Do PCs have a future? Intel thinks so

Intel Corp showed off hybrid tablets and ultrabook laptops with voice and gesture recognition technology along with an upcoming low-power chip in a bid to convince Wall Street a slump in the personal computer industry is only temporary.

At the annual Intel Developer Forum in San Francisco on Tuesday, the company demonstrated a range of mobile devices, many of them crosses between tablets and laptops. Executives showed sleek "ultrabook" laptops with improved gesture- and voice-recognition features, similar to those already found on some smartphones.

Intel's upcoming processor, code-named Haswell and due to appear in a crop of laptops during next year's holiday season, will improve on computing and graphics features and is targeted to reduce electricity consumption from 17 watts to 10 watts, according to the company.

The chip will allow devices to stay on longer without needing to recharge and underscores the Intel's recognition that mobility will only become a bigger factor in personal computing.

"It was designed with mobility in mind ... from sleek tablets to ultrabooks to high-performing desktops," said David Perlmutter, general manager of Intel's Architecture Group.

In an interview with Reuters, Perlmutter steered away from strict categories of laptops and tablets and said manufacturers over the next few year will offer a wider range of mobile products for consumers, mixing and matching new features, performance and size.

Recent launches of smaller tablet sizes by Google and Amazon are examples of the already growing range of devices consumers have to choose between, a trend that will gain more steam, he said.

"There will be a variety of needs fulfilled by a variety of solutions. Some people want something very benign, very simple," Perlmutter said. "Others need performance."

Investors watching
For Intel, showing off its most recent innovations at the forum this week is key to convincing investors and hardware developers that the PC industry remains innovative and still has a future.

Perlmutter pointed to tablets with extendable screens and laptops with removable keyboards as devices that he said might catch on with the upcoming release of Microsoft Corp's Windows 8, which will feature touch capability.

Intel's tablet strategy so far has focused on Windows 8, but Perlmutter said tablets running Intel processors and widely-used Google's Android platform are also in the works.

The top chipmaker cut its third-quarter revenue estimate more than expected on Friday due to a decline in demand for its chips as customers reduce inventories and businesses buy fewer PCs.

Intel's processors are used in 80 percent of the world's PCs, but the Santa Clara, California, company has been slow to adapt its chips for smartphones and tablets. It now trails Qualcomm Inc and Samsung Electronics Co Ltd <005930.KS>, which design their chips with power-efficient technology licensed from ARM Holdings Plc .

The combined market for PCs, smartphones and tablets is expected to almost double over the next four years, but Intel's share of the processors used in them will dip from 35 percent to 29 percent, according to a report this week from IHS iSuppli.

While macroeconomic troubles have weighed on sales for several quarters, the growing popularity of tablets and smartphones is seen as an existential threat to the PC industry.

The Haswell chip's improved power efficiency is a step in the right direction to offering consumers punchy performance in thin laptops without sacrificing battery life, said Evercore analyst Patrick Wang.

"Will it stymie the shift towards tablets and smartphones? Not yet, but only time will tell," Wang said.

As well as investors, Intel's forum is visited by thousands of hardware developers, many of whom face decisions about whether to focus their resources on the PC industry or mobile devices using chips made by Intel's rivals.

Intel is heavily promoting premium Ultrabook laptops powered by recently launched Ivy Bridge processors. But Wall Street investors say that adding costly touch screens to models due out soon may make them too expensive for many consumers. Many ultrabooks currently on the market, without touch screens, cost over $1,000.

Perlmutter said bringing down the costs of building ultrabooks to make them more mainstream is a challenge Intel is working on with PC manufacturers.

Underscoring the shift in focus toward mobile, Apple on Wednesday will become a distraction for participants at the forum when it is expected to launch its newest iPhone at a nearby venue.

Some analysts said Perlmutter's speech was light on details about future products than keynotes in previous years.

"This time around, the company only highlighted a few next-gen features, lacking the details to show how Intel would play more materially in the low-power segment of computing devices," Freedman said.

Shares of Intel were up 1.4 percent at $23.58 in afternoon trading.

Copyright Thomson Reuters 2012