Intel ‘pays high price’ for reliance on PCs with flat quarter

Intel chip

Intel watched PC sales plummet in its latest quarter, but netted half a billion dollars from the Internet of Things (IoT) and saw data centre sales rocket.

The chipmaker recorded $12.8 billion in takings between January and March 2015, an identical sum to the same period last year that left revenue growth flat, but saw its IoT division grow 11 per cent year on year to earn $533 million.

But the division's revenue actually dropped 10 per cent compared to the previous quarter.

PC sales crashed from $8 billion last year to $7.4 billion in its latest quarter a 7.5 per cent decline.

They suffered an even greater more dramatic drop of 16 per cent compared to the last quarter's takings of $8.86 billion, after the Windows XP exodus boosted sales at the end of last year.

However, data centre revenue jumped 19 per cent year-on- to rake in $3.7 billion, though that also represents a fall from $4 billion recorded the previous quarter.

Additionally, its computing, data centre and software and services groups also fell compared to the three months ending December 2014.

Software and services dropped from $553 million to $534 million year-on-year.

"Year-over-year revenues were flat, with double-digit revenue growth in the data centre, IoT and memory businesses offsetting lower than expected demand for business desktop PCs," CEO Brian Krzanich said. "These results reinforce the importance of continuing to execute our growth strategy."

But TechMarketView analyst Richard Holway said Intel was experiencing the consequences of allowing PCs to become such a big part of its strategy over the years, urging it to modernise.

"Intel really has to get associated with some in fashion' markets again," he said. "It has paid a high price for its reliance on the PC market and it missed out big time in the smartphone sector. Perhaps the most telling take-away from Intel results is that it is forecasting flat revenues for the whole of 2015."

However, he pointed out that data centre sales did rise year-on-year and now account for 30 per cent of Intel's overall revenue. Meanwhile operating profit rose four per cent year-on-year to $2.6 billion.