Intel revenues flat in 2015 as PC sales continue to fall
PC sales decline offset by big increases in data centre and flash disk sales
Intel has reported pretty-much flat revenues for 2015, a year in which PC sales continued declining. However, falls in sales of client computing semiconductor devices were offset by continued buoyancy in demand for data centre products, as well as rising solid-state disk sales via its Non-Volatile Memory unit.
Total revenues fell marginally from $55.9bn in 2014 to $55.4bn in 2015, although research and development spending was boosted by $400m to $20.1bn. Net income fell slightly, from $11.7bn to $11.4bn.
Client Computing Group revenues fell by eight per cent to $32.2bn, largely in-line with falling PC sales. But the company continued its drive towards 100 per cent of the data centre market, with the Data Center Group posting revenues up 11 per cent to $16bn. The Non-Volatile Memory Solution Group, meanwhile, achieved revenues up by one-fifth, but the company did not publish the figures.
However, investors were unimpressed, largely due to the slowing in growth in the fourth quarter of data centre revenues, a fall that Intel argued was due to the "lumpiness" of sales in that particular sector of the computing market.
"The data centre market has been offering Intel some shelter from the difficult PC chip market. Intel's business in data centres has been driven, in particular, by investments from vendors and enterprises that support their cloud and analytics strategies," said TechMarketView analyst Kate Hanaghan.
She continued: "Cloud and big data analytics are substantial market-shaping trends that are set to run and shape the tech industry for years to come. However, Intel says the revenue flow from data centre microprocessors can be ‘lumpy' quarter-by-quarter - hence the fourth quarter slowdown.
"It says this does not represent a fundamental change in demand from customers. We think this is a reasonable explanation based on what we are see in terms of cloud-related investments. However, industry watchers are jittery about there being any loss of momentum in Intel's strategically important areas."
Intel's latest results come as its sixth generation Core PC processors, codenamed Skylake, start hitting the market in volume, providing power users, at least, with a stronger reason to upgrade than Windows 10.
Intel's results also emerged in the same week that its ever-diminishing rival AMD started volume shipments of its first "Seattle" Opteron A1100ARM-based server microprocessors.
Intended for high-density server systems, the processors have four or eight ARM A57 cores running at either 1.7GHz or 2GHz. The high-end parts will cost about $150, representing a significant discount compared to the price of Intel's Xeon D microprocessors. The prices for the Xeon D start at $199, with the high-end parts costing as much as $675.
Although AMD admits that the Intel Xeon D is much faster, it is aiming its new Seattle server microprocessors at commodity web serving applications, running Linux, Apache, MySQL and PHP, and in networking and storage infrastructure. ARM has targeted a server market share of 25 per cent by 2020.
While technically there's quite a distance between AMD/ARM and Intel, at the moment, the price competition may represent a challenge to Intel's profitability in the data centre space.