Intel grows datacentre business but desktop struggles

Intel has posted fourth quarter 2013 revenue of $13.8bn, with growth in its datacentre business and a decline in desktop systems

Intel has posted revenues of $13.8bn for the fourth quarter of 2013, reporting growth in its datacentre business and a decline in desktop systems.

For the full year, Intel reported revenues of $52.7bn and net income of $9.6bn.

Intel's Data Center group posted revenues of $11.2bn, up 7% from 2012, while revenues in its PC Client Group were $33bn, down 4% from 2012.

Intel's PC Client Group has been affected by the decline in PC sales. According to analyst firm Gartner, total PC shipments for 2013 reached 315.9 million units, a 10% decline in shipments from 2012. 

In the transcript of the investor call, posted on the Seeking Alpha financial blogging site, Intel CFO Stacy Smith said: "Our datacentre business continues to see robust growth as a result of the build out of the cloud and the exposure of devices that compute and connect to the internet."

But the drive to modernise datacentre servers to support new virtualisation workloads may be coming to an end.

When asked by analysts why the growth in the enterprise server business was not in line with economic growth, Intel CEO Brian Krzanich said it was "showing a kind of long-term growth rate in enterprise that is less than what it was three years ago". 

"I think there was some impact associated with the virtualisation curve having played out, but that does not stop the fact that we think there is growth in the enterprise segment. We have just changed our view for 2014. We think the recovery just plays out a bit slower than we would have thought a quarter ago," he said.

In the desktop market, Krzanich said Intel benefited from the transition away from Windows XP to a modern, supported version of the Windows operating system. He said a lot of the growth in the desktop market came from the enterprise space in the mature markets.

During the call, Krzanich also answered questions on Intel's mobile computing strategy, which is based on 64-bit chips, unlike ARM, which is a 32-bit architecture. He said mobile device manufacturers using Intel chips can already start to utilise 64-bit computing. 

"We are out there working with all of the OSs and the OEMs to enable that. The real uses and the values are going to be in those high compute areas – things like video, media, transfer media manipulation; all the classic things that drove the compute cycles on PC," said Krzanich.

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