Revenue fell off a rather abrupt cliff. How much do you think is Windows-8 Osborning vs. weak macro vs. tablet?
8% YoY and flat sequentially isn't a "steep cliff".
My YoY mental model looks like this, however:
- 8% usual PC growth - plus several points MSS gained at AMD's expense - minus 5% from economic slowdown - minus 8% from anciticpation for Windows 8 - minus 5% from tablet cannibalization
In Q4, we have Windows-8 devices selling, yet Intel has guided an extraordinarily weak Q4.
First of all, I think they baked in some conservatism, in case Windows 8 didn't pan out. They guided $100 million up from Q3, which would be 2% down, YoY. The mental model should look like this:
- 8% usual PC growth - minus 5% from economic slowdown - minus 5% from tablet cannibalization
If Windows 8 carries strong sell-through, you should expect to see 4-8% upside. If Intel keeps its share vs. AMD (it should!), then that's a few percentage points of additional upside.
Intel has declined to give 2013 guidance. How long will the Win-8 ramp take and how many sales will this cost? Did Intel know about the Win-8 anticipation effect? If so, did they not bake it into guidance back in Q1/Q2?
Like I have said, I'm very bullish about 2013. They have a phone design, a tablet design, and a new PC design - all of which can win in the market.
In a weak macro environment, smartphones, tablets and datacenter have grown very quickly. It's not like we are in a global recession... there's still a mediocre GDP growth rate with unemployment in the US gradually coming down along with a floor in the housing market.
A slowly recovering US economy is more than washed out by weakness in Europe and Japan.
Mature western markets have been primarily driven by replacement/upgrade sales. Very few people in that market are getting their "first" computer. Most of the unit growth of the past several years has been driven by emerging market demand as people over there become rich enough to buy their first computers. Overall unit growth over the past several years has been in the single digits. The recent outsized EPS growth at Intel has come from a very successful ASP uplift when Intel introduced the i3/i5/i7 branding as it was easier to upsell.
Agree with all that. Intel's strategy is this:
- Use Ultrabooks, and Windows 8 + touch, to start a new upgrade cycle for PC's - Use convertibles to attract a portion of the tablet market towards a more premium device that acts as both a PC and a tablet - Use Clover Trail to begin winning share against the incumbent ARM architecture in tablets - Use Medfield and CT+ to begin winning share against the incumbent ARM architecture in phones
It will be effective, because it's multi-pronged, and focused on both preserving share in existing markets (defense), as well as gaining share in markets previously not addressed (offense).
I think you know how I'm thinking about future demand. I think ARM based computers have to potential to disrupt Intel's ASPs in the best case and even take significant share in the worst case. The mere existence of that risk factor will keep a lid on earnings expectations. I think these views are consistent with the depressed earnings multiple on the stock.
No doubt they are consistent, but the thing with ASP is that Intel does not need to lower pricing in their traditional markets. It's incumbent upon ARM entering the PC business to offer a differentiated product, and they have yet to even be on a level playing field, due to the compatibility issues. So I feel that Intel is in a good position to preserve ASPs on their Core product line. As for Atom, those will undoubtably be sold at low ASPs to compete in phones and tablets, but they'll also be gaining share in the process. So while overall ASPs will decline due to a mix towards SOC pricing, it will all be accretive to revenues and margin dollars.
A tablet sale in-lieu of a laptop upgrade is still a lost opportunity. Tablets are effectively elongating the upgrade cycle. We'll see how the market reacts to Intel's Win8 hybrid products and if they can arrest the ARM-based tablet incursions.
If someone puts off a laptop purchase to get a tablet, Intel would at least prefer that they get an Intel Clover Trail tablet. Those will be legitimate considerations, now with Windows 8 shipping. However, with Windows 8 convertibles, consumers can choose to get the best of both worlds. A tablet and PC in one is an appealing idea to many people, and it will end up stemming the loss.
What's more, any deferred PC purchase is still a person in need of a PC - they just decided to spend their money on something in the meantime. Intel can still address that demand with PC innovations at a future date in time. It is not "lost", per se, to the tablet market.
At what price would you consider selling your shares?
$30 or bust, for me. I'm pretty heavy loaded right now, but I'd consider selling a portion of my holdings at a fair price. I think Intel will hit $40s in the next couple of years, though, so I won't be selling everything.
Market Data 
Markets 
AI
