Intel profits drop in Q3 on weak PC market, alleviated by higher chip prices, server & IoT markets

Posted:
in General Discussion edited October 2015
Intel profits dropped 6.3 percent year-over-year in the third quarter, impacted by a diminished market for desktop and laptop PCs -- though the company was buoyed somewhat by things like higher selling prices for chips, and rising sales in the server market.




The company recorded $3.11 billion in net income, down from $3.32 billion, and $14.47 billion in revenue, a decline from $14.55 billion, according to a results statement. Sales of desktop chips fell 15 percent, while notebook processors didn't fare much better at 14 percent.

The blow was softened by higher prices for new Skylake-series processors, and growth in the server and Internet of things (IoT) sectors. Sales of server processors rose 12 percent, while IoT revenue advanced almost 10 percent, albeit to $581 million. Intel also reduced subsidies to PC makers building tablet-like PCs.

Recent Gartner data indicated that the global PC market continued to slide in the third quarter, shrinking 7.7 percent. Only Apple and Dell marked significant growth worldwide, though HP and Lenovo did make gains in the U.S.

Intel's problems may be linked to a variety of factors, including the increasing reliance of many people on smartphones and tablets instead of full-fledged computers. While Intel technically makes dedicated tablet processors, these have largely failed to catch on in a market dominated by the Apple iPad, as well as Android tablets capable of running on processors from companies like Nvidia or Qualcomm.

The company was also likely hurt by people waiting for the launch of Skylake, which began shipping to PC makers during the quarter.

On Tuesday Apple updated its iMac desktops with Skylake chips. The company also released its first 21.5-inch iMac with a 4K Retina display, and upgraded every 27-inch unit to 5K.
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Comments

  • Reply 1 of 27

    Lets see those new chips, and Thunderbolt ports on iTX boards.  Then I'll consider a recreational custom build over buying a new mac so soon.

  • Reply 2 of 27

    I contributed a small part to their sales when I finally built a new system with a Skylake processor. However, my last PC went for 5 years and I'm not sure I would have bought a new system if it didn't crap out on me.

     

    On a side note, I have to give a HUGE thumbs up to Microsoft support. When my old PC first started acting up, I decided to do a fresh install of Windows 7 on it. It installed fine and activated properly. Then it crapped out. Something with the motherboard and it would only run for a few minutes before overheating (I assume) and freezing.

     

    Tried installing Win 7 on my new PC and it wouldn't activate. Tried the phone method and still no go. This was because my now non-functioning PC had the license activated. Contacted MS customer support with online chat session (this was 8PM PST) and had a rep appear in under 1 minute. Long story short, it took about 45 minutes of remote access tries with me switching back and forth between my old and new PC (and the rep quickly accessing my old PC because he knew it would only work for a few minutes before shutting down) and the rep was able to transfer my license key over to my new machine. Now I have a licensed version of Windows 10 Pro on my new machine and didn't have to pay a dime.

     

    I haven't dealt with MS customer support for many years, but I remember my previous experiences were not quite so pleasant. I bet that this is one of the other areas at MS that Nadella has been involved in.

  • Reply 3 of 27

    Ok, and the reason why Apple's stock is down?

  • Reply 4 of 27

    Microsoft is not helping Intel by refusing to make the Windows upgrade people want. A Windows 7 interface with the under the hood improvements of Win 8/10 but without the abortion of a UI introduced in Win 8 or the spyware/forced patch installation of Win 10 would sell very well. But MS will never make that product and lots of pent up upgrade dollars flow someplace else.

  • Reply 5 of 27
    rogifanrogifan Posts: 10,669member
    Intel stock was down almost 3% this morning and now it's rebounded and is actually up about 40 cents. Meanwhile Apple was just downgraded by firm OTR claiming 6S demand is weak due to market saturation and lack of innovation at Apple. :rolleyes:
  • Reply 6 of 27
    rwesrwes Posts: 165member
    Quote:

    Originally Posted by JollyPaul View Post

     

    Microsoft is not helping Intel by refusing to make the Windows upgrade people want. A Windows 7 interface with the under the hood improvements of Win 8/10 but without the abortion of a UI introduced in Win 8 or the spyware/forced patch installation of Win 10 would sell very well. But MS will never make that product and lots of pent up upgrade dollars flow someplace else.


