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Ultrabooks may not be selling as well as expected; 7.7 percent drop in outlook warns of trouble ahead

Intel Corp. (INTC) on Friday announced a trimming back its Q3 2012 earnings predicition from an already gloomy $14.3B +/- 0.5B USD to $13.2B +/- 0.3B USD.  The 7.7 percent dip was blamed on a variety of factors.

Specifically, Intel writes:

[Intel] is seeing customers reducing inventory in the supply chain versus the normal growth in third-quarter inventory; softness in the enterprise PC market segment; and slowing emerging market demand. The data center business is meeting expectations.

So what does that mean?

The inventory reductions could be attributable to several factors.  First, Windows 8's touch-screen mandate for laptops may be leading to supply chain frustrations due to tight supply for the fast-growing display technology.  Second, some OEMs have expressed concerns regarding the risk that Microsoft Corp.'s (MSFT) Windows 8 could be poorly received by customers.  Changes like the unwrapping of the Start Menu into the new "Windows 8 Theme" side screen have outraged some Windows traditionalists.  

Third, OEMs are moving towards the competition -- ARM Holdings, Plc.'s (LON:ARM) titular architecture.  OEMs appear to be responding to ARM's conquest of the tablet and smartphone space by racing their Windows RT (ARM Windows 8) products to market.  Lastly, OEMs may be reacting to weaker than expected Ultrabook demand, slowing purchase orders.

David Schmook, head of North American operations at Lenovo, said in a previous interview, "[Intel meeting its 2012 ultrabook targets is] going to require a very strong first couple of weeks of launch of Win 8.  They’ll be a lot bigger than they are now. I don’t know if it will get all the way up to 40 percent."

ARM chip on penny
The mobile sector's biggest winner, ARM is now looking to horn in to Intel's PC hegemony via its power-efficient system-on-a-chips. [Image Source: Digital Trends]

The good news for Intel is that ARM chipmakers who rely on third party fabs like Samsung Electronics Comp., Ltd. (KSC:005930) and Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330) (TSMC) have barely squeaked onto the 28 nm node.  Meanwhile, Intel is already mass-producing at 22 nm and will move to 14 nm node in 2014.  Samsung has plans for 14 nm, but it appears Intel is at least a bit ahead at the moment.

Intel did offer another scrap of good news -- it thinks it can repurpose existing machinery/resources at its fabs for the 14 nm die shrink, which it says will allow it to cut capital spending from $12.9B USD to $12.1B USD.  That should help it post a bit better net earnings numbers come Q3's official figures.

Source: Intel



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What happened to fact based reporting?
By Trisped on 9/7/2012 7:44:49 PM , Rating: 3
What makes Windows 8 have a "touch-screen mandate for laptops"? I have looked at your references and the ONLY thing I see is IF touch support is provided then it must support 5 points (or more).
The Start Menu was not unwrapped, it was removed. Your own post states as such. In addition, if it was unwrapped then all the original functionality of the Start Menu would be available. By your own reports Microsoft is going to/has removed this code so the Start Menu cannot be re-enabled. As for the Start Screen being a replacement, I can tell you it is lacking a number of required PC features. From what I understand the RTM is better then the Release Preview, but there are still missing features which require a user to know text commands to access the features which were easily accessed from the start menu.

I do not mind "spicing things up," but please keep the facts clear.




RE: What happened to fact based reporting?
By Jeffk464 on 9/8/2012 5:04:31 PM , Rating: 2
I think MS desperately needs to put out a "desktop" version of windows 8. Why would they want to leave a large segment of their customers hanging? They need the option of two GUI's(metro and desktop) with 100% software compatibility.


By Ringold on 9/9/2012 10:29:41 PM , Rating: 2
They want to force their app market down our throats. After spending some days with Win8 RTM, I'm gagging.. Probably going to keep Win7, and hope some linux distro finally gets its act together.


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