Desktop PC sales not slowing as predicted, Intel says

Predictions that growing demand for notebook PCs would result in a corresponding slowdown in demand for desktops hasn’t come to pass, Intel’s top executive in Asia said.

“Pretty much all of our forecasts have understated mobile [growth] and have also suggested that at some point desktop [growth] will flatten out or even start to decline,” said John Antone, vice president and general manager of Intel Asia-Pacific, in a telephone interview.

“The good news is that mobile continues to grow a little bit faster than we forecast and desktop has not contracted,” Antone said.

Intel, the largest provider of microprocessors used in PCs, saw its finances buoyed by growing demand for PCs. On Tuesday, the company said its second-quarter revenue was $8.7 billion, up 8 percent over the same period. Second-quarter profit rose 44 percent over the same period last year, to $1.3 billion.

Intel doesn’t break out its revenue by specific product type, but does provide a breakdown by business unit. For example, Intel’s Mobility Group, which makes chips for notebooks, saw microprocessor sales rise from almost $2 billion during the second quarter of 2006 to nearly $2.4 billion during the second quarter of 2007.

The strong growth in mobile processor sales was largely due to the launch of Santa Rosa, an upgraded version of Intel’s Centrino chip package.

Intel’s desktop processor sales are harder to determine, as they are spread across different business groups. But Intel said desktop processor shipments were up during the second quarter, despite generating less revenue as a result of a price war with Advanced Micro Devices (AMD) that hit prices for low.

“Desktop unit demand came in higher than seasonal with strength across the board while revenue was lower on a year-over-year basis,” said Paul Otellini, Intel’s president and CEO, during a conference call with investors.

Predictions that desktop PC sales would decline as notebook shipments grow underestimated the demand from emerging markets. While desktop shipments in the U.S. and Western Europe have indeed declined, the market for desktop PCs has shifted to emerging countries, where such systems continue to be in high demand, Antone said.

“That frontier of where computing is getting to continues to push forward, and so the overall total unit volume for desktops has continued to be slightly up. It hasn’t contracted on a worldwide basis yet,” he said.

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