    What you're describing is Windows 10, no? Yes, there are remnants of the Tile/Modern UI elements in 10, but it's been so scaled back that it's basically what you're describing.

     

    What I think isn't helping Intel is that it's a free upgrade (at least for now). And since the under the hood improvements of 8/10 are still around, people have even less of a reason to change their hardware.

  • Reply 7 of 27
    rogifanrogifan Posts: 10,669member
    jollypaul wrote: »
    Microsoft is not helping Intel by refusing to make the Windows upgrade people want. A Windows 7 interface with the under the hood improvements of Win 8/10 but without the abortion of a UI introduced in Win 8 or the spyware/forced patch installation of Win 10 would sell very well. But MS will never make that product and lots of pent up upgrade dollars flow someplace else.

    Re/code just reported that Intel, Microsoft and several PC OEMs have a big PC ad campaign coming. So expect to see PC ads everywhere the next two months. I wonder what advertising Apple has planned for the holiday season, I hardly ever see Apple ads on TV yet every time I watch a football game or golf tournament all I see is Surface everywhere. :rolleyes:
  • Reply 8 of 27
    Quote:
    Originally Posted by Rogifan View Post



    Intel stock was down almost 3% this morning and now it's rebounded and is actually up about 40 cents. Meanwhile Apple was just downgraded by firm OTR claiming 6S demand is weak due to market saturation and lack of innovation at Apple. image



    6S numbers are going to end up being killer. I've seen more Android switchers than I can recall seeing in years, even among hardcore Android users. Not that this will stop these guys from finding some other BS reason to suppress Apple's stock prices.

  • Reply 9 of 27
    rogifanrogifan Posts: 10,669member
    derekson wrote: »

    6S numbers are going to end up being killer. I've seen more Android switchers than I can recall seeing in years, even among hardcore Android users. Not that this will stop these guys from finding some other BS reason to suppress Apple's stock prices.

    Well to be fair, Morgan Stanley and now BOA have both raised estimates. Yet it seems to mean f**k all for the stock. The Nasdaq over all is up today yet Apple is down over 1%. :rolleyes:

    http://www.benzinga.com/analyst-ratings/analyst-color/15/10/5912291/bank-of-america-still-neutral-on-apple-but-boosts-mac-an
  • Reply 10 of 27
    ceek74ceek74 Posts: 324member
    Quote:

    Originally Posted by sog35 View Post

     

     

    Its pointless trying to explain why Apple is down.  

     

    Its all about $$.  Pushing the stock down is helping someone in Wall Street - probably short sellers or options call sellers.  That's why Apple needs to go private and give Wall Street a big FU


    sog35, you nailed it.  Why does everyone keep trying to figure out why?  Just put your Wall Street goggles on and the answer is crystal clear.

  • Reply 11 of 27
    Quote:

    Originally Posted by JollyPaul View Post

     

    ...but without the...spyware/forced patch installation of Win 10


     

    Quote:

    Originally Posted by rwes View Post

     

    What you're describing is Windows 10, no?


     

    No. I was initially excited that MS would get it right in Win 10. The privacy issues and loss of control over what MS installs as "important updates" is the fly in that ointment. Why do I care about Windows since I primarily use a Mac/iPad/iPhone? I write Windows device drivers for a living and occasionally (less and less as time goes on) do PC gaming at home so I get to deal daily with Win XP to Win 10.

  • Reply 12 of 27
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    Its pointless trying to explain why Apple is down.  

    Its all about $$.  Pushing the stock down is helping someone in Wall Street - probably short sellers or options call sellers.  That's why Apple needs to go private and give Wall Street a big FU

    Oh and Microsoft 1st class a-hole Frank Shaw posted a tweet asking people who did it better....he was comparing the Medium backstory on Apple's new products to something Microsoft did for the Surface. Exactly the kind of thing you'd expect on cnet or The Verge trying to start a fanboy war to generate clicks but totally classless coming from a Microsoft exec who should be above trolling on Twitter.
  • Reply 13 of 27
    rwesrwes Posts: 165member
    Quote:
    Originally Posted by JollyPaul View Post

     

     

     

    No. I was initially excited that MS would get it right in Win 10. The privacy issues and loss of control over what MS installs as "important updates" is the fly in that ointment. Why do I care about Windows since I primarily use a Mac/iPad/iPhone? I write Windows device drivers for a living and occasionally (less and less as time goes on) do PC gaming at home so I get to deal daily with Win XP to Win 10.


