Lack of innovation on the PC side of the business is what is hurting Intel Corporation (NASDAQ:INTC), affirms Trip Chowdhry, Managing Director at Global Equities Research. Despite a slowdown in the Pc business, the giant chip maker was able to report impressive first-quarter earnings that were slightly above what was posted last year same period. During an interview with CNBC, Chowdhry reiterated that the PC business remains a 200 million unit business that Intel should focus more on, instead of shifting attention to the mobile business.
The ongoing weakness in the personal computer market has been attributed to people remaining uninterested in buying PCs opting for tablets and smartphones. The PC business continues to account a huge portion of the company’s revenues raising concerns whether Intel will be able to sustain its profit margins should the weakness persist.
“Intel Corporation (NASDAQ:INTC) has done a very poor job when it comes to innovating on the desktop side; somehow they have missed the whole vision of what desktop computing is all about. They have merged laptops and desktops today Intel is treating the desktop as a second class citizen. It is still a 200 million units business and they need to really optimize laptops for power and desktop for performance,” said Mr. Chowdhry.
Chowdhry believes Intel Corporation (NASDAQ:INTC) should not focus more on developing chips for the mobile business as it is not a high margin business compared to the PC business. Intel was bashed by the Street for entering the mobile market quite late after other chip makers had accrued a sizeable amount of market share.
“I would really like Intel to exit the mobile market because this is not a space in which they can really do well. The high-profit business continues to be desktop; they have totally ignored that desktops need innovation, and it is a 200 million unit opportunity,” said Mr. Chowdhry.
Intel Corporation (NASDAQ:INTC) hope of offsetting the ongoing weaknesses in the PC markets could on the other hand lie on the sale of chips for data centers. A business that has continued to grow as more business continue to embrace the cloud. The chip giant is confident that the data center business could one day account for a huge portion of its total revenues.
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