Otellini says PC industry on brink of recovery

Netbooks have helped stabilize PC shipments over the past few quarters

The PC industry is set to come out of the most damaging recession in decades as computer shipments begin to pick up, Intel CEO Paul Otellini said on Tuesday.

Chip shipments are stabilizing as PC shipments start to rise, Otellini said during a keynote speech at the Intel Developer Forum trade show in San Francisco.

"This is an environment where we have had the worst recession in 70 years," Otellini said. "The market is poised for a resurgence and we will see how 2010 plays out," he said.

Otellini said he is "personally" betting that in the coming quarters the PC industry is likely to see flat or positive growth in shipments compared to 2008. The recovery has already started and the best is yet to come, he said. The PC industry has been more resilient than expected and the trend should continue going ahead.

The recovery will help Intel, which makes the chips that power most PCs, he said. "It shows we have built something that's indispensable," Otellini said.

Otellini's comments on the PC industry are stronger than conservative outlooks provided for an expected PC industry recovery from companies like Advanced Micro Devices and Dell.

Analyst firm IDC in July said PC shipments for the second quarter of 2009 were stronger than expectations, propped up by consumer spending and lower prices.

Worldwide PC shipments in the second quarter fell 3.1 percent compared to the same quarter a year earlier, to 66 million units, according to IDC. IDC had originally projected a drop of 6.3 percent.

Netbooks have helped stabilize PC shipments over the past few quarters, Otellini said.

Netbooks are inexpensive laptops characterized by small screens and keyboards. They are designed to run basic Internet applications and office productivity applications like word processing.

Otellini said netbook shipments outpaced those of Nintendo's Wii gaming console in 2006 and Apple's iPhone in 2007; those products were wildly successful when they were launched, respectively, in those years. Intel ships Atom processors for netbooks, which first made an appearance in 2007.

Otellini also criticized the European Commission for ignoring possible evidence in its antitrust investigation. The EC found Intel guilty of anticompetitive behavior, but Intel believes the regulator was selective with evidence it looked at and, essentially, came in with a "predisposed view" to find the company guilty, Otellini said.

The Commission on Monday released a nonconfidential version of the ruling that detailed e-mail exchanges between Intel and computer manufacturers. The EC described the e-mail exchanges as "smoking gun" evidence in the probe, which resulted in the chip maker being fined €1.06 billion ($US1.45 billion) in May.

Intel has never attempted to quash competitors by setting up conditional deals with PC makers, Otellini said. The EC has consistently ignored evidence and painted a different picture around the memos, he said.

Intel has its side of the story to tell, but it can't offer additional information for the time being, as it was under restrictions concerning the release of documents. But it hopes to release documents at some point to tell its side of the story.

Otellini also made a number of announcements at the keynote, including the introduction of a new developer program around the Atom mobile processor. The program will help developers write and port existing programs for use on PCs, like netbooks, based on Atom processors. It will also provide the tools and software development kits to developers and help sell applications. Otellini said applications will mostly be sold in the app stores, much like how Apple sells iPhone applications for the iPhone.

The program will first apply to netbooks and then expand to other mobile devices. Intel has partnered with Asustek Computer, Acer and Dell for the program.

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Agam Shah

IDG News Service
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