     

    It's all good - I hear ya man. I use Apple devices primarily myself, but work in IT. I have a Windows 10 VM always ready; have deleted my Windows 7 and 8/8.1 VM's since using and getting comfortable with 10. I like to be up to speed on what's new all around. I understand that Apple devices, restrictions and cost arent for everyone, so knowing what else is out there, I can make informed recommendations (if/when asked).

     

    As for the updates/drivers, there are ways to disable, https://support.microsoft.com/en-us/kb/3073930, in case you hadn't already come across that one. There are other methods being pushed/supplied by MS as well I believe. Search around.

     

    And just out of curiosity, what privacy issues?

  • Reply 14 of 27
    dysamoriadysamoria Posts: 2,152member
    Ah the magic of the "free market", where reduced demand leads to raising prices...
  • Reply 15 of 27
    Quote:

    Originally Posted by rwes View Post

     

     

    It's all good - I hear ya man. I use Apple devices primary myself, but work in IT.

    ...

    And just out of curiosity, what privacy issues?


     

    Of the three platforms I regularly deal with (Mac OS X/Linux/Windows) they all have their blind spots. It's all good, or all bad, depending on your point of view.

     

    As for privacy in Win 10, I'm talking about the scattered and questionably organized privacy settings that default to on and the encrypted packets sent to MS servers with unknown content even with all the settings (that have been found so far) turned to off. There may be nothing bad going on, but privacy settings should be centralized and opt-in instead of opt-out. The unexplained encrypted packets (seen by different reviewers/labs) should not be happening at all with everything shut off.

     

    I don't think it's a conspiracy, it just a combination of wanting to collect usage data, sloppiness and a general transfer of control from the machine owner to MS.

  • Reply 16 of 27
    rwesrwes Posts: 165member
    Quote:
    Originally Posted by JollyPaul View Post

     

     

    Of the three platforms I regularly deal with (Mac OS X/Linux/Windows) they all have their blind spots. It's all good, or all bad, depending on your point of view.

     

    As for privacy in Win 10, I'm talking about the scattered and questionably organized privacy settings that default to on and the encrypted packets sent to MS servers with unknown content even with all the settings (that have been found so far) turned to off. There may be nothing bad going on, but privacy settings should be centralized and opt-in instead of opt-out. The unexplained encrypted packets (seen by different reviewers/labs) should not be happening at all with everything shut off.

     

    I don't think it's a conspiracy, it just a combination of wanting to collect usage data, sloppiness and a general transfer of control from the machine owner to MS.


     

    Gotcha - ???? I vaguely remember seeing some material online regarding what you described, but had forgotten about it; Thanks for sharing (educating).

  • Reply 17 of 27
    Wow...isn't Microsoft Surface innovation selling like hotcakes and single-handedly helping to sell tonnes of Intel chip?

    /s
  • Reply 18 of 27
    Quote:

    Originally Posted by rwes View Post

     

     

    I vaguely remember seeing some material online regarding what you described


     

    I'm probably stuck in the past and too absorbed with my own preferences. The age of information appliances heavily controlled/maintained by vendors is here and I'm still clinging to antiquated notions of general purpose computing. Visit me at the museum next to the Teletype Model 33.

  • Reply 19 of 27
    canukstormcanukstorm Posts: 1,921member
    Quote:

    Originally Posted by Wisely View Post



    Wow...isn't Microsoft Surface innovation selling like hotcakes and single-handedly helping to sell tonnes of Intel chip?



    /s



    Actually, Surface sales are growing, just on the backs of MS' OEM partners. Put another way, Surface is growing its market share in an otherwise declining segment of the market.

  • Reply 20 of 27
    Quote:

    Originally Posted by CanukStorm View Post

     



    Actually, Surface sales are growing, just on the backs of MS' OEM partners. Put another way, Surface is growing its market share in an otherwise declining segment of the market.


     net net:  intel chip sales in their premium margin market is down, and the trend long term is not good.

     

    End user computing is moving to ARM chips,  Server computing, while growing, is not growing faster profit wise at to offset the loss to android/iOS based end user computing...

     

    And I can't see IoT being a high margin product for Intel, at least compared to Skylake.

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