AMD has followed Intel in warning that revenues suffered in the third quarter due to slackening consumer demand.
The news on Thursday reinforced the view that PC makers and their microprocessor partners have suffered a tough “back to school” season. With tablets, eReaders and smartphones exciting the consumer imagination more than laptops, it could be an equally tough holiday season ahead.
AMD said sales for its quarter ending September 25 should be down 1 to 4 per cent on its June quarter “due to weaker than expected demand, particularly in the consumer notebook market in Western Europe and North America.”
Intel gave a similar warning four weeks ago, predicting sales could be down by 5 per cent “affected by weaker than expected demand for consumer PCs in mature markets”.
Neither Intel nor AMD are likely to generate much more interest in the fourth quarter in the Windows-based PCs they support. The big launches of laptops and PCs featuring their new chips are not due until the New Year, although advance chip sales to ramp those launches should help them in the final quarter.
The poor state of Western economies and the lack of consumer confidence seem to be the major factors.
But the impact of Apple’s iPad and the forthcoming introduction of a number of rivals should not be ignored.
Best Buy told the FT last week it had no hard numbers, but it seemed “there was some replacement of netbooks by iPads going on”.
Paul Otellini, Intel chief executive, has said he sees tablets as “additive” to the market, rather than cannibalising netbook and laptop sales. The company has been focused on netbooks, but it unveiled a Dell tablet running Windows at its developer forum this month and Mr Otellini said it was working with Microsoft on tablets for the enterprise.
That won’t help third or fourth quarter numbers. Tablets appearing this autumn will overwhelmingly feature Google’s Android operating system and Arm-based microprocessors rather than the x86 ones of Intel and AMD.
Gene Munster, Piper Jaffray analyst, issued a report on Thursday – “iPad is the Mac of the Masses” – raising his forecasts for sales of the iPad (featuring Apple’s own A4 Arm-based processor) in 2011 from 14.5m to 21m – almost double the 10.7m expected to be sold this year.
Mr Munster sees Android providing the main challenge and first competition to the iPad, with eight to 10 competitors in the market by year’s end.
“Long term we expect tablets to account for 17 per cent of the PC/Netbook market by 2012 (66m tablets out of 380m PCs/Netbooks),” he writes.
Intel’s Atom and AMD’s Ontario processors should secure a piece of that new market by then, but it looks as though Arm-based processors will start out with the lion’s share.
