For the past several years, the chip maker has been shadowed by relentless bears. In the wake of yet another non-moving quarter that was characterized by further declines in sales, doomsayers opined that Intel’s only way out of the gutter was a reinvention, begging the question; how soon will this reinvention come?
I am inclined to believe that Intel Corporation (NASDAQ:INTC)’s reinvention is ever nearer. The chip maker has a strategy that will take the market by surprise.
‘Haswell’ to offset loss brought about by tablets
Tablets remain a thorn in the PC sector’s side. The witnessed sequential and year-over-year declines in PC shipments are attributable to consumers’ current preference toward tablets. Research firm IDC actually contends that the global shipment of PCs plummeted 14% in the first three months of the year, signaling the sharpest plunge in over a decade.
The continued viral growth of the tablet sector, along with other equally compelling factors, has forced Intel Corporation (NASDAQ:INTC) to slash the current quarter’s revenue forecast by as much as 8%.
Moving forward, tablets are likely to continue gnawing into PC sales. This is especially so if you consider how Android is gaining market share. The impetus behind the tablet’s uptrend has in-arguably been Google Inc (NASDAQ:GOOG)’s Android OS. Unlike its iOS counterparts, a good number of Android-powered tablets are within the $100 to $200 price range.
These price incentives have been instrumental in key markets such as China and other emerging yet equally potent markets, including Brazil and India. Last year, Android’s growth outpaced the sector’s overall growth, coming in at a mind-boggling 175%, compared with the sector’s equally huge 117% growth.
Research firm Strategy Analytics actually believes that Android tablets are closing the gap on Apple Inc. (NASDAQ:AAPL)’s iPad. It argues that 17.6 million Android tablets were shipped during the first three months of the year, up from 6.4 million units a year earlier. It also ventures that Android’s market share as of this writing is 43.4%, up from 34.3% a year earlier.
Intel and tablet growth
Intel Corporation (NASDAQ:INTC) has a new chip designed for a new generation of laptops and ultrabooks. The new chip, dubbed ‘Haswell,’ will replace the current Ivy Bridge architecture. Just like Ivy Bridge, Haswell will make use of the 22-nm process node. However, it has some key differentiating factors that, if marketed properly, could create a unique and compelling selling point for Intel.
One key selling point for Haswell is its battery life. Going by what Intel Corporation (NASDAQ:INTC) said, Haswell will present the greatest generation-to generation battery life improvement in the company’s history. A Haswell-powered ultrabook is expected to run for more than nine hours without charging.
In addition, Haswell-powered devices are expected to pack a greater punch when it comes to graphics. Considering that ultrabooks and tablets have a somewhat similar form factor, convincing consumers to buy ultrabooks on selling points such as battery and graphics is possible.
Support from industry peers
In addition, I believe that players such as Microsoft Corporation (NASDAQ:MSFT) will root for Haswell. Microsoft’s Windows 8 received a muted response and has failed to catch on as expected. Latching onto Intel may be a good play for Microsoft Corporation (NASDAQ:MSFT). As it is, there is still a lot of mystery surrounding its Windows 8 operating system, which to date, lacks concrete sales figures.
Since its debut half a year ago the only license sales figures released to the public have been the 40 million license sales in late November 2012 and the 60 million license sales in January. To add insult to injury, IDC saddled the PC’s downturn during the first three months of the year on Microsoft Corporation (NASDAQ:MSFT). The research firm argues that Windows 8’s complicated interface caused users to shy away.
Microsoft will therefore throw its weight behind Intel as it pushes forward with Haswell in early June. Haswell is not an immediate solution, but if packaged well, could change the lopsided PC-tablet battle, thereby reversing Intel’s fortunes.
The article Intel’s Reinvention Is Coming Sooner Than Expected originally appeared on Fool.com and is written by Lennox Yieke.
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