Intel's Steve Long: We're Seeing A 'Resurgence' For PCs

While the PC market faces uncertainty in the second half of 2020, Intel executive Steve Long said there are three major reasons he is optimistic about the future of the business. 'There's obviously uncertainty with GDP. We don't control that. What we do control is the kind of innovation that we bring into the market,' he said.

Intel executive Steve Long said the chipmaker is seeing a "resurgence " of PCs as the coronavirus pandemic prompted a large spike in sales for client CPUs, underscoring the resilience of the business.

Long, global vice president of client computing sales at Santa Clara, Calif.-based Intel, told CRN that while the pandemic has created uncertainty for PC sales for the rest of the year, he has several reasons for optimism for the category, which he outlined in a panel discussion at last week's virtual Intel Partner Connect.

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"There's obviously uncertainty with GDP (gross domestic product). We don't control that," he said. "What we do control is the kind of innovation that we bring into the market, and we can control the kind of solutions and reasons to get buyers out there excited about what the category brings."

For one thing, Long said Intel is setting itself and its partners up for success with new product lines like the 10th-generation Intel Core S-series desktop processors and a new line of Intel vPro processors for commercial PCs as well as with the company's vast amount of resources for channel partners.

"We're standing behind them with not only our products, but our programs," he said. "For over 25 years, we've worked with our channel partners, and we remain very committed to them, both with training and skilling them up as well as with all the right tools, incentives and marketing programs."

He also pointed to three key trends that leave him feeling optimistic about the market.

For much of the PC's history, sales have closely correlated with gross domestic product, according to Long, but that changed when smartphones and tablets began to take over 13 years ago. However, the company is noticing trends that will bring PC sales closer in alignment to GDP again.

One trend is a big refresh of commercial PCs that was largely driven by the end of Microsoft's support of Windows 7 at the beginning of the year — something that is now being driven by businesses, organizations and schools moving people to work and learn from home as a result of the pandemic.

"It's really tested the resiliency of the human spirit. For the client business, I think equally it's underscored the resiliency of our category," he said.

Long said the company is also noticing an increase in the number of PCs per household. Last but not least, the number of first-time PC buyers is ramping up significantly.

"They're starting to come into the category in a way that that we haven't seen in a while," he said.

Intel has also taken steps to lessen the impact of ongoing supply issues.

With new manufacturing capacity coming online and Intel's F-series processors giving partners more options, Long said Intel's CPU supply has improved over last year, even though product mix issues continue, particularly because of demand for laptops for schools.

"We have an opportunity to replenish inventories and, frankly, gain back some volume that that we know we need to go back and gain back because we have left a couple years of business where we need to earn our way back in with credibility in our supply chain," he said.

When Intel introduced its F-series processors at the beginning of last year, there was some confusion in the channel about the product line's positioning, particularly because the processors originally had the same recommended customer pricing as regular processors while lacking integrated graphics, according to Long. But after Intel reduced the pricing of the F-series parts several months later, they have become widely accepted by partners, he added.

"A year later, I can tell you, I'm swimming to keep up with demand on those parts right now," Long said.

The big question, Long said, is what the rest of the year will look like for the PC market. Intel reported a 14 percent increase in sales for the Client Computing Group in the first quarter compared to the same period last year, largely thanks to a huge demand in laptops. But the company said it expects the total addressable market will decrease in the second half of the year due to the economic impact of the pandemic.

Randy Copeland, president of Velocity Micro, a Richmond, Va.-based system builder and Intel partner, said business has been up for a variety of reasons tied to the pandemic, from more people working from home to more people having free time to play PC games. The company is also seeing an uptick in PC sales from day traders and scientific researchers.

"We have a lot of people who are working from home now, and they're trying to do real work, and they found that their five- or six-year old laptop or their seven- or eight-year old desktop is not cutting it to do real work," he said.

To help customers with the work-from-home transition, Velocity Micro has repositioned its small form factor ProMagix HD 30 workstation as a good low-cost PC for people who need high performance.

"It just worked out that it's perfect for people for a second PC for home use," Copeland said.

While Velocity Micro still has some issues with CPU shortages, it's something that only lasts for a day or a week at the most, which is a marked improvement over last year or the year before, according to Copeland. Beyond Intel's increased manufacturing capacity, Copeland credits improvements Intel made in its communication with partners.

"It's more of a two-way conversation about allocations," he said. "When we're looking at the quarter ahead of us, we basically they say, 'Here's what we'd like to give you, what would you like?' And we tell them what we'd really like, and they're better able to give us what we're asking for."