Why a slower-than-expected decline in the PC space helped Intel

Market Realist

Intel's better-than-expected earnings show tech sector health (Part 3 of 4)

(Continued from Part 2)

Intel’s PC Client Group revenue declined by just 1%

In the previous articles of this series, we discussed Intel’s (INTC) Q1 2014 results and the outlook for Q2. In this article, we’ll discuss Intel’s most important business, the PC Client Group, which constitutes about 62% to the company’s overall revenues. Plus, Intel is the dominant player in the PC chipsets market, with AMD (AMD) a distant second player. The PC Client Group’s revenues in Q1 was down 1% from a year ago, driven by its unit volumes growth of 1% year-over-year and its average selling price decline of 3%. Including tablets, the unit’s volume growth was even better, at high single digits.

The PC market declined more slowly than expected

Analysts had widely predicted that the PC market would see a rapid decline due to the emergence of smartphones and tablets as the preferred household device. However, the PC market defied this trend in Q1 2014. Gartner released a report claiming that the PC market declined only 1.7% in Q1 2014 compared to Q1 2013, as the PC shipments declined from 77.9 million to 76.6 million. Gartner cited the reason for this slow decline to the end of Microsoft’s (MSFT) support of Windows XP.

Lenovo surpassed HP in the PC market

Lenovo experienced the fastest growth in the PC market, at 11%, increasing its market share from 14.9% in Q1 2013 to 16.9% in Q1 2014. HP (HPQ), meanwhile, lost its top position, when its market share could only increase from 15.1% to 16.0% during the same period. Dell (DELL) also increased its market share, from 11.2% to 12.5%, while Acer Group and Asus’ market shares remained in the single digits.

Intel innovating with new PC chip designs

Although Intel is the distant leader in the PC chipset market, it still continues to innovate with new chip designs. According to Intel’s management, “We’re ramping more than 130 Atom microarchitecture notebook and desktop designs with our Bay Trail M&D platforms, significantly increasing our presence in the value segment. And we exit the quarter with market segment share leadership on Chrome Systems and saw positive traction in small form factor and all-in one computing.”

Continue to Part 4

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