Intel's PC Business Chief Admits to a Huge Mistake

In late 2012, PC Watch first reported (via SemiAccurate) that Intel wouldn't produce a version of its 14-nanometer Broadwell processor targeted specifically at mainstream desktops. This ultimately came to pass, as Intel wound up releasing parts known as "Haswell Refresh" to hold the line between mid-2014 and late-2015.

At the recent Citi Technology Conference, Kirk Skaugen, head of the company's Client Computing Group, admitted that not bringing out Broadwell-based chips for the desktop may have had a negative impact on the company's chip sales.

Why might this have negatively affected the company's business?Skaugen points out that Intel's desktop PC processor business brings in over $10 billion in revenue today, making it not only a substantial part of the company's PC business, but also a large part of its overall business. Weakness here obviously affects the company, and Skaugen seems to think that skipping over Broadwell for the desktop may have impeded desktop chip demand.

"We didn't build a fifth-generation Core product for [desktop] towers," Skaugen said. "We made an experiment and we said 'maybe we're putting technology into the market too fast, let's not build a chip for the mainstream tower business.'"

This, Skaugen admits, "was a mistake."

He went on to say that skipping over Broadwell for the desktop helped the company save money on research and development, but when the Windows XP refresh was more or less over, customers were left with little incentive to upgrade their systems after that.

Indeed, in the first quarter of 2015, Intel saw its desktop processor unit volumes plunge 16% year over year, with the decline accelerating to 22% in the second quarter.

It's back to yearly refreshes for desktop tower chipsDuring the conference, Skaugen indicated that the company will return to a yearly desktop chip refresh cycle. This change was probably made fairly recently, as a leaked Intel chip roadmap that has been floating around the Web indicates that Intel had planned to put out "Skylake Refresh" chips for the desktop in late 2016.

However, a more recent leak from indicates that Intel plans to bring out its next-generation Kaby Lake chip (which could technically be viewed as a more extensive "Skylake Refresh") for tower desktops in 2016.

It's not clear by how much skipping over Broadwell for tower desktops affected the company's business, but Skaugen was clear in communicating that he thinks this contributed to the slowdown that Intel saw in its desktop business this year.

Skaugen wants to return the PC business to growthIntel has publicly said that over the long term, it expects the PC business to be flat to down, with the goal being to keep the segment "roughly flat."

However, Skaugen made it clear during the conference that he wants to do better than that and would like to grow the business at a low- to mid-single-digit clip.

Although many factors that contribute to the overall PC industry growth rate are ultimately out of Intel's control, as an Intel stockholder I hope the company delivers compelling products that ultimately put it in the best position possible.

At the very least, Intel should continue to innovate in the PC space to try to grow its share within the PC market, even if said innovations don't do much to spur growth in the total demand for PC products.

Here's hoping that Intel's Kaby Lake chip, scheduled to launch next year, brings meaningful innovation to the company's PC processors -- desktops included!

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Ashraf Eassa owns shares of Intel. The Motley Fool owns and recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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