Intel Is Changing The Way It Forecasts PC Growth To Meet Demand

Intel exec Steve Long says as the PC resurgence continues, the chipmaker is looking at different metrics, like stimulus funds, to forecast future growth: ‘What we’re changing from a segment-first modeling approach is that we think this is a new inflection point on the client category curve, and as an industry and whole ecosystem, we need to get ahead of it.’

Intel PC sales executive Steve Long said the chipmaker is applying a new “segment-first” modeling approach for 2021 sales to improve the way it forecasts future growth for desktops and laptops stay on top of CPU supply and to help partners keep track of new opportunities.

In an interview with CRN, Long said this new approach means that the Santa Clara, Calif.-based company is no longer looking at gross domestic product to forecast future PC trends for the Client Computing Group because there has been a “total disassociation” between the two in 2020 as a result of the vast changes in computing needs brought upon by the coronavirus pandemic.

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“What we’re changing from a segment-first modeling approach is that we think this is a new inflection point on the client category curve, and as an industry and whole ecosystem, we need to get ahead of it and forecast it, and our partners have everything to gain with the opportunity,” said Long, whose title is global vice president of client computing sales at Intel.

Long said the resurgence of the PC category that he described in a May interview is continuing for reasons he previously described: a new commercial PC refresh being driven by organizations of all sorts needing new devices for employees and students working from home, an increasing density of PCs per household and a growing number of first-time PC buyers.

These trends played a major role in Intel’s decision to take a segment-first approach to forecast future sales for its laptop and desktop processors, according to Long.

For instance, in education, the company is looking at several metrics to determine demand in that category, including student population and student-to-teacher ratios. The company is also tracking how stimulus fund measures in countries across the world to determine potential areas of growth. In addition, the company is tracking small business trends.

“Obviously [the pandemic has] impacted certain small- to medium-sized businesses. Data point from the U.S. Census here in 2020 already points to the highest actual increase in new businesses created in the United States — businesses born in technology or doing things, servicing things through technology — so that’s an opportunity,” Long said. “If you’re not factoring in the fact that they’re coming into a client- or cloud-first world using some of the technologies that we bring, we’re going to miss the opportunity.”

Based on Intel’s research, Long said the trends driving PC growth this year will continue in 2021.

“I think through the first half of next year, we already have solid pipeline visibility that suggests that these trends continue,” he said.

For Intel’s third-quarter earnings report, which was released Thursday, the company said revenue for the Client Computing Group was up 1 percent year over year to $9.8 billion. It was only one of two segments that saw sales growth in the quarter, but it did contribute to Intel beating expectations for overall revenue in the quarter to Intel upgrading its forecast for total 2020 revenue.

To improve CPU supply, the company has increased capital expenditures and expanding its capacity by 25 percent this year, according to Long. The company has also added test capacity sites and expanded test capacity capabilities to improve output, and the company’s Technology and Manufacturing Group has created more flexibility in Intel’s network of factories.

“Every quarter, our supply output has grown year on year, and our forecasts are ahead of 2021, we’re getting well ahead of it,” Long said. “Our total available market forecasts and the capacity that we’re putting in place are ahead of any third party or anyone in the industry, and we’re trying to make sure that we get the ecosystem seeing the opportunities that we see, so that we can build and not constrain our partners’ ambitions.”

Kevin Wasielewski, CEO of Origin PC, a Miami-based PC system builder and Intel partner for the enthusiast market that is owned by PC hardware vendor Corsair, said his business has been up this year, with a continued demand in gaming PCs being a major factor. But outside of that, he said, he feels fortunate to still be in business, knowing the hardships many are going through.

“It’s just been an insane year of things that nobody could predict basically,” he said. “But it’s a year of surprises, so there’s some good surprises, there’s some bad surprises. Overall, it’s a positive picture, and I can’t complain, because other people are affected so much worse than we are.”

The biggest challenge he faces is that it’s hard to predict what the fourth quarter of this year and next year will bring, Wasielewski said.

Another challenge has been a shortage of Intel processors, according to Wasielewski, but the situation has improved recently, and the company can sometimes find workarounds for unavailable products, like shifting up or down the product stack or switching to the F-series CPUs without integrated graphics.

“For supply chain issues, we give [customers] the option of, ‘Hey, you could continue waiting.’ That’s one option. We could switch it to this processor. That’s another option. We can switch it to this complete different system, so we give a lot of these different options and try to be flexible with them,” he said.

Erik Stromquist, president of CTL, a Portland, Ore.-based Intel partner that sells Chromebooks, said it’s been very difficult to keep up supply for Chromebooks, but the issue goes beyond just Intel processors to other kinds of components, like display panels, batteries and USB-C controllers.

He said the overall supply chain issue is so significant that he has school customers that haven’t received Chromebooks that were ordered all the way back in May. One thing that he thinks is exacerbating the issue is a massive student laptop project in Japan that is diverting supply from the U.S.

“I don’t see any light at the end of the tunnel,” Stromquist said. “The power has shifted to those who have supply and those who have the ability to meet demand. So resellers are losing power, IT administrators are losing power, and the power is shifting back to OEMs.”