Mobile nerves hang over Intel and Microsoft Q4s
Atom suffers 57% revenue decline, as Intel pins hopes on smartphone breakthrough, while WP7 too small to figure in Microsoft's report
Published: 23 January, 2012
READ MORE: Financial | Intel | Microsoft | Processor | Windows Phone
The old Wintel alliance is seeking to find its place in the new mobile world, but the fourth quarter results of both former best friends highlighted the difficulties ahead.
Intel delivered a strong Q411 but beneath the top level figures, such as a 6% year-on-year leap in net income to $3.4bn, and a 21% rise in revenue to $13.9bn, there were worrying signs. In particular, the Atom family - which targets low power and mobile devices and recently pushed into smartphones with its Medfield iteration - suffered a huge revenue decline of 57% compared to the year-ago quarter, making just $167m.
Although Medfield, which recently attracted handset deals with Motorola and Lenovo, will not figure in results until later in the year, the Q4 dip emphasized nervousness about Atom's ability to be a powerhouse in the mobile world - and how far its lower margins could shift Intel's business even if it does become a big success beyond its natural home of netbooks.
On a conference call, CEO Paul Otellini insisted the Atom doldrums would be very temporary and Intel was finally poised for a smartphone breakthrough. He said: "While the Lenovo and Motorola designs are exciting first steps, we're not done making announcements in the smartphone space." He added: "We're coming in at the top of the smartphone market. Our value proposition initially is aimed at best performance and very competitive feature sets and very good battery life."
As well as vying for top end handsets, Intel would also address "multiple price points" in the tablet segment. Perhaps the firm's biggest bet in mobile computing for 2012 is its own Ultrabook superslim notebook platform, but the early models, at least, mainly use the mainstream Core processors rather than Atom.
Otellini was asked about plans to create an integrated mobile system-on-chip combining processor and baseband, which is increasingly seen as an essential tool for participating in the mainstream smartphone market, and competing with Qualcomm. Intel has acquired various elements of the mobile platform, notably Infineon Wireless, which brought a major baseband business with it, but Otellini remained guarded, saying he was "not really at liberty to discuss" plans for single-chip offerings.
CFO Stacy Smith said the company was forecasting an increase in R&D of $1.8bn during 2012, with additional funds heavily focused on "critical areas" such as handsets and tablets.
Over at Microsoft, success in tablets and other hybrid mobile devices has to wait for Windows 8 - in other words, 2013 in terms of significant financial contribution. That leaves WP7 as the only mobile platform, but it is confined to handsets and is struggling to gain market share. The possible impact from Nokia's first WP7 launches will only really be felt from the current quarter onwards, since its Lumia range made its debut late in 2011, and not until this year in north America.
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