In the last few days Hewlett Packard Inc and Dell have posted results, in which their respective chief financial officers have spoken about the issues their businesses face with the supply of Intel processors. This affects the ability of these PC firms to fulfill orders of new PCs for enterprise customers and consumers of high-end PC devices, that tend to use the Intel chipset.
Struggle with Windows 10 refresh
In a transcript of the earnings call of October 26, posted on the Seeking Alpha financial blogging site, HP Inc’s CFO, Steve Fieler, discussed how the supply issues could impact the company’s enterprise customers, and their ability to refresh Windows 7 PCs with new Windows 10 machines. Microsoft is due to end support of Windows 7 on January 14, 2020, but the supply issues with Intel processors has meant that PC manufacturers are struggling to ship new Windows 10 PCs to their enterprise customers. “It could be that these current supply constraints actually indeed help prolong the Win 10 refresh. And so there’s a lot of dynamics going on. And that’s why I think the seasonal patterns are likely to be affected, both from a supply, but also on the potential extension of the Win 10 refresh,” Fieler said.
Worsening supply of Intel chips
Similarly, Dell admitted that the Intel CPU shortages have worsened quarter-over-quarter the shortages. In the transcript of the earnings call, posted on Seeking Alpha, Jeffrey Clarke, vice chairman, products and operations at Dell, said the supply issue with Intel processors, “is now impacting our commercial PC and premium consumer PC Q4 forecasted shipments.”
Looking at the response from Dell’s CFO, Thomas Sweet, on the question of how Intel’s processor supply issues, affects the ability of Dell to fulfill orders from its enterprise customers, it appears that about two-thirds of Dell’s enterprise customers have migrated from Windows 7 to new Windows 10 PCs. However, that still leaves a third of Dell’s enterprise customers still on Windows 7.
In the Seeking Alpha transcript of its Q3 2019 earnings call, Intel CEO, Bob Swan acknowledged the supply issues with processors saying: “We’re letting our customers down, and they’re expecting more from us. PC demand has exceeded our expectations and surpassed third-party forecasts.”
But failing its customers – the PC manufacturers – has a direct impact on every enterprise IT department’s ability to complete the refresh of Windows 10 before the Windows 7 end of support deadline. The ball is now in Microsoft’s court.