Stacy Smith, Chief Financial Officer
Yes, I’m not sitting on a bunch of bad news for Q-2. I would expect Q-1 to be the trough for the year.
John Pitzer, Credit Suisse
That’s helpful. And then, for my follow-up, Brian, one of the things that happened when PC penetration slowed was that mix actually got better than a lot of us from the outside looking in thought. Do you think that now the tablet penetration growth seems to be slowing, that we could see some stabilization of mix or even some mix up? How do you view the tablet market as unit growth begins to slow relative to mix?
Brian Krzanich, Chief Executive Officer
That’s an interesting question, John. I think almost like the PC. If you really look back at the PC, the PC began to bifurcate. You did see systems coming in at lower and lower price points, right? And you saw kind of the bottom of the PC market go from the $500 range to, as we said now, you can go out there and get a good system, $249 all the way down to $199 with Chrome.
I think, and then you saw at the same time, as you said, we saw record Core i7 and the gaming PCs are hitting record levels, and so the high end did very well, as well, and we’ve been working on filling in that middle. I think the same thing is going to happen on tablets. You are going to see a robust low end of the tablets. I go to Shenzhen, I see what’s coming out of China right now, and there’s some good low-cost tablets that are going to come out and continue to drive probably that average ASP system down into some $100 range.
At the same time, I think you see systems that, you know, we’ve got them coming with all of our major OEMs, Lenovo, Dell, HP – systems with real innovation: things like the RealSense snapshot, thinner and lighter, longer battery life, better screens, edge to edge screens. People are willing, if you bring the innovation, a $399 tablet, maybe $299 to $399 tablet is not an unreasonable price if you bring the performance or capability that’s new and innovative. So, I think we’ll get that same kind of effect, yes, in the tablet space that we saw in the PC space as well.
John Pitzer, Credit Suisse
Thanks guys, appreciate it.
Operator
The next question comes from Ross Seymore from Deutsche Bank.
Ross Seymore, Deutsche Bank
Thanks for letting me ask a question. Stacy, a couple for you actually. The first one is on full-year R&D spending. It looks like you’re growing that in line to slightly even faster than the midpoint of the revenue side of things. Can you just give us a little bit of detail why the R&D is going to be up about 6% year over year, especially given that it’s either the tick or the tock year where some of the expense goes up into COGS?
Stacy Smith, Chief Financial Officer
Yes, there’re two things to point to. First of all, we are making increases in R&D investment, in areas where Brian and I have looked, and believe we’re going to get a significant pay off on those investments – specifically, in Data Center Group, the Internet of Things Group and a bit more towards process technology.
Then, we are offsetting some of that with decreases in investment in other areas that you’ve seen –the MCG segment being top of that list, and some efficiencies across our product engineering group. I would also point to the second phenomenon which is the acquisition of Axxia, which is going into the Data Center Group and increases our product, or improves our product portfolio there, and the networking space is bringing along some R&D costs associated with that. So, that’s part of what is adding to the R&D spending next year.
Ross Seymore, Deutsche Bank
I guess as my follow on, and somewhat similar – we talked a little bit about this at CES but Stacy wanted to get your view – Broadwell is launching in the 4th Quarter and then starting to ramp now, Skylake, it sounds like you want to continue to have that be on time in the early part of the second half of this year. To the extent that the Broadwell duration is shorter than normal, what sort of business implications, whether it be on revenue, the COGS, etc. line should we think of to hit the financials throughout the year?
Brian Krzanich, Chief Executive Officer
Well, this is Brian. Let me first answer how we are looking at this. I mean, we are not going to slow Skylake down. We said it would be the second half of this year. I don’t want to slow it down because it brings a lot of innovation, and a lot of new capability to this market. We think we have managed between the SKUs, of what SKUs we’re bringing out on Broadwell to really refresh the two in one devices, the Chromebooks. We wanted to bring Core M out, I think, in the first part of this year – with the Chinese New Year, the back-to-school season, having these super thin and light devices is going to be critical so missing that by doing something else with Broadwell would have been a mistake. I think getting that volume is a good thing. We think we’ve managed the transition on the number of SKUs that Broadwell will have, and how it will transition the market to Skylake now, moving forward.
From a margin or COGS standpoint – remember they are on the same technology, it’s the same piece of silicon, it’s the same factory – all we do is change the piece of glass in the scanner to get a different product, so there’s not a change or revamp of our factory that needs to occur for this.
