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Skipping Over Broadwell For Tower Desktops Was A Big Mistake For Intel Corporation (NASDAQ:INTC)’S PC Business

The fact that Intel Corporation (NASDAQ:INTC) would not produce a version of its 14-nanometer Broadwell processor may have had an adverse impression on the company’s chip sales. The target for this was specifically at mainstream desktops, and Kirk Skaugen, the head of the company’s Client Computing Group has admitted that this was a huge mistake on their part.

Skaugen says that the current revenue collected from Intel’s desktop PC processor business is probably over $10 billion. This is both a substantial part of the company’s PC business as well as to the overall business. However, failing to provide Broadwell for the desktop affected the demand for the chip.

Skaugen further explains that after experimentation, the Company developed the feeling that it was putting technology into the market too fast. Hence, they halted the building of fifth-generation Core product for [desktop] towers.

At first skipping over Broadwell for the desktop seemed a good thing since the Company was able to save money on research and development. However, the goodness could not last after completion of Windows XP refreshment that left a lot of customers with a little incentive to upgrade their systems. In fact, it was so bad such that Intel’s desktop processor unit volumes plunged to 16% in the first quarter of 2015 and more decline to 22% in the second quarter.

Speaking at a recent conference, Skaugen pointed out that the company will return to a yearly desktop chip refresh cycle. Earlier on, a leaked Intel chip roadmap making rounds on the web had revealed that Intel had plans to put out “Skylake Refresh” chips for the desktop in late 2016.

With Intel Corporation (NASDAQ:INTC)’s desktop business having slowed down tremendously thus year, it is now clear how much more skipping over Broadwell for tower desktops affected the overall Company’s business.

Nevertheless, the Company is optimistic about returning the PC business and do better over the long term probably growing the company at a low- to mid-single-digit clip. Hence, Skaugen made it clear during the conference that the company hopes to deliver compelling products that will put it in the best position possible.

Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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