WinTel: The Best and the Worst of the Dow

Rising 1.1%, Intel (NASDAQ: INTC  ) is the biggest winner on the Dow Jones (DJINDICES: ^DJI  ) index today. The biggest loser? The other half of the legendary WinTel duo -- Microsoft (NASDAQ: MSFT  )  -- is down 1.3%.

MSFT Chart

MSFT data by YCharts.

These companies are joined by the hip in many ways. How can one of them soar just as fast as the other one is sinking?

The answer, my friend, is actually obvious. Intel and Microsoft are adjusting to the new realities of the computing market -- in very different ways and with polar-opposite outcomes ahead.

Microsoft's big bet is the Windows 8 platformed. Streamlined across smartphone, tablet, and PC systems and running on the traditional Intel chips as well as newfangled ARM (NASDAQ: ARMH  ) hardware, the operating system is Mr. Softy's attempt to stay relevant no matter where the computing sector goes next.

But a brand-new report from the NPD group shows that Windows 8 is off to a terrible start no matter how you slice it.

The software was supposed to be the saving grace for the ailing PC market. Consumers have seen it coming for ages, and might have held off on buying new computers because there was this new thing just around the corner. But it hasn't worked out that way. Instead, PC sales fell 24% compared to the same early holiday period in 2011.

And consumers don't seem excited about the new software, which changes the way you interact with your computer and makes desktops act more like overgrown smartphones. When Windows 7 was four weeks old, it was bundled with 83% of all new PC sales. For Windows 8, that acceptance ratio plunged to 58%.

This bet-the-company effort is starting to look like an encore of the Windows Vista fiasco.

By sharp contrast, Intel isn't necessarily married to extending its existing product lines forevermore. Analyst firm RBC Capital says that the chip giant is talking to Apple (NASDAQ: AAPL  ) about putting together Cupertino's custom ARM chips in 2013.

This would let Apple move further away from current chip supplier and courtroom adversary Samsung, while Intel diversifies its revenue stream and gains instant street cred in the mobile world.

And that's how Microsoft fumbled today even as Intel bounced back from a recent losing streak. The wonder twins don't look so identical anymore.

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Better yet, you'll continue to receive updates for an entire year. Click here now to learn more.

 

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  • Report this Comment On November 30, 2012, at 3:37 PM, lucasmonger wrote:

    A 1% gain or loss in any stock is just noise in the whims of stock traders. Calling one "soaring" and the other "sinking" is overblowing the situation. A 30-50% gain or loss might be considered soaring/sinking.

    Agreed, the data doesn't lie - Win8 is off to a terrible start. A quick trip to the local Best Buy was very disappointing. For Black Friday, there was only 1 touch-capable Win 8 computer in the entire building, though there were many non-touch Win8 machines. I personally wouldn't buy a non-touch Win8 machine knowing that I'd forever regret that purchase yearning for touch.

    The OEMs really dropped the ball on getting a selection of products on the showroom floors for people to touch and play with. Alas, maybe these claims of failure are premature and things will pick up once the products are out there in numbers and people see the value of touch. There's also probably a supply shortage of high resolution touch screens for laptops and tablets (likely caused by Apple locking up most of the touchscreen supply for iPads and iPhones).

    But you've got to hand it to Mr. Softy - they're not going down without a fight.

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