Intel Shifting Focus from PC Market to IoT and Data Center
Intel has dominated the CPU market for long, as being the first and foremost provider of consumer processors for both desktops and laptops. While the US-based company will continue selling CPUs, it recently made it clear that they would no longer focus on the PC market to drive growth; rather target the “smart and connected world.”
During the company’s Q4 2015 conference call, Intel CEO Brian Krzanich stated:
Taken as a whole, 2015 demonstrated the benefits of our strategy, which is designed to capitalize on the growing need for the infrastructure powering the smart and connected world. That strategy is also resulting and the evolution of our business model to focus on three keys areas of growth, the Data Center, the Internet of Things and Memory. Our results reflect that evolution.
Intel’s client PC business is still the largest segment, however, it’s on decline for the past few years and not generating required revenues for the company. Last year, Intel rolled its mobile devices (smartphone and tablet) reporting into the PC group, and changed the name of the business group from the PC Client Group (PCCG) to the Client Computing Group (CCG). Unfortunately, the move didn’t work in favor of the company as the CCG fell 8% year-on-year, despite sequential growth in Q3 and Q4.
Meanwhile, the relative growth and revenue of Intel’s various other businesses has been strong in 2015: security revenue saw 6% increase, Internet of Things (IoT) revenue rose 7%, and data center revenue was up 11%. These results are an obvious reason why Krzanich spoke about shifting focus to these segments. According to company CFO Stacey Bright:
“Other businesses now make up about 40% of our total revenue, and 2015 marked the first year where these businesses made up the majority of our operating profit.”