By John Mylant, founder and CEO of OptionsWeekly.Org
NEW YORK (TheStreet) -- For the last few years, authors including me have been writing about how the PC industry continues to shrink and will fall by the wayside due to technological advances in mobile computing.
Although this trend is certainly hurting chipmakers such as Intel (INTC), it seems our articles may have been premature.
Even though many chipmakers have focused their energies on the mobile market for things like tablets and smartphones, it appears PCs may not be going away like we thought they would.Gus Richard, an analyst at Piper Jaffray, noted a revival in corporate PC buying that will be cycling in April 2014, coinciding with the release of Windows 8.1 in the fourth quarter of this year. Low-end tablets are expected to continue to replace low-end notebooks. On the corporate side, the PC industry is expected to grow. This is good news for Intel, even as it transitions into tablet processors. Intel is launching its "Bay Trail" processor, and it is expected to perform well in tablets and computers. It has been a long time since the company has seen a good shot in the arm like this. Mr. Richard believes we could see Intel's revenue rise after two straight years of decline. This belief would coincide with an event that Intel hosted. An "Intel-sponsored" survey of 3,977 adults from the U.S. was done by the research firm IDC in June. Here's a summary of the results, which were reported by AllThingsD: 1. PCs are considered the "primary" computing device by 97% of respondents. 2. Of that group, more than 41% said they planned to buy a new computer in the next year. 3. PCs are considered extremely important in daily life to these respondents. The were asked what they'd give up first instead of their computer for a week, and 73% said exercise, 71% said candy and sweets, 65% said caffeine and 58% said TV. 4. Respondents said that they typically spent a total 43 hours a week on all types of computing devices. More than half of that time, however, was spent in front of a PC. Bay Trail is expected to be the catalyst that will drive tablet market share toward Intel, with a possible revenue base of $500 million to $1 billion, according to Richard. With the rise in corporate PC buying and the positive results of this survey, there appears to be optimism for Intel right now. It is quite interesting to see how analysts give different perspectives. While Gus Richard of Piper Jaffray upgraded the company to neutral because of the forecasted increase in top-line PCs and Intel's "Bay Trail" processor, another analyst downgraded the company to neutral. Tristan Gerra, a semiconductor analyst for R.W. Baird, cut Intel's rating to neutral from outperform. A number of factors, including a "present" reduction in PC order rates, was given for his reasoning. From his perspective, PC units were expected to decline into the teens this year, and that is a downgrade from the expectations they had earlier this year. He says sales of "consumer" PCs will remain under pressure through 2014 because larger size tablets have been introduced into the market. PC manufacturers have been waiting for a sizable increase in sales of PCs among consumers. Evidently the average home PC is about four years old, and one would think consumers would become frustrated with their slower, older machines and would eventually replace them. This hasn't happened yet, however, as PC sales remain slow. From a consumer perspective, tablets are just easier to use and more mobile than PCs. This is why they have been chosen and purchased over low-end laptops. Media files, photos and other documents are just easier to manage on a tablet than they are on a PC. PCs come out on top when one thinks about productivity or getting something important done; this is why they remain. From one perspective, Intel looks better because "corporate" PC sales are expected to grow. On the other hand, from another's perspective, Intel looks worse because "consumer" PC sales are expected to continue slumping. I guess it's all from what perspective you're coming from. The long-awaited "purchase wave" by consumers of home PCs has not arrived yet, and sales continue to slump. Corporations have not done away with PCs, because they serve an important function for business that tablets just cannot compete with yet. But the big focus should be upon the long-term investment in Intel as it continues to morph into the tablet market with its "They Trail" processor that will transcend both PCs and tablets. At the time of publication, Mylant held no shares of stocks mentioned in this article. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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