Intel and Microsoft Try to Fix What's Killing the PC Industry

The PC industry is sick and Intel is trying its best to bring back innovation. But can it succeed?

Apr 2, 2014 at 12:00PM

For the last couple of years, Intel (NASDAQ:INTC) and the rest of the PC industry have expected a nice seasonal uptick for the back-to-school selling season, only to be left disappointed. During 2012, the "pitch" was that Microsoft's (NASDAQ:MSFT) Windows 8 and touch would renew interest in the PC. In 2013, Intel expected that its next-generation Haswell processor would drive sales back up, only to fall flat. During that entire time, Intel continued to make a fatal error that it appears to try to rectify this year.

It's the low end, stupid!
While Intel's Haswell processor was absolutely fantastic about driving tablet-like battery life in PC/convertible form factors, there were two problems with the Haswell ramp:

  1. It started late. While the desktop version of Haswell was readily available in June 2013, most PC vendors didn't have Haswell-powered Ultrabooks/convertibles until the end of the year, essentially missing the back-to-school season with these new chips.
  2. Haswell, while fantastic, is more of a high-end notebook part. So, while you had these wonderful high-end machines in the September/October timeframe, the low end of the market (the one susceptible to cannibalization by tablets) was still serviced by hobbled variants of the already relatively inefficient Ivy Bridge platform.

Intel's Haswell-ULT, the star of the MacBook Air's show. Source: Intel. 

So, how does Intel finally solve this problem?

Bay Trail-M is a misused hero
Let's face it: Today's low end laptops make a ton of compromises. Even with a low power 7.5 watt Bay Trail-M (this is a low power system-on-chip for cheap PCs based on Intel's best tablet processor), OEMs are tempted to go cheap on important aspects of the system such as the display, storage subsystem, and chassis thickness. The Samsung (NASDAQOTH:SSNLF) Chromebook is a fine example of what an Intel OEM partner should be able to do with Intel's low power Bay Trail-M platform:


Samsung's hot-selling Chromebook, an update to which is due shortly. Source: Samsung.

Indeed, Samsung offers a slick, fast, and affordable machine that -- in many ways -- offers a more pleasant user experience than many low-end Microsoft Windows based machines. Naturally, Samsung benefits from the "free" Chrome while OEMs using Microsoft's Windows need to hand over a license fee, but Microsoft is allegedly cutting OS license costs for low-end machines precisely to allow Windows OEMs to be more competitive.

Unfortunately, the PC industry seems dead-set on fulfilling the self-fulfilling prophecy that the "PC is dead" by trying to cut corners and save a buck or two here or there. This leads to compromised systems such as the following machine from ASUS:

Bay Trail M Amazon

A typical, compromised low-cost Windows machine based on Intel's Bay Trail-M. Source:

If this machine were to, instead of a slow 500 GB 5400 RPM (this is as slow as it gets these days) hard disk drive, include a 64GB or even 128 GB solid state drive, then it would be significantly more appealing and could help drive wallet share back to the PC. Users don't know why their iPads feel significantly smoother than these lower-end PCs, but a big part of it is the storage subsystem -- a 5400 RPM hard disk drive is simply unacceptable and a huge bottleneck for today's microprocessors.

Intel lowers Bay Trail-M bill-of-materials cost, urges OEMs to improve quality of systems
At Intel's Developer Forum in Shenzhen, China, the company hosted a presentation titled "2014 Intel(R) Platform, Bay Trail-M/D: Platform Cost Reduction." The focus of the presentation was on how Intel was updating/refreshing its Bay Trail-M/D processors for the low end of the PC market. These updates would not only add new functionality, but they would meaningfully reduce the cost of the components that are required to build a system around Intel's chips.

Bay Trail M Platform Bom

Source: Intel.

Notice in the last bullet point how Intel is giving its customers a pretty strong hint that instead of using the bill-of-material cost savings to just capture more margin per unit or to drive selling prices they should be making more compelling devices. While this may be a tough pill to swallow for many of the PC makers, many of whom are basically running their PC businesses "for cash" until they can transition to phones/tablets, this is how Intel and its partners will thrive long term. It's now up to the OEMs to deliver affordable but sleek designs for back-to-school.

Intel and Microsoft may eventually save the day, but this stock could be set to explode!
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information