A change in strategy remains the only solution for Intel Corporation (NASDAQ:INTC)’s current woes in the PC business, which has forced it to slash its first quarter guidance by $1 billion, according to Daiwa head of technology, Rick Hsu. Intel is suffering great deal from a decline in earnings from its PC business as demand continues to drop amidst a strong dollar. During an interview on CNBC, Hsu reiterated that the giant chip company may be forced to shift its attention to data centers and cloud computing, to offset a further decline in earnings from the PC business.
Intel Corporation (NASDAQ:INTC) was hit hard last year on fewer than expected companies upgrading their PCs running on outdated operating system leading to weak demand for its chips. Hsu believes a focus on chips for operating data centers should be good for Intel as the internet of things (IoT) continues to gain momentum.
“They probably want to focus more on the data centers and cloud computing area to intense their momentum. [..] They need to rely more on the amount of demand when it comes to the next big data IoT cycle. We believe that the cycle is going to spur more demand for computing data centers so that should benefit Intel Corporation (NASDAQ:INTC),” said Mr. Hsu.
Microsoft ended support for Windows XP last year a move that was expected to push more consumers and buyers to upgrade to newer machines. Intel Corporation (NASDAQ:INTC) had had hoped for a bounce back in demand from small and medium-sized business, something that never happened.
Lack of interest to move on, from Windows XP could spell more trouble for Intel and Microsoft Corporation (NASDAQ:MSFT). On the other hand shifting attention to chips that run data centers should help offset Intel’s losses accrued in the PC business, which is expected to drop by 4.9% globally in terms of volume sales according to IDC research.
“Going forward when we move into the next cycle of IoT, i think that is going to open up probably more opportunities for this non-Microsoft operating system to expand their market share. I think that could be one of the special focus for Intel,” said Mr. Hsu.
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