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Microprocessor Supply Orders Hit a Record Year

It looks like $61 billion is the emerging number for the quarter's microprocessor sales — and all that has to be supplied. It also appears tablet and phone chips are now crowding out PC chips to an even more noticeable degree than in 2012, when chip sales rebounded sharply.

From the supplier's standpoint, this is when the story gets interesting. The shift from supplying PC to supplying mobile — as well as the bet on which OEM to drop — will become a self-fulfilling prophecy soon, not only because of consumer demand, but because of supply chain economics. At some point the disincentive to supply waning tech gets too great, and starts being reflected in rising prices for those chips. That creates a rise in consumer prices, and then you´ve got a vicious cycle, one that typically is the death knell of the old tech — in theory.

To be prudent, it´s only August, and these are analyst predictions rather than hard sales numbers. But if these sales numbers prove to have been driven increasingly by the booming mobile market, that would represent the latest in several quarters showing similar, trend-like data. That could finally end the argument over whether the supply of chips for PCs is tapering off slowly — or crashing.

Of course, the story so far comes down to whose numbers you trust. IC Insights' widely followed prognostications are calling for a 54 percent year-on-year increase for tablet processor sales. That's an immense jump. Only slightly more modest is their call of a 30 percent uptick in mobile phone chips.

By comparison, standard laptop processors appear to have suffered in part from the poor reception for Windows 8, which hit PC sales hard, and the whole supply chain with it.

“The falloff in standard PC shipments is a major problem for Intel and AMD since they have supplied more than 95 percent of the x86-based MPUs used in personal computers since the 1980s,” the research outfit claimed in their findings.

The other wrinkle in this story becomes clear when you look beyond the mobile versus PC stats, to a broader examination of the mobile wars. Suppliers bailing out of the waning PC processor market have a much less mature playing field. Nasdaq recently reported, for example, that user shifts among the major handset manufacturers have gone — forgive a technical term — completely bananas. In the past 12 months consumers have been jumping between Apple and Android, Samsung and HTC, etc., in a way that PCs haven´t experienced in decades.

This suggests shifting demand and a huge market for suppliers able to handle quick shifts in demand. Citing a Fortune item, Nasdaq's announcement noted that Apple tended to woo former Blackberry users, where Samsung won over the former Nokia clients. Apple, contrary to talk of a downturn, saw 20 percent of its new iPhone users coming over from Samsung, whereas Samsung only saw seven percent of its adopters coming from the other direction (after leaving an Apple handset and iOS).

For chip suppliers, the mobile wars have been the obvious battleground for years. However, the additional evidence that PC´s are not just a mature market, but rather a geriatric one, is new. The pricing issue has to hit its point of no return soon. The problem is, no one knows where that point is. Based on today's evidence, though, it´s getting closer… and it may happen fast.

24 comments on “Microprocessor Supply Orders Hit a Record Year

  1. prabhakar_deosthali
    August 27, 2013

    The trend seems to be very clear. Mobile and tablets is the future for the microprocessor manufacturers.

    It is also heartening to see that Apple is still holding its fort in spite of those `quick shifts of loyalty between various brands  by the mobile phone buyers.

    The PC/Laptop market in my opinion should remain at least steady for a few more years as the student community in the higher education segment cannot do without them.

     

  2. MikeDCowan
    August 27, 2013

    Hi Mark – your title suggests a record sales year for micros whereas the first sentence of your article, namely, It looks like $61 billion is the emerging number for the quarter's microprocessor sales  “infers” a quarter's worth of sales. The $61 billion forecast estimate would definitely be a full year's sales forecast expectation NOT a quarter's.

    Mike Cowan

      

  3. SP
    August 27, 2013

    smartphone with tablet looks to be quite fascinating combination.

  4. Himanshugupta
    August 27, 2013

    I think the new emerging trend is to buy something called Phablet, a combination of smartphone with a larger screen but i think people will soon realize that tablets are better option and this will again chage the dynamics of the smartphone market. Most companies are trying to increase the size of the smartphone touchscreen to make people interested in buying tablets (with screen 7″ or 8″).

  5. jbond
    August 27, 2013

    I think eventually the larger smartphones will lose their excitement and people will realize that the phone is just too large to carry around and go to a smaller smartphone and a tablet as separate items. Personally I tried the larger screen and it is too large for your purse or pocket. It is easier to have a separate tablet.

  6. Eldredge
    August 27, 2013

    prabhakar,

       I tend to agree – I think the PC/laptop segment will be viable for awhile yet, though tablets may be an acceptable alternative for the higher education market.

  7. Hailey Lynne McKeefry
    August 28, 2013

    @jbond, i tend to agree with you… There's also been a run at dual mode phones (work/home) and it remains to be seen how those will perform. Right now they seem a big clunky and the interface needs work, IMHO.

