The Associated Press April 20, 2011, 6:41AM ET

Intel CEO on weak consumer PC spending

Tablet fever has gripped the PC industry, but Intel Corp.'s latest results showed it was able to depend on corporate PC and server buyers to lift its results.

On a conference call with analysts, Intel CEO Paul Otellini addressed a question about whether weakness in consumer PC sales was caused by tablet demand or economic concerns.

QUESTION: Regarding weakness in consumer PCs in U.S. and Europe, what do you attribute that to? Do you think that is tablet "cannibalization"? Macroeconomic worries? Windows 7?

ANSWER: I think it's a little bit of each of those, but I'd add one more, which I think is a big one. Remember in 2009 and the first half of '10, during the depths of the recession, the consumer notebook market worldwide, particularly in the U.S. and western Europe, was very strong, and it was strong contrary to GDP at the time. Remember, GDP was going south and consumer sales were going north. And I think what happened is that people bought a lot of machines in that timeframe and that we're still just early in the cycle.

So those machines are one-and-a-half years old or less, so seeing a consumer refresh right now probably isn't on average what you're going to see in mature markets, because this is not like emerging markets where people are buying their first machine.

This is a mature environment where people are buying a new machine when he they decide they need to upgrade or whatever. Now clearly some tablet cannibalization is impacting that, but I think the bigger one is the macroeconomics and the prior cycle.


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