PC owners to rush out to get their devices refreshed.

"I'm a believer that the catalyst of Windows 10 and Intel's Skylake launch will help boost desktop and notebooks. It's interesting to see how it will play out," said Todd Swank, senior director of product marketing at Equus, an Intel partner based in Minnetonka, Minn.

Mont Phelps, CEO of national solution provider NWN, No. 88 on the CRN 2014 Solution Provider 500, said he was not concerned about Intel's forecast of a mid-single-digit decline in the PC market.

Phelps said he expects NWN's total Intel systems business to be up in 2015 -- not nearly as dramatic as the 300 percent growth his company had in 2014.

"We are seeing continued opportunities broadly in the market for Intel-based PCs, laptops and servers," said Phelps. "We are optimistic. It all goes back to whether you are selling a box or a solution."

Intel is one of NWN's top strategic partners, said Phelps. "They are a tremendous supporter of the channel," he said. "We take important NWN customers to quarterly executive business reviews with them and we look to them to understand where the market is going, and what the opportunities are. They touch so many parts of the technology business and drive the agenda around chips and where the whole market is going."

Charles King, analyst at market research firm Pund-IT, said weakened demand for PCs stems from both consumers' already having refreshed their PCs because of the Windows XP end-of-life last year, but also as consumers prepare for the Windows 10 launch later in the year.

"Our expectations were reduced this quarter, due to what appears to be a softening around demand for PCs in particular," he said. "But that's not a surprising situation, and it's not something that Intel is facing alone. The first two quarters are generally soft for PC sales anyway, as vendors focus on the late summer to build up back-to-school sales, but in addition, we're in a mid-stage this quarter, as consumers expect the Windows 10 delivery coming soon."