The PC Will Never Die

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The PC is back. So says Intel (Nasdaq: INTC  ) chief executive Paul Otellini.

"The worst is now behind us," he told analysts and investors in reporting expectations-busting first-quarter earnings. Foolish colleague Anders Bylund has all the numbers for you here. I'm more interested in the context.

Have we really reached bottom? Maybe. Otellini hasn't exactly said that PC-making partners Dell (Nasdaq: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) are ordering more chips. Management, meanwhile, is planning for zero second-quarter revenue growth, The New York Times reports.

Zero revenue growth sounds like "zero PC growth." That may not be the case; netbooks suddenly aren't selling as well as they once were. Sales of Intel's low-power Atom processor, a popular choice as the brains for commercial netbooks, were down 27% from the fourth quarter to the first. Overall revenue was down 13% sequentially.

Certainly the recession is partly to blame for lagging netbook sales. Consumers who can't afford mortgages are unlikely to pay up for even cheap computing equipment.

Yet cloud computing could also be a part of the problem. Google (Nasdaq: GOOG  ) and Adobe (Nasdaq: ADBE  ) have been working hard to meld the offline and online worlds. The resulting innovations are testing PCs like never before.

Take Gears. Having it installed on your machine allows Gmail to operate, even when you're disconnected.

Gears is a collection of scripts -- code that tells other code what to do -- that makes your browser more functional, more integrated with your PC. Innovative? No doubt. But adding scripts adds stress to system resources like memory and processing horsepower, especially when those system resources are waiting for a response from one or more remote servers.

Put differently: Just because software isn't installed locally doesn't mean your PC, when engaged with the cloud, won't break a sweat. It will, as would any netbook.

The PC is back? I certainly hope so, Mr. Otellini. With cloud computing, we need it more than ever.

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Dell and Intel are Inside Value picks. Google is a Rule Breakers recommendation. Try any of these Foolish services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers had stock and options positions in Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is gearing up for summer.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 15, 2009, at 5:45 PM, Netteligent09 wrote:

    Intel still facing crisis for the rest of 2009. Demand is low, margin is low, and outlook is dim.

    Until unemployment and corporate America turns around, these tech companies are at high risk.

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