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Intel's job cuts: The 'PC is dead' or PC evolution?

Intel sheds 12,000 jobs in its shift away from PCs. The PC is dead -- or is it? Also in Searchlight: Google faces more antitrust charges; Viber encrypts all its messages.

The news this week of Intel's massive job cuts, which come amid first-quarter sales that fell short of Wall Street's expectations and the fifth straight year of a decline in PC shipments, will no doubt renew that years-old question: Is the PC dead?   

Certainly Intel's Stacy Smith, who is moving from the CFO role to head up the company's sales, manufacturing and operations, made it clear the state of the PC is not good:

We are seeing growth in the data center, Internet of Things, security and programmable solutions, which all helped offset a weak PC market.

But dead? Not now, not yet, said J.P. Gownder, a principal analyst at Forrester Research.

"For something to be dead, we would have to see people stop using it on a grand scale. Well, that's not happening," he said, adding that PCs are still very common in workplaces, and there hasn't really been any decrease in their usage.

Intel's restructuring reflects a period of transition for the hardware market and its purveyors, he said. Many clients haven't reached the stage yet where they need to replace PCs, so Intel and others haven't been able to sustain steady sales growth. Within one or two years, however, he believes more enterprises will move to Windows 10, and in some cases take advantage of the newer features of the OS, as well as next-generation computing devices, such as the Surface Pro, Surface Book and Dell XPS 13.

If there is a takeaway from Intel's sobering news, Gownder and others said, it is not that the good old PC is dead but that it is evolving into another kind of computing tool -- one that is more flexible, able to move from the desktop to the great outdoors and adapt to users' varying needs.

"We're no longer in a one-size-fits-all world where everyone walks in through the door and they get the exact same PC," Gownder said.

PCs of the future

How well Intel rides out the PC's metamorphosis is an open question, Gownder said. In the meantime, Intel will cut 12,000 jobs as it restructures itself to put new focus on high-growth areas like wearable computing and IoT, as the company laid out in its announcement. But this emphasis on areas outside traditional hardware underscores just how absent the company has been in the global shift to the 21st-century version of mobile computing, Gownder said.

"Intel missed the smartphone revolution," he said, referring to the company's decision 10 years ago to pass on an opportunity to provide the processor for the iPhone, opting instead to focus on Microsoft and desktops. Intel's new focus signals that it doesn't want to make the same mistake again.

Mark Hung, research vice president at Gartner, agreed, saying that Intel is ramping up a strategy the company has had in place for the last few years.

"Intel has been focusing more and more on the two ends of the network: One end is the cloud, the data center and the communication network infrastructure; on the other end are things that are outside of traditional PCs and mobile devices -- what people would generally call the Internet of Things," Hung said. And, while Intel's client PC market has slowed, it is already seeing good growth in "2-in-1s," the super-thin laptops that convert into tablets.

CIO challenges

What is the upshot for enterprise CIOs? First off, they would do well to avoid the "PC is dead" hubbub, which in Gownder's opinion is market hype, and instead take a careful look at their workforces, analyzing the various use cases for PCs and other tools and segmenting employees by computing needs.

This segmentation and matching the best device to employees based on their needs requires not only a deep investigation of employees' roles and what they do on a day-to-day basis but also extensive piloting and A/B testing. It's mainly a trial-and-error process, Gownder said.

"Try some of these newer devices and see how they fit in; see if you can get applications that are business-critical to run effectively on those devices," he said.

CIOs should also plan for their enterprises moving to more flexible and mobile workplace arrangements, Hung said, and figure out the impact of these new layouts on hardware procurement.

For instance, in these new layouts, setups like wireless docking are going to become more prolific. While there will still be a monitor that would provide the screen real-estate to help with tasks like spreadsheet work or word processing, the configuration should be flexible enough that employees can undock their device and be productive on the go.

Plus, "different people can use that same space on as-needed basis, versus having pre-assigned offices and cubicles for each and every person," Hung added.

However, he predicts that enterprises will take their time to adopt such a widespread change -- about three to five years. Money is a huge factor.

"It's going to take time and it's going to take money. Especially globally, there are definitely still a lot of uncertainties regarding the economic environment," Hung said.

CIO news roundup for week of April. 18

Intel's job cuts aren't the only thing the tech world has been watching this week:

  • Google is facing antitrust charges once again from the European Commission, this time targeting the search giant's mobile business. The Commission alleges that Google has been using its Android OS to unfairly promote its own services, including its Google Search and Google Chrome, over those of its competitors, and that it does so through restrictive contracts and bribery.
  • First WhatsApp, now Viber: The messaging app company announced Tuesday that it has made end-to-end encryption the default for all conversations between individual users and groups on its network, which comprises 700 million users. This means third parties won't be able to read their messages, including the government or Viber itself.
  • Former Intuit chairman Bill Campbell died Monday in his home in Palo Alto, Calif. Campbell, the "secret coach" of Silicon Valley, advised the likes of Steve Jobs at Apple, Larry Page at Google, and John Doerr, a leading venture capitalist at Kleiner Perkins.
  • Verizon is the one to beat in the latest on the bid for Yahoo. The sale of the Internet company's Web assets has reached the second phase, and while other potential bidders, such as Time Inc., have backed out, analysts believe Verizon is hoping to make advertising and content services its next growth engine.

Check out our previous Searchlight roundups on Facebook's "chatbots" and Microsoft's investment in blockchain.

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