Intel Reaches the Crossover Point for Notebooks

Historically, desktops generated the largest sales for Intel Corp. (INTC), but the revenue crossover point for notebooks happened in the June 2008 quarter.

Management stated that the notebook market was changing rapidly. Corporate customers were the primary buyers of notebooks in the past. However, nearly 50% of consumer PC purchases have now shifted to the mobile platform. While this has boosted the demand for notebooks manifold, there has been some negative pressure on margins. Intel has stayed ahead of this race by consistently introducing superior products with improved functionality.

The company launched the mobile version of its Penryn processor under the Core 2 brand early in 2008. Later in the year, it launched the first quad core processor for mobile platforms. Montevina, the Centrino mobile platform, also launched recently, with a new processor, a new chipset and a new wireless adaptor. Montevina is a faster and more eco-friendly chip, enabling superior multitasking for intensive applications such as high definition entertainment and gaming. It also has a longer battery life.

The recently launched Dunnington is the last of the Penryn family, and Intel’s first six-core chip. It is compatible with the Caneland family.

As the dominant supplier of microprocessors for the worldwide personal computer (PC) market, Intel has always generated healthy profit margins and strong cash flow from operations, which it has invested in next generation manufacturing technology. R&D focus is currently on ramping 32nm production in the second half of 2009.

After its 2006 woes, the company crystallized its “tick-tock” strategy and successfully executed it in 2007 and 2008. As a result, the company was able to grow both gross and operating margins in 2008, even when the recession drove down revenue slightly. Microprocessor market share continued to grow in each quarter of 2008.

Sejuti Banerjea contributed to this report.

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