By Libardo Lambrano The future of Intel (INTC) is not computers. Instead, I believe the company’s next act will feature wearables, servers and the Internet of things. In 2013, Intel underperformed the Nasdaq Composite Index and investors became concerned about the end of the era of the so-called Wintel domination. (Wintel is a tech term mashup of Intel and Microsoft Windows). The Wintel alliance was virtually unstoppable from the 1980s to 2000. In April 2013, the research firm IDC issued an alarming report disclosing that worldwide shipments of laptops and desktops fell 14% in the first quarter from a year earlier. That was the sharpest drop since IDC began tracking this data in 1994 and marked the fourth straight quarter of decline. IDC expects PC shipments to fall by 6% in 2014 and decline through 2018. This was not seen as good news for Intel.
Beyond mobile and PCs
Investors have been betting on mobile and tablets to fill the gap, but it doesn't appear that the numbers investors were hoping for will ever materialize for Intel, in my opinion. Intel does not have a strong mobile presence. Qualcomm (QCOM) has dominated this market segment for many years. The market for tablets and book readers has cooled down and it doesn't appear, in my view, that they will ever achieve the volumes investor were looking for. Regardless of this crisis in the PC industry, I believe Intel still has a lot of potential. Investors should stop looking to PC shipments as a means of assessing a potential investment in Intel. What is now driving the growth at Intel and will become the next big things are wearables, servers, and the Internet of things. While these three are still nascent product categories, Intel is already playing a big development role in each of them.