Citing Windows 8 Uncertainty, Intel Warns on Current Quarter

Consumers and businesses aren’t just holding off on new PC purchases until Windows 8 ships at the end of next month; they’re unsure what types of machines to purchase. That’s the word from chip-making giant Intel, which warned investors this week that earnings for the current quarter would be lower than previously expected.

Intel previously said that it expected revenues in the current quarter to be $13.8 billion to $14.8 billion. It now expects revenues to hit $13.2 billion, plus or minus $300 million. Intel’s gross profit margin will fall from 63 percent to 62 percent.

The slowing of sales is in line with recent announcements from PC giants HP and Dell, both of which predicted lower-than-originally-expected revenues for the current quarter.

As usual, the culprit is Windows 8, which goes on sale on October 26, right as the current quarter is winding to a close. But Intel’s slowing growth might have more to do with uncertainty than any expectation about a future boost from Windows 8. The trouble is, PC makers aren’t sure which types of Windows 8 devices are going to sell the best, and because the coming generation of Windows 8 hardware is so diverse, it’s not clear where these firms should put the most resources.

Previous to this version of Windows, sales predictions were relatively easy: Consumers and businesses essentially chose between two basic types of PC, desktops, and portable computers. But thanks to the rise of simpler, slate-like tablet devices, Windows 8 will be accompanied by a much wider range of PC types, including various desktops, but also tablet, slate, laptop, Ultrabook, hybrid PC, convertible PC, and other portable designs, many of which will come with multi-touch capabilities.

And Intel’s ARM-based competitors now have a foot in the PC door, too: Various PC makers and other device makers will be selling portable devices based on Windows RT, the ARM variant of Windows 8. (Even Intel’s longtime partner Microsoft is making a Windows RT tablet, the Surface.) Uncertainty about the popularity of these devices, too, is surely hanging over Intel’s future growth potential.

Not helping matters is that business PC sales are flattening ahead of the Windows 8 launch as well. In previous quarters, strong sales of business PCs helped make up any shortfall on the consumer side. Only Intel’s data center business—servers—is meeting expectations, the firm revealed.

Fortunately for Intel, none of this was unexpected. With the biggest PC makers already reducing sales forecasts ahead of the Windows 8 launch, most people believed it was only a matter of time before Intel followed suit. After all, these firms are Intel’s customers, not businesses or consumers.

TAGS: Windows 8
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