How fast and far can Intel fall?

Here’s a few data points indicating the velocity of the transition to companion devices (smartphones, tablets, wearables) away from the previous desktop paradigm:

  • Intel posted fourth quarter 2013 numbers showing basically flat demand for personal computer chips, its sweet spot. It has struggling with making the low energy chips better suited for companion devices, being beaten there so far by Qualcomm and Samsung. The market responded badly to this and other poor reports like GE’s, and the S&P fell 7.19%, and led to a cascading impact on VMware, and Citrix, whose cloud computing solutions run on Intel chips.
  • Intel also announced that its Bay Trail chipset for tablets will be rolling out in Q2. This might turn out to be Intel’s BB10 or Windows 8 moment, however, if device makers don’t start buying them in large numbers.
  • Intel responded with an announcement that it will be cutting 5% of its global workforce, but that did not lead to a rebound in the market. It seems that seeming cost-consciousness about its declining markets is not going to make investors buy more stock, although the falling price stabilized as Wall Street assimilated the news about redirecting R&D toward profitable and expanding lines, like low-power systems.
  • Meanwhile, Apple and Samsung are projecting huge numbers of tablets for 2014: 80-90 million units and 60-70 million units, respectively.

What surprises me is how Wall Street can be surprised about these trends. The handwriting is on the wall: we are hurtling into a postnormal world that will be dominated by companion ‘computications’ devices, and the desktop (and to a lesser extent, the laptop) will go the way of the telegraph and the floppy disk.

The implications for business and the workforce are broad and deep, and there is still a great deal of disruption to come. But we should stop being surprised by the structural impacts of these changes. So, while Intel might change itself into a competitor in this brave new world, it will have to become a very different company to do so.