Partners Bullish On PC Sales Despite Intel's Revenue Slash

Intel slashed its revenue outlook for the first quarter of 2015 by almost a billion dollars Thursday, citing weak SMB demand for its business and desktop PCs, as well as low inventory levels across its PC supply chain.

Despite the company's crushingly low PC demand, partners remain optimistic about the PC market, stressing that the dip in demand is a result of low refresh levels, and doesn't signify an overall decline in PC sales.

"This is part of the natural business cycle for upgrades," said Todd Swank, senior director of product marketing at Equus Computer Systems, a Minneapolis-based custom system builder. "We saw a spike in sales last year when consumers had to upgrade their PCs for Windows XP, and so now there's no catalyst for desktops today driving the upgrade cycle. But this coming fall, when we see Microsoft's Windows 10 launch and Intel's new Skylake CPU, I think we'll see another spike in demand."

[Related: Intel Earnings: Data Center Revenue Soars As Mobile Revenue Tanks]

Stocks slid by 4.7 percent Thursday after Intel announced its revenue outlook cut from $13.7 billion to $12.8 billion.

In the second quarter of 2014, Intel saw a spike in demand after Microsoft ended its technical support for Windows XP, and consumers rushed to refresh their devices. However, that surge in demand has left a space in the consumer market in the first quarter.

In January, the Santa Clara, Calif.-based company reported strong growth in its PC and data center business in 2014, reeling in $14.72 billion in revenue in the fourth quarter of 2014. The company's Client PC Group reported a 4 percent increase in revenue for 2013 at $34.7 billion.

Though the PC market has been under constant pressure as tablets, mobile phones and other new devices overtake consumer demand, partners are still bullish on PCs, particularly with Microsoft's Windows 10 upgrade opportunity coming later in the year.

"There's definitely still interest in PCs, particularly among bigger businesses," stressed Anita Nunez, director of sales at Boca Raton, Fla.-based iPower Technologies, a Dell partner focused on storage and switches. "We do see cycles of more and less demand, as clients try to make their investments last longer, holding on to their PCs for as long as five to eight years."

Also on the horizon is Intel's new successor to Broadwell, Skylake, a next-gen CPU that will support cable-free PCs and other devices.

Entre Computer said it is not seeing a tapering off of new PC volumes as it ramps up business for 2015. However, the West Springfield, Mass.-based Dell partner said the punishing winter has impacted buying patterns in recent months.

"I will say that, specifically here in New England, obviously the beating we took with the snow impacted customer activity. But I can't relate that to overall trends," said Rob Braceland, vice president of sales at Entre Computer.

As for SMB sales, Braceland said Entre business has been consistently good. "The XP refresh is still a very significant viable opportunity for anyone at this point. It's a question of when do those SMB folks decide to release the dollars to move to Windows 7,’ Braceland said. "With small health-care, manufacturing or insurance business, we aren’t seeing those guys desperate enough to make the move yet. They will. If it's not this week then it will be next."

Intel also cited "currency conditions" as a factor in its revenue recalculation, a trend that has been impacting a number of global public-sector companies. The slide of the euro and surging of the dollar is proving a major headache this earnings season.

Currency swings have meant the difference between profits and losses for Microsoft, Google and Apple. In the case of Apple, which recently turned in record profits of $18 billion this past quarter, it cited currency conditions for a loss of $2 billion in sales.

Dell and Lenovo didn't return requests seeking comment for this story.

Tom Spring contributed to this story.

PUBLISHED MARCH 12, 2015