PC Sales Set For Comeback In 2014, Piper Jaffray Says

As part of a report on Intel's outlook, Richard said desktop and notebook PC sales in 2014 will grow thanks to the sun-setting of Windows XP and the release of Windows 8.1. He also expects Intel's upcoming Bay Trail microprocessor, used in hybrid notebooks and tablets, to drive sales.

Overall computer shipments had plunged roughly 11 percent in the second quarter of 2013, after dropping 14 percent the quarter before that, according to IDC. A 5 percent gain would be a modest, but a welcome, reverse of a two-year downward trend, said Fred Moore, managing partner at Moore Computing, a St. Louis-based HP SMB partner.

[Related: Upwardly Mobile: Chip Sales On Record Pace For 2013 ]

Moore said that he anticipates 2014 to be a busy year in PC sales thanks primarily to Microsoft forcing an upgrade cycle to a number of its key software packages such as Windows XP, but also Windows Server 2003 and Exchange 2003 -- all of which lose support by Microsoft in early 2014.

Piper Jaffray estimated that 30 percent (or 500 million PCs) of the 1.2 billion PCs in use today still run on Windows XP. With Windows XP support ending in April 2014 about a third to half of PCs will be refreshed, Richard said. That puts the number of XP upgrades between 150 million to 250 million PCs, Piper Jaffray estimates.

"This is more of a dead-cat bounce than a fundamental PC market change," Richard said. He said sales in desktops and notebooks will continue to be cannibalized by a booming market for tablets and smartphones, and that PC sales will grow in 2014 and likely be flat for the next three to five years as older XP systems are put out to pasture.

Some VARs say Piper Jaffray's bullish outlook on Intel and PCs may be underestimating a shift in the market to non-Intel devices, such as thin-client devices for computing needs in businesses, and Chromebooks.

"Companies vote with their wallet and, with the economy still stuck in the doldrums, many companies are not going to want to pay a premium for Intel systems," said Allen Falcon, CEO of Cumulus Global, a Westborough, Mass.-based partner of both HP and Google. He said customers could take this upgrade cycle as an opportunity to move to affordable cloud-centric systems that are easily managed.

Piper Jaffray raised its price target on Intel's stock to $22 from $20 while upgrading its recommendation to "neutral" from "underweight." Piper Jaffray forecasts Intel's revenue in 2014 should rise to $54.2 billion from a projected $52.9 billion in 2013.

PUBLISHED AUG. 20, 2013