  8. ahdand
    August 28, 2013

    @Hailey: Very true. The interface sucks right now and the settings and the features do need a vast improvement. Concept is really cool but needs enhancements badly.    

  9. Daniel
    August 28, 2013

    “There's also been a run at dual mode phones (work/home) and it remains to be seen how those will perform. Right now they seem a big clunky and the interface needs work, IMHO.”

    Hailey, you meant about dual sim phone. I had a dual sim phone, one sim for my official work and the other for personal purpose. The only drawback is, I won't be able to attend two calls at a time, I mean I have to switch between this two sims.

  10. Hailey Lynne McKeefry
    August 28, 2013

    @Jacob, yes… that's what i meant. I understand the underlying purpose of having a clear distinction between personal and work. I hadn't thought of the practical aspects–How do you switch between SIMs? What have you found in practical terms? Is it worth it?

  11. Daniel
    August 29, 2013

    “that's what i meant. I understand the underlying purpose of having a clear distinction between personal and work. I hadn't thought of the practical aspects–How do you switch between SIMs? What have you found in practical terms? Is it worth it?”

    Hailey, there is no need of switching between the SIMS because both are active at the same time. The only difficulty is we won't be able to attend two calls at a time. One will be waiting and we can put them in hold for attending the other calls and vice versa.

  12. Hailey Lynne McKeefry
    August 29, 2013

    @Jacob, i suspect these usability issues will be overcome in time as next generation products are improved.

  13. Daniel
    August 31, 2013

    “i suspect these usability issues will be overcome in time as next generation products are improved.”

    Hailey, doubtful because no person can talk (attend) two calls at a time.

  14. SunitaT
    August 31, 2013

    smartphone with tablet looks to be quite fascinating combination.

    @SP, but what exactly is the difference between the smartphone and the tablet ? I think already they share many common features.

  15. SunitaT
    August 31, 2013

    It is also heartening to see that Apple is still holding its fort in spite of those `quick shifts of loyalty between various brands  by the mobile phone buyers.

    @prabhakar_deosthali, this shows that Apple has dedicated fan base and I think Apple users will stick to Apple brand even though the latest Apple products lacked unique features.

  16. SunitaT
    August 31, 2013

    I think eventually the larger smartphones will lose their excitement and people will realize that the phone is just too large to carry around and go to a smaller smartphone

    @jbond, I totally agree with you. I think people will start preferring wearable gadgets so that it would be easy for them to carry around like wearable watch, wearble glasses like Google glass.

  17. t.alex
    September 1, 2013

    Hailey, that sounds interesting. What is work mode and what is home mode? Is it dual sim or is it completely two phones in one physical phone?

  18. Hailey Lynne McKeefry
    September 4, 2013

    @tiriapur, the biggest difference is footprint. Really, that's the biggest difference between the iPhone and the iPad. Wouldn't a combo package be by default a tablet?

  19. Hailey Lynne McKeefry
    September 4, 2013

    @t.alex, it's dual simm, but at least in some models, you have to physically swap the simm to change modes. Here's one example: http://press.nokia.com/2013/02/12/nokia-asha-310-debuts-with-dual-sim-and-wi-fi/

     

    At least initially, these offerings are being focused on other geographies.

  20. t.alex
    September 6, 2013

    Hailey, what is the relationship between dual-sim and home-mode/work-mode? Isn't it correct when you reach home you would still be able to receive calls from work?

  21. Hailey Lynne McKeefry
    September 10, 2013

    t.alex, this is stricly about data security. It ensures that corporate data and personal data are kept completely separate. That way, if you change jobs or leave the company it's a ismple thing to make sure the corporate data is safe and deleted without the inconvenience of having personal data wiped as well.

  22. t.alex
    September 13, 2013

    Hailey,

    I believe for this kind of security there should be some form of operating system isolation as well. Data stored on Micro SD card, for example, can be easily mixed up.

  23. Anand
    September 23, 2013

    @ jbond, you are absolutely right. This is my experience too and many others' as well. Phone remains a phone however big it is. On the contrary, the bigger it is, the more problematic it becomes especially in carrying it and using as a phone. A 5″ or 5.5″ smart phone is too big to carry without difficulty and too small to work on as a tablet.

  24. Anand
    September 23, 2013

    @ Jacob, yes human attention to multiple voices has limitations. Then it renders your prior concern of not being able to attend two calls at a time irrelevant. There was a time when we received call on one SIM, the other SIM was turned off altogether. Now we can have the call for second SIM on waiting. In future, we'll definitely be able to attend both calls simultaneously. It is still questionable if this feature will be of any use at all or not.

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