Gartner estimates that in 2012, worldwide PC shipments will grow 4.4% over the year. Another report cites that growth in IP traffic will lead to increased demand for data centers. Further, analysts believe that IP traffic will triple by 2015, and lead to 50% growth in data storage needs. Growing demand for computers and data centers signals a strong market for processor firms Intel and ARM, both of which saw quarterly results surpass market expectations.
Intel’s (Nasdaq:INTC) Q1 revenues fell 7% over the year to $12.9 billion, marginally ahead of the Street’s target of $12.85 billion. EPS of $0.56 was also ahead of the market’s projected earnings of $0.54 for the quarter.
By segment, the company saw its PC Client Group revenues fall 7% sequentially to $8.5 billion and Data Center Group revenues drop 10% sequentially to $2.5 billion. Other Intel architecture group revenues of $1.1 billion reported a decline of 2% sequentially.
Intel has not slowed down on acquisitions. Earlier this quarter, it announced plans to acquire interconnect assets from Cray Inc. for $140 million. Cray is a global leader in supercomputing and is known for Jaguar, its XT5-HE supercomputer, which is the third-largest supercomputer in the world. Intel announced plans to acquire assets related to Cray’s high-performance computing (HPC) interconnect program, which will help it to expand within the server market and strengthen Intel’s HPC portfolio.
Intel’s Mobile Device Expansion
As part of its mobile device focus, Intel plans to release the first Intel-based smartphone this year. The Android model will be released through the U.K. carrier, Orange. The phone, being called Orange San Diego, is expected to cost nearly half of a comparable iPhone. However, analysts believe that it may be a move that is too little, too late.
Intel is also working hard to end ARM’s dominance of the mobile computing segment. Chips with ARM cores have the orders for Apple’s fast-growing iPad and iPhone devices, while Intel supplies chips for Apple’s laptop and desktop processors. But Intel plans to change that. The company is not only developing the 32-nanometer Medfield chips, it is also ramping up factories for the 22-nanometer processor. The 22 nm processor uses 3-D Tri-Gate Transistors and enables greater performance and efficiency, especially for smartphones, tablets, and ultrabooks. It’s a chip that Intel hopes will attract Apple.
Intel’s Foray into TV
Meanwhile, Intel’s plans to enter the TV service market are facing tough battles. The company’s Internet-based offering will let a user watch TV networks through Intel’s set-top box. Intel has been in negotiations with content providers in an attempt to get unbundled rate cards to be able to offer fewer channels instead of forcing consumers to buy entire lists of channels. However, these attempts have not yet gotten results as content providers are not interested in “breaking their programming bundles.”
The market is looking forward to Intel’s TV, which the company claims, comes with facial recognition features that would help improve the quality of data about viewers and let marketers launch more targeted ads on these networks. Intel plans to launch its TV service during the year, provided it is able to get the required content.
Intel’s stock is trading at $26.98 with market capitalization of $135.74 billion. It touched an eight-year high of $29.27 in May 2012.
The increasing popularity of Apple’s “i” devices has surely boosted U.K.-based ARM’s (Nasdaq:ARMH) revenues. Q1 revenues increased 14% over the year to $211.9 million and were ahead of the Street’s projected $206.4 million. EPS of $0.16 was also ahead of the market’s targeted earnings of $0.15 per share.
ARM vs. Intel
As Intel tries to take away ARM’s market share, not surprisingly, ARM is also trying to eat into Intel’s share. Recently, the company sharpened its focus on providing security for online mobile payments in a move to counter Intel’s DeepSAFE technology. Earlier this quarter, it entered into a partnership with Gemalto and Giesecke & Devrient, both of which develop security tools for payment technologies. The three will work together to create technical standards for a secure environment within the chip where sensitive data will be stored, processed, and protected.
ARM will also be able to compete with Intel on the desktop front as Microsoft readies its special version of its operating system, Windows RT. The new OS is expected to be able to support ARM-based processors.
ARM’s stock is trading at $22.692 with market capitalization of $10.51 billion. It touched a 52-week high of $31.55 in November 